20 October 2025

Chill Brands Group plc

("Chill Brands" or the "Company")

Business and strategy update

Chill Brands Group plc (LSE: CHLL), the consumer packaged-goods distribution company, is pleased to provide the following update on its business operations following the start of its new financial year on 1 October 2025.

Over the past 12 months, the Company has undergone a significant transformation in both structure and focus, marking a period of strong operational progress. Having transitioned from an own-brand operator to a diversified distribution and services group, Chill Brands is now working with a growing portfolio of global and emerging partners across the fast-moving consumer goods ("FMCG") sector, including the rapidly expanding nicotine alternatives market.

This announcement provides shareholders and investors with a detailed overview of the Company's current activities, commercial agreements and strategy as it continues to build a scalable, multi-channel business with multiple revenue streams and long-term growth potential.

Highlights

·    Completed transition from an own-brand business to a diversified, cash-generating distribution and services group.

·    Streamlined costs base through the closure of non-performing US operations, eliminating annual costs estimated to be in excess of US $650,000.

·    Appointed by RELX and other leading global nicotine brands to provide UK nationwide sales and distribution services.

·    Entered into partnership with SYP Global for development of novel nicotine delivery technology.

·    Established a warehousing and fulfilment centre to reduce costs and increase operational flexibility.

·    Preparing to launch Chill Connect online wholesale platform for independent retailers to order directly for delivery.

·    Planning the creation of a trade compliance division to help brand partners maximise retail performance and promotional value.

·    Continued refinement of Chill.com marketplace with focus on stress prevention, reduction and relief.

·    Increased investment in paid advertising and multi-channel marketing to drive traffic and sales growth.

Callum Sommerton, Chief Executive Officer of Chill Brands, commented:

"Chill Brands today is a very different company to the one it was at the start of 2024. We have evolved into a diversified distribution and services business with multiple routes to market, supported by new infrastructure and a sharper consumer proposition on Chill.com. Through our work with both high-growth start-ups and established global partners, we are building a scalable model that is agile and positioned for long-term growth.

"The Company has also demonstrated resilience through what was an exceptionally challenging period. Chill Brands did not just survive - it reinvented itself, emerging with a stronger model, new capabilities as a services business, and the confidence of global brand partners who see value in our platform.

"Our strategy gives investors exposure to a portfolio of brands and categories that are shaping the next generation of consumer products. Our focus now is on execution - delivering value for our partners, our customers and our shareholders."

Overview of Chill Brands' business

Following a major shift in its business activities over the past 12 months, and the significant progress made in developing its operations, Chill Brands now operates as a distribution-led consumer goods business that connects innovative brands with retailers and consumers.

The Company provides a comprehensive route-to-market solution encompassing sales representation, logistics and marketing support. Through its Chill Connect distribution network, Chill Brands sells and distributes products from leading global and emerging brands into the UK convenience and FMCG sectors, including the rapidly expanding nicotine alternatives category. In parallel, through Chill.com, the Company operates a direct-to-consumer e-commerce marketplace that showcases complementary wellness and lifestyle products. Together, these operations provide opportunities for the Company in multiple growth channels across both B2B and B2C segments of the consumer goods market.

Chill Brands' strategy provides investors with indirect exposure to a portfolio of brands that are shaping the next generation of consumer products, including in the high-growth and rapidly evolving market for nicotine alternative products - a category characterised by recurring consumer demand, constant innovation and strong opportunities for revenue growth. Through its mix of distribution agreements and brand partnerships, the Company sits at the intersection of established global players and emerging challenger brands, offering access to growth in multiple segments of the consumer goods landscape.

The Company's model combines recurring service fees from consulting and field sales representation contracts with repeat distribution income from product sales. Once relationships are established, the Company's revenues can scale without proportional increases in cost, creating the potential for operational leverage over time.

The recent appointment of Chill Brands by leading companies such as RELX and other internationally recognised brands demonstrates the confidence of established operators in the Company's ability to deliver sales growth and retail coverage in the UK market. These partnerships also validate the Company's infrastructure and commercial execution capabilities.

With a growing network of supplier and retail relationships, Chill Brands is actively engaged in discussions with additional brand owners seeking entry into the UK market. The Board expects to announce further partnerships as this business grows.

Strategy update

Transition to a distribution model

Over the past year, Chill Brands has recalibrated its business from an own-brand model to that of a distribution and route-to-market partner. This shift has established a more diverse and resilient platform for growth.

The Company now operates its Chill Connect retail distribution division under a flexible model tailored to the needs of its brand partners in the following ways:

·    High-growth start-ups - Chill Connect provides consulting services, commercial strategy support and access to its national sales network for a recurring retainer fee;

·    Established brands - Chill Connect secures distribution rights, purchasing and reselling products to retail and wholesale customers, earning a margin from the distribution value chain; and

·    Hybrid arrangements - bespoke structures combining consulting and distribution, depending on the brand's maturity and objectives.

