AGM Statement

RNS Number : 2013B

Chill Brands Group PLC

29 September 2022

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018), AS AMENDED BY REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

29 September 2022

Chill Brands Group plc

("Chill Brands" or the "Company")

AGM Statement

Chill Brands Group, the international consumer packaged goods company, will hold its Annual General Meeting ('AGM') today at 3.00pm (BST) at the offices of Allenby Capital Limited, 5th Floor, 5 St Helen's Place, London EC3A 6AB. At the AGM the Company's Chief Executive Officer, Callum Sommerton, will make the following statement:

"Our AGM is upon us again and our report and accounts for the financial year ended 31 March 2022 will be released shortly, providing reflective commentary on the Company's financial and operational performance. Comparatively, this statement is intended to provide a forward-looking review of the Company's status today along with its prospects for the future.

It will come as no surprise to anyone who has followed Chill Brands for some time that the Company encountered significant difficulties during the period ended March 2022. These challenges were addressed by fundraising activities carried out in April and May which ultimately led to a restructuring of the Group's management team and operating model.

Since being appointed as Chill Brands' Chief Executive Officer, my priority has been to reduce spending and redress flaws within the Company's approach to sales and marketing. While this work is ongoing, we have taken considerable strides to provide the Company with a firm foundation from which to grow both in terms of revenue and shareholder value.

I am pleased to provide this update on our progress and look forward to sharing further information about the Group's development during the weeks and months to come.

Financial Management

Responsible management of the Group's finances is an essential part of correcting past mistakes and planning for the future. Since April, we have scrutinised every aspect of the business to ensure that funds are allocated only to activities for which there is a strong business case and a clear path to return on investment. Our work so far has led to a major decline in recurring expenses that is estimated to amount to an annual reduction of at least US $1,000,000.

In addition to cost cutting measures, we continue to implement strong controls to improve financial governance and accurately assess the health of the business. These steps will better enable us to further reduce our cash burn rate, extend our runway, and ultimately deliver a Company that is cash flow positive.   

Retail Operations

Having previously struggled to resource the planned rollout of products into a wider group of US convenience store locations, we have reconfigured the Company's approach to the retail channel. The Company's complex master distribution agreement has been brought to a close and we have developed essential internal infrastructure to help us manage and scale Chill Brands' retail footprint.

The Company recently signed agreements with additional brokerage partners and we have started to receive purchase orders in connection with new stores and distributors, which we expect to continue and accelerate over the next two quarters. Separately, and in line with renewed branding and marketing strategies, we are now distributing updated sales collateral materials to retail stores with the aim of improving brand recognition and sell through rates.

Chill Brands is now working with partners that know its business, understand its products, and have the connections and industry knowledge to help the Company scale. The Company's efforts start again from a firm baseline of retail locations including 363 branches of Yesway/Allsup's, 157 Smoker Friendly outlets, and 80 independent vendors with further expansion planned during the remainder of 2022 and beyond. The Company also aims to commence sales pilot programmes to establish new routes to market and will provide further information as additional distribution agreements are executed. 

eCommerce Operations

After announcing a switch to an eCommerce-led sales strategy in January 2022, the Company has been working to redevelop Chill.com which will launch in October. Following the release of the improved website, our strategy will be fixed around marketing fundamentals including search engine optimisation (SEO) and conversion rate optimisation (CRO).

Even without the implementation of an effective marketing strategy the Chill.com site has contributed significantly to our sales performance during 2022, having generated in excess of $20,000 gross monthly sales during certain peak periods. I expect this performance to improve as we assign greater attention, resources, and expertise to our digital sales channels.

Over time we have also replaced certain discontinued marketing activities from the past year with new campaigns that are considered more relevant to the Chill brand and its customers. This has included a grass roots social media marketing drive in collaboration with influencers who in many cases have accepted sample products in lieu of cash payments. These social media personalities have a combined follower count in excess of 5 million and their posts have generated organic exposure for the Chill brand which we will continue to pursue on an ongoing basis.

In addition to our own sales activities, we continue to hold discussions with select brands with a view to onboarding their products to Chill.com as we seek to build on the concept of a wellness and relaxation marketplace. These conversations will be supported greatly by the launch of our new site with further updates to follow.

Brand and Product Development

In concert with adjustments to our retail and eCommerce strategies, we have also been undertaking a complete refresh of the Chill brand. Its new identity and appearance have been meticulously crafted in line with market analytics to create a brand that reflects consumer trends and is more appealing to those customers who are most inclined to buy the Company's products.  

I am also pleased to report that a number of product development projects are now underway. These efforts are intended to diversify the Company's range such that it will comprise both premium CBD products and other products that contain alternative natural ingredients. Early discussions with the Company's distribution partners suggest there is strong demand for the proposed new products and further details will be shared as these projects progress.

Outlook

After what has been an incredibly difficult year for the Company, I find that there are still many reasons to be optimistic. Chill Brands is a promising business with valuable assets the likes of which are not a common feature of comparable consumer goods companies.

Our ownership of the Chill.com domain has been a consistent source of interest from organisations much larger than ourselves and it has value both as we build our brand but also as a digital asset that could generate significant funds for the Company on any eventual sale. We also continue to progress through rounds of testing in relation to our unique seed genetics and will provide further information regarding routes to commercialisation for those biological assets in due course. Finally, the Company sells what our team believes to be some of the most differentiated products developed by any CBD brand on the market today. Our CBD chew pouches consistently attract new customers seeking alternatives to mainstream oral tobacco products, while our unique CBD isolate infused herbal smokes have recently invited interest from new sales venues which we hope to open shortly. I am sure that these novel products will bear fruit when paired with our updated brand and marketing strategy.

Much of our work in stabilising the Company and re-energising the Chill brand has yet to become visible, but we are working tirelessly to realise our vision of a differentiated and above all profitable wellness business with an expanded product range and the ability to scale. I believe this can only be delivered by building a solid framework for omnichannel sales, ensuring that we can continue to advance online and in stores without exhausting our resources. There is still much to be done and it is essential that the Company begins to execute. We can no longer focus on the relative strength of our partners and advisors or disguising our roadmap from competitors, but must instead be driven by revenue growth and tangible progress.

I am grateful to our shareholders for their support of the Company through what has been an exceptionally challenging period. Thank you for your patience, I am confident that the future of Chill Brands is bright."

-ENDS-

About Chill Brands Group

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is an international company concerned with the development, production, and distribution of best-in-class hemp-derived CBD products, tobacco alternatives and other consumer packaged goods (CPG) products. The Company operates primarily in the US, where its products are distributed online and via some of the nation's most recognisable convenience retail outlets. The Group's strategy is anchored around lifestyle marketing that is designed to enhance the popularity of its products, channelling visitors to its landmark chill.com website.

Publication on website

A copy of this announcement is also available on the Group's website at http://www.chillbrandsgroup.com

Media enquiries:

Chill Brands Group plc	[e-mail]
Allenby Capital Limited (Financial Adviser and Broker)	[phone]
Nick Harriss/Nick Naylor (Corporate Finance) Kelly Gardiner (Equity Sales)

 

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