Chill Brands Regulatory News (CHLL)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

7 September 2023

Chill Brands Group plc

("Chill Brands" or the "Company")

Trading Update

Chill Brands Group, the consumer packaged-goods distribution company, is pleased to provide an update on its operations.

Overview

· UK retail sales operations began in August 2023 with sales to an initial 120 outlets.

· Increase in e-commerce website traffic since commencement of online vape sales.

· US pilot stores demonstrating product sell-through, with discussions with distributors progressing.

· US vapour products range expanded to include 1,500 and 3,000 puff devices.

UK Sales Operations Commence

UK sales of Chill Zero nicotine-free vapour products commenced on 7 August 2023. Initial sales have been made to 120 retail outlets including independent retailers, vapour category specialist stores, bars and nightclubs. The Company continues to activate additional outlets with the support of its UK sales and marketing partner, The Vaping Group Ltd.

The appetite for Chill Zero products demonstrated by these outlets has facilitated discussions with national retailers and buying groups. Chill Brands will continue to expand its independent store footprint and satisfy repeat orders from existing stockists while seeking to launch sales with chain retailers as soon as possible. Further information regarding major retail launches will be provided when appropriate.

The Company has noted a significant increase in traffic to the Chill.com UK site since online sales of its nicotine free vapour products commenced on 10 August 2023. This has resulted in an uplift in marketplace product sales as a proportion of Chill Zero vapour products customers have also purchased from the third party brands marketed on the site. The Company continues to expand the range of products available on the Chill.com website and has most recently signed further agreements with multiple brands wishing to launch on the US-facing site.

Update on US Vape Pilot Stores

Further to the US launch of Chill Zero nicotine-free vapour products earlier in 2023, the Company has been working with pilot stores to establish product market fit and sales data. This pilot programme has resulted in the activation of select stores within the Colorado, Arizona, Florida and Texas markets.

The pilot stores have delivered positive results, including encouraging sell through rates that demonstrate healthy consumer demand for the products. Reorders for newly activated stores are occurring within an average of four to five weeks and numerous multi-store operators have expressed interest in stocking the product range across their full store footprint.

The data gathered from the pilot programme has enabled the Company to commence discussions with larger distribution partners. This includes the buyers of a national smoke shop chain who, following August trade show attendances, have given positive indications regarding their intentions to stock Chill Zero products. Based on these discussions the Company is actively preparing to introduce its 1,500 and 3,000 puff devices into the US market.

Callum Sommerton, Chief Executive Officer of Chill Brands, said: "The Chill Zero range of nicotine-free vape products is off to a great start. A successful entry into the UK and positive results from our US pilot stores reaffirm that this is a category with significant growth potential.

Many stockists of the products have commented on strong demand for nicotine-free alternatives and often highlight a lack of existing quality options on the market. There is a clear opportunity for Chill Brands to become a market leader in this space, particularly as we begin to market and sell the products to major national retailers. These conversations are progressing well and I look forward to updating our shareholders further as our plans come to fruition."

-ENDS-

About Chill Zero Vapour Products

Chill Zero vapour products are flavoured, disposable personal diffusers. They offer a similar experience to traditional vaping products but without the addictive effects of tobacco or nicotine. They appeal to a wide range of consumers including those who wish to quit smoking or reduce their nicotine intake, as well as those who enjoy the flavours, sensation, and social aspect of using vapour products.

Research suggests that the market for vapour products could exceed US $55 billion by 2029, with more than 26 million Americans already using vaping devices both recreationally and as a functional alternative to traditional tobacco products.

Chill Zero vapour products are available in a range of sizes and flavours including 1,500 and 3,000 puff variants that last longer than the conventional 600 puff products marketed by competitors.

About Chill Brands Group

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is concerned with the development, marketing and distribution of wellness and recreational products containing natural, functional ingredients. The Company's proprietary product range is distributed by some of the most recognisable convenience retail outlets in the US and includes nicotine-free disposable vapour products that cater to the rapidly growing market for tobacco alternatives. Chill Brands also operates the chill.com e-commerce website, on which it is building a marketplace of products from third-party brands.

Publication on website

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

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