The Company's distribution-led model also offers a number of advantages over a traditional own-brand approach. By working with multiple brand partners rather than relying on a single proprietary product line, Chill Brands reduces concentration risk and gains exposure to a wider range of categories and revenue opportunities. This approach provides diversification, scalability and resilience - insulating the business from regulatory, supply chain or category-specific shocks that can materially affect single-brand operators. It also enables the Company to leverage its expertise, infrastructure and sales network across a portfolio of partners, generating recurring income streams without total exposure to the capital intensity or marketing spend required to build and sustain an individual consumer brand.

Competitive advantage

The Company's prior experience operating its own brands, including its Chill ZERO nicotine-free vape range - which secured listings in WHSmith Travel, Morrisons and other major retailers - has provided valuable insight into the commercial and operational challenges faced by brand owners. This background enables Chill Brands to add value far beyond the role of a traditional distributor.

In addition to its logistics and distribution infrastructure, Chill Brands deploys a nationwide field sales team that provides in-store representation for partner brands. These sales teams engage retail staff, ensure correct merchandising, and maximise product visibility at the point of sale - delivering an advantage over wholesale-only competitors.  Moreover, the Company's large global partners possess the scale and compliance capability to adapt to evolving regulation in the nicotine alternatives space. This dynamic creates opportunity - regulatory change now serves as a catalyst for innovation rather than a threat to operations.

Many traditional distribution models overlook the importance of selling directly into independent convenience retail, instead focusing primarily on large key accounts or relying on decentralised wholesaler and cash and carry networks. Chill Brands' model places greater emphasis on direct engagement with independent retailers, a channel that represents a substantial share of UK FMCG sales and acts as an early proving ground for new products. By establishing distribution at this level, the Company helps brand partners to build market presence, drive repeat purchase behaviour and generate meaningful sales data before scaling into national accounts. This bottom-up approach creates a stronger foundation for sustainable growth and ensures that consumer demand is firmly established before brands commit to the higher costs and complexities of major retail listings.

Financial model

Chill Brands' diversified model generates income from multiple sources. Under consulting and service agreements the Company earns recurring retainer fees. Under distribution partnerships it generates revenue from a more traditional transaction flow, purchasing and selling products to capture margin through the distribution value chain.

Growth in these areas requires working capital investment in inventory, warehousing and personnel. While these initiatives increase near-term costs, they build the foundation for scalable, recurring income as the Company deepens its partnerships and expands volumes.

As part of this strategy, Chill Brands intends to work increasingly closely with select brand partners, evolving relationships from that of supplier and customer into long-term strategic collaborations that align mutual interests and create sustainable shared growth.

Operational streamlining

As part of its strategy to focus resources on activities that deliver the highest return on investment, Chill Brands has now substantially eliminated spending associated with its former US operations. This division historically cost the Company in excess of US $650,000 per year while delivering limited commercial benefit.

The closure of these activities marks a decisive step toward a leaner and more efficient operating structure. By redeploying capital and management focus to the UK and European markets - where the Company has established strong brand partnerships and clear routes to growth - Chill Brands expects to generate better value for shareholders.

Growth strategy

In recent months, the Company has announced a series of key commercial agreements with leading international brands, establishing a strong platform for expansion. Alongside these partnerships, Chill Brands has identified several operational initiatives and upcoming product launches that are expected to serve as important catalysts for financial growth.

Wholesale portal

During the final quarter of 2025 the Company will launch an online wholesale platform that allows independent convenience retailers to order products directly from Chill Connect for delivery. This initiative aims to reduce retailers' reliance on traditional cash and carry outlets, which require store owners to spend valuable time away from their businesses and purchase stock in bulk.

By providing a digital ordering platform that is accessible at any time, Chill Brands will offer a faster, more convenient, and reliable route for retailers to source products. Retailers will be able to browse a curated range, place smaller or more frequent orders and benefit from transparent pricing and prompt delivery. This not only saves time and cost but also improves stock rotation and enhances product availability on shelves.

Importantly, the wholesale portal will expand on the direct relationship between Chill Connect and thousands of independent retailers, providing real-time visibility of customer demand and purchasing trends. This data will help the Company and its brand partners respond quickly to changes in consumer behaviour, optimise inventory levels and introduce new products more effectively.

As adoption grows, the platform is expected to significantly increase sales volumes by expanding the number of active retail accounts and streamlining reordering processes. Retailers that previously purchased sporadically through intermediaries and field sales representatives will have a simplified, centralised purchasing solution that encourages regular trade. Over time, this is expected to strengthen brand loyalty, improve sell-through rates and drive consistent revenue growth across Chill Brands' portfolio.

