TIDMZOE
RNS Number : 4469U
Zoetic International PLC
25 November 2019
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.
25 November 2019
Zoetic International plc
("Zoetic" or the "Company")
Trading update
Zoetic, the London listed vertically integrated CBD and natural
resources company, is pleased to provide the following update on
its operations and current trading.
Highlights
-- Six new CBD products to be launched in the UK ahead of Christmas
-- Two new flavours for chew pouches to be launched in the US
-- Two new blends introduced alongside larger pack sizes of Chill smokables
-- Introduction of the Chill brand to the UK
-- Further distribution discussions in the US
-- Successful harvest of outdoor crop
United Kingdom
The Company is working towards launching six new CBD products
for sale before the end of 2019, all of which are expected to be
available for sale ahead of Christmas.
Cosmetics
The Company has been developing a range of cosmetics and beauty
products, and its initial launch comprising a hand cream, night
cream, facial serum and lip balm is expected to be available for
sale in the first week of December. Assuming the success of these
products, Zoetic plans to further develop this range, with further
product launches planned during 2020.
Softgels
Also expected to be available for sale in the first week of
December are softgels. Similar to the Company's oral tinctures,
these are oral capsules which will be available in two strengths of
10mg and 30mg with each being sold in packs of 30 softgels. The
softgels are suitable for vegans.
Gummies
During December, Zoetic plans to commence sales of CBD gummies.
These edible sweets will also be available in two strengths of 10mg
and 25mg and will be sold in four assorted flavours. Significantly,
the gummies will be sold under the Company's "Chill" brand and this
will be that brand's first introduction to the UK and Europe. The
gummies are also suitable for vegans.
Massage oil
The Company's massage oil that has been on sale since October
has been very popular and so the management team are exploring ways
to broaden this range. New products are likely to be introduced in
early 2020.
Marketing
In line with these new product launches, Zoetic is expanding and
upgrading its marketing programme. This includes:
-- Launch of an affiliate marketing programme (already live in the UK and with the US to follow)
-- Upgrades to the UK customer website www.zoetic.uk.com (in progress)
-- Attendance at UK/European trade shows during 2020
United States
Chill
Chew pouches have rapidly become the Company's best selling
product by volume. At present, these are available in mint flavour,
but Zoetic has been developing and testing other flavours with the
expectation of adding two new flavours, vanilla and peach, to the
range before the end of 2019.
Preparations for the trial with Mr. Checkout are complete and
Chill products will shortly be available through certain of Mr.
Checkout's distribution partners. Based on correspondence with Mr.
Checkout to date, management is optimistic about the outcome. In
addition, the Company is in discussions with a further major
distributor in relation to the chew pouches. These discussions are
currently at the contract negotiation stage and, assuming a
satisfactory conclusion, will provide the Company with another
valuable outlet for its lead product.
In light of this potential high demand, Zoetic has reviewed its
manufacturing capability. If both of these distributors proceed as
expected then demand may exceed the Company's existing
manufacturing capacity. To ensure there is no disruption to supply,
management has started exploring solutions and these may include
either outsourcing some manufacturing or expanding its in-house
capacity.
As previously announced, the Company will be trialling larger
pack sizes of its CBD smokables and the management's expectation is
that a pack size of 10 has more traction with end customers. That
makes the product more comparable with tobacco product sizes and
takes the smokables out of the novelty category and into
mainstream, and potentially repeat, use. Alongside this trial,
Zoetic is introducing two new blends to its range of smokables -
"Mintz" and "Calm" - both of which will also be available for sale
in December. Mintz is a mint-flavoured blend focused on the menthol
smokers market and Calm is a blend of herbs designed to have a
relaxing effect.
Outdoor crop
Harvesting completed in October and the plants have now been
dried. The dry weight yielded is less than expected, but this is
more than offset by quality of the crop, being at the top end of
expectations, such that the overall value of the crop is very
satisfactory. Although the Company has made a small number of sales
of the biomass (which is the dried but untreated plant), Zoetic
plans to use the vast majority of its outdoor crop in its own
product manufacturing. Biomass prices are relatively low at present
and, as the Company expands its operations and requires more raw
material, it is far more economic to process the biomass for the
Chill and Zoetic brands. Whilst this means the Company will forgo
some short-term revenue from biomass sales, the longer-term impact
on margins should be very positive and it supports Zoetic's "seed
to sale" strategy.
Feminised seeds
In anticipation of commencing sales of feminised hemp seeds next
year, Zoetic has started developing framework arrangements with
seed distributors in the United States and is now well positioned
in this regard ahead of the growing season. The process of
developing and curing the feminised seeds is taking marginally
longer than anticipated and Zoetic now expects its first high
quality feminised seeds to be ready at the beginning of 2020,
having previously expected the seeds by the end of 2019.
Notwithstanding this additional time, the Company remains on target
to make its first sales ahead of the 2020 growing season and to
reach maximum capacity at its indoor facility in DeBeque in the
coming months.
Operating costs
Notwithstanding this expansion of activities in the UK, the
Board continues to identify further cost savings such that the
overall operating costs of Zoetic remain in line with the
expectations set in the trading update announced on 4 October 2019.
Further details will be provided at the time of the announcement of
the Company's interim financial results for the period to 30
September 2019, next month.
Commenting, Nick Tulloch, Chief Executive of Zoetic, said:
"The development of six new products in the UK has taken
considerable effort from the team in both the UK and US. The
primary target was to ensure that the cosmetic and beauty range was
available for sale ahead of the Christmas period and I am delighted
that we are on track for that. Furthermore, the impending launch of
our first Chill-branded product in the UK is an important
milestone. In conjunction with these product launches, we are
upgrading and improving our sales and marketing capabilities in the
UK and Europe and investors should expect to see several changes
here in the coming months.
"In our US division, the popularity of our chew pouches is
surpassing expectations. This has meant that we may need to address
manufacturing capacity earlier than we expected, but it is
paramount that we are able to meet demand and the team in the US
are already well advanced in examining options in this regard. In
the meantime, as we look forward to commencing sales of feminised
seeds next year, our outdoor farming operations have produced a
successful outcome and we are now positioned to manufacture
products with our own source of CBD."
**ENDS**
Enquiries
Zoetic International plc +44 (0) 1738 472 029
Nick Tulloch
IFC Advisory Ltd +44 (0) 20 3934 6630
Tim Metcalfe
Graham Herring
Florence Chandler
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