18 October 2023

Supreme plc

("Supreme," the "Company" or the "Group")

Vaping Category Update

Supreme (AIM: SUP), a leading manufacturer, supplier, and brand owner of fast-moving consumer products, today outlines a series of proactive measures within the Group's owned-brand vaping products to seek to mitigate the growing rise of underage vaping as well as reduce the environmental impact of disposable vapes.

As an industry leader, and to ensure its owned brands do not create any interest from underage vapers, Supreme today announces the following proactive measures over the coming months, which it believes should be adopted across the UK vaping market:

1.    Plain packaging: Packaging across its entire 88vape range, from disposables to 10ml liquids, will be immediately assessed to ensure the use of colour is very limited (used only to differentiate one stock item from another) and the packaging is plain and uniform. Supreme does not use images, cartoons or characters on its packaging.

2.    Discontinue all bright coloured disposables: The Company's 88vape disposable range will be switched to either plain black, white or grey hardware with any bright colours discontinued at the earliest opportunity. 

3.   Age-appropriate flavours only: The naming conventions of all flavours across the 88vape range will be simplified, for example "Peach Dream" will be become "Peach" and "Sweet Strawberry" will become "Strawberry" to reduce the shelf appeal for underage vapers. Any flavours which are likely to be more appealing to underage vapers will be removed entirely from the range.

4.   To trade only with retailers with age robust verification: Supreme will increase its 'pre-order' due diligence on all retailers and e-tailers in its network to ensure they expressly confirm that they have robust age verification protocols in place. Supreme will no longer trade with those that cannot comply with this requirement.

5.   Responsible location of products in store: Supreme will strongly recommend to all retailers that their Vaping products should not be located close to confectionery and will work with retailers to find a suitable location in store to avoid underage vapers from coming into contact with vaping products.

6.    Vape disposal bins in store: Supreme is currently rolling out vape disposal units across the entire estate of its largest customer, B&M Retail, in a bid to encourage more responsible disposal of the single use devices.

7.   Government co-operation: Supreme will continue to cooperate with the government in all its efforts to combat underage vaping and would welcome further legislation of the industry, such as those proposed by the Vaping Industry Association who argue that the sale of vaping products should be licenced with substantial fines for those retailers that are found to be selling vapes to underage individuals.

8.    Industry co-operation: Supreme will encourage other vape brand owners that they work with to follow suit.

Sandy Chadha, Chief Executive Officer of Supreme, commented:

"As a business, we are fully committed to eradicating underage vaping so that the industry can get back to its core objective; to support adult smokers to find an affordable, sustainable, safer alternative to smoking. Whilst we believe flavoured vapes are a critical part of many ex-smokers 'quitting journey' as they seek to replace that tobacco taste for something more palatable, we are also desperate to ensure that those flavours do not spark any interest in younger people.

We are fully supportive of any further legislation in the sector and believe it is the right thing to do to begin to transition our business by removing or changing anything from within our product set that could be deemed compromising. As government guidance evolves we may seek to re-assess this approach."

"I would like to go on record to pledge my support to the initiatives currently being recommended to the government by the Vaping Industry Association who argue that licensing the sale of vaping products (similar to alcohol) will directly address the problem such that only reputable and responsible retailers should be permitted to sell vapes in the first place with substantial fines for those that are found to be selling vapes to children."

"Finally, I would also like to highlight the 'black market' or illicit vape market to the government as a core source of vapes for young people given their accessibility and the interest generated by these brands on social media. These illicit vaping products which are non-compliant with UK regulations and have larger tank sizes (meaning they last longer), higher nicotine concentrations and can contain banned products. Unless we stand up to this black market (by stricter border-force and increased investment into trading standards) then even the strictest laws governing the legal vape market won't make a notable change to whether young people choose to vape."

As announced separately today, Supreme continues to trade in line with expectations¹ for the year ended 31 March 2024, which were significantly increased on 26 September 2023. A copy of the Company's trading update issued today is available at:

https://investors.supreme.co.uk/regulatory-announcements/.

¹ Company compiled analyst Adjusted EBITDA² consensus for the year ending 31 March 2024 prior to release of this announcement was £29 million.

² Adjusted EBITDA means operating profit before depreciation, amortisation, share-based payments charge, fair value movements on non-hedge accounted derivatives and exceptional items.

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About Supreme

Supreme supplies products across five key categories; batteries, lighting, vaping, sports nutrition & wellness, and branded household consumer goods. The Company's capabilities span from product development and manufacturing through to its extensive retail distribution network and direct to consumer capabilities. This vertically integrated platform provides an excellent route to market for well-known brands and products.

The Group has over 3,300 active business accounts with retail customers who manage over 10,000 branded retail outlets. Customers include B&M, Home Bargains, Poundland, Tesco, Sainsburys, Morrisons, Amazon, The Range, Costcutter, Asda, Halfords, Iceland and HM Prison & Probation Service.

In addition to distributing globally-recognised brands such as Duracell, Energizer and Panasonic, and supplying lighting products exclusively under the Energizer, Eveready, Black & Decker and JCB licences across 45 countries, Supreme has also developed brands in-house, most notably 88Vape and has a growing footprint in Sports Nutrition and Wellness via its principal brands Sci-MX and Battle Bites.

investors.supreme.co.uk/