Warehousing and fulfilment

Chill Brands has established its own warehousing and fulfilment centre in the North of England, marking a key step in strengthening its operational infrastructure. Previously reliant on third-party logistics providers, the Company now benefits from greater control over inventory, delivery times and cost management.

Bringing fulfilment in-house provides improved oversight and flexibility across the distribution network, enabling faster response to demand and the ability to create bundled and cross-brand product promotions that increase average order values. For brand partners, it ensures consistent service levels and reliable product availability.

The facility will also support trials of in-house fulfilment for Chill.com, allowing consolidated deliveries that reduce shipping costs and enhance the customer experience. Over time, this development is expected to deliver material improvements in service quality, creating a stronger platform for scalable growth.

Trade compliance division

Looking further ahead, Chill Brands plans to establish a trade compliance division to support brand partners with major retail listings.

When consumer goods companies secure shelf space in national chains, they incur significant costs through listing fees and promotions. However, many face challenges such as out-of-stock events, poor merchandising or inconsistent compliance with retailer agreements.

Chill Brands's trade compliance teams will conduct in-store visits to monitor availability and presentation, ensuring products are correctly displayed and performing as agreed. This will help partners maximise the value of their retail investments and strengthen their negotiating position with major accounts.

In addition to providing in-store support, the development of this division will enable Chill Brands to gather and aggregate valuable UK retail data, both quantitative and qualitative. Information such as product availability, shelf placement, pricing compliance, promotional execution and customer feedback is already compiled into detailed reports and dashboards by existing Chill Brands teams. This data will provide brand partners with actionable insights to guide decision-making, optimise marketing spend, and improve the effectiveness of future retail campaigns.

The Company is currently in the early stages of discussions with several prospective brand partners regarding the provision of this service. Initial feedback indicates strong demand from consumer goods businesses that wish to gain greater visibility and control over their in-store execution. Given the significant investment that brands make to secure and maintain retail listings, the Board believes that a trade compliance service of this nature could become a valuable and complementary addition to Chill Brands' wider distribution offering.

Chill.com marketplace

The Chill.com marketplace remains an integral part of the Company's consumer strategy. The platform is being updated to focus on stress prevention, reduction, and relief - a targeted and relevant niche within the wellness sector.

The site will be structured across three verticals:

·    Calm - products supporting relaxation, sleep quality and mental wellbeing;

·    Power - products that enhance energy, focus and performance under stress; and

·    Balance - foundational health products such as gut and immune support.

The wellness market is broad and highly fragmented, and many generalist platforms struggle to establish a distinctive identity. Chill.com's updated positioning will better enable it to target a defined and fast-growing consumer need with tailored content, product selection, and marketing. This focus is expected to improve customer acquisition efficiency, strengthen brand recognition and drive repeat purchasing by creating a meaningful point of differentiation within the competitive e-commerce wellness space. This repositioning moves Chill.com away from the broad and crowded general wellness category, giving it a clear identity and unique value proposition as the destination for stress-related wellness products.

The Company has also increased its investment in digital marketing and brand awareness campaigns to drive traffic, build recognition, and encourage repeat purchasing on Chill.com. These activities include performance advertising, influencer and creator collaborations, and targeted content designed to reach consumers actively seeking wellness solutions. Building a successful e-commerce platform requires sustained marketing over time as awareness grows, audiences convert and loyal customer behaviour develops. This ongoing investment is therefore an essential step toward establishing a strong and repeatable revenue base for Chill.com.

e-commerce logistics

Historically, Chill.com has operated on a dropshipping model, with orders fulfilled directly by brand partners. While this approach has enabled rapid scaling of the marketplace, it creates limitations as delivery times can vary, customers may receive multiple parcels for a single order and the Company has limited ability to influence packaging or create value-added offers.

By trialling in-house fulfilment from its new warehousing facility, Chill Brands will gain greater control over the customer experience for brands that elect to stock product for fulfilment by Chill. Orders can be consolidated into single shipments, reducing costs and improving convenience for consumers. The Company will also be able to design curated bundles that bring together complementary products across its partner range, enhancing basket size and margin. This capability further strengthens Chill.com's positioning as a trusted destination for stress-related wellness products and aligns the platform with best practices of leading e-commerce operators.

-ENDS-

Enquiries:

About Chill Brands Group

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is a distribution-led consumer packaged goods company operating across the fast-moving consumer goods ("FMCG") sector. The Company provides comprehensive route-to-market solutions for both established global brands and emerging challenger businesses, encompassing sales representation, logistics, and marketing support. Through its Chill Connect division, Chill distributes products - including nicotine alternatives, functional beverages, and other innovative consumer goods - into the UK convenience and retail sectors. In parallel, the Company operates the Chill.com e-commerce platform, a direct-to-consumer marketplace focused on stress-related wellness products. Together, these operations give shareholders exposure to multiple growth channels across both business-to-business and consumer retail markets.

Publication on website

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