Zoetic Interntnl PLC - Trading Update
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.
("Zoetic" or the "Company")
· Two major distributors in the US proposing to take on the Company's Chill products
· Trials underway with contract manufacturers
· Launch of CBD gummies in the
· Company on track to commence sales of feminised hemp seeds, including outside of the US
· Recovery of funds from legacy business continues
Chill in the US
Chew pouches remain the Company's best-selling product by volume and the introduction of two new flavours, vanilla and peach, before the end of 2019 has continued the success of this product. In addition, Zoetic introduced two further blends (Mintz and Calm) to its range of Chill smokables.
Progress with Mr Checkout has surpassed expectations with one of its partners, AATAC (a US national association comprised of smaller buying groups), expressing interest in taking both the chew pouches and smokables for distribution to its convenience stores in
In addition, Zoetic has developed interest from New Age Beverages Corporation, a Nasdaq listed distributor of healthy, natural products. New Age Beverages' supplies a number of well recognised brands including Nestea, Xing, Marley, Volvic and
Securing an increase in manufacturing capacity has to date been an impediment to progressing with these distributors, but the Company is now pleased to announce that trials are underway to contract manufacture both the chew pouches and smokables. Furthermore, initial products from these trials have been of very high quality.
Retail prices for both products will remain in the sub-US$10 range and Zoetic will sell to the distributors at around half of that price. Depending on volumes, the Company expects to earn around a 50% gross margin.
Total stores represented by these two distributors are approximately 12,000. The Company's realistic objective is to supply around 500 new stores per month, subject to customer demand and manufacturing constraints, and so management estimate that it is likely to take up to two years for products to be rolled out across the entire network. Zoetic has recently been selling between two and three packs of each of the chew pouches and smokables per store, per day, where they are currently stocked. However, these have been achieved with the products being placed on shelves with multiple other brands. Moving forward, the Company is introducing display cases which hold 48 of its products. These are typically placed on the sales counter and, by increasing brand awareness, management estimates that the introduction of these cases could potentially double daily sales given the prominence they give to the Chill brand and products.
Subject to concluding a successful trial with the contract manufacturers in the coming weeks, Zoetic intends to enter into contracts with both distributors with the target of supplying initial stores by the Spring.
Zoetic / Chill in the
It is the launch of CBD gummies that has generated most interest in recent weeks, including from certain retail chains, and the
In the coming weeks, the
Zoetic has successfully produced feminised hemp seeds and, assuming that further crops bring sufficient volumes and the quality of the seeds is high, the Company plans to start commercial sales in the coming weeks. In preparation for that, Zoetic has registered as a seed distributor in five US states and is also developing a bespoke website to advertise seed sales.
Zoetic's strategy will be to focus on accessing newer hemp markets where it believes pricing will be more robust than in traditional growing regions. One significant development is that the Company has received enquiries from growers outside of the US and it is currently working on the feasibility of enabling supplies to them.
Recovery of funds from natural resources business
The process of recovering capital from the Company's legacy natural resources business continues. As announced at the time of the interim results, the monthly revenue from the
Trading on the OTC
Zoetic's ordinary shares have been trading on the OTC in
Appointment of new financial adviser and broker
Zoetic is also pleased to announce the appointment of
"Our business continues to develop on all fronts and, although competition in the CBD industry shows little sign of abating, our strategy of leading with compelling branding is beginning to show signs of paying off. In both the US and
"The onus is now on us to deliver our products at high volumes and with no compromise on quality. We believe our switch to outsourced manufacturing will achieve this and our trials will be completed in the coming weeks following which our distribution contracts will get underway. In the
"I am also pleased to report the successful production of feminised seeds. Volume is important in this part of the industry and we will wait to produce greater numbers before formally launching our sales programme, but preparations are well underway and shareholders can look forward to further news shortly.
"We remain an early stage business with much to prove but I am pleased with the substantial progress we have made in a little over 10 months from a standing start. This has given us the belief that we can convert our branding and marketing efforts into significant sources of revenue."
Nicholas Malins Smith
This information is provided by RNS, the news service of the
Quick facts: Zoetic International PLC
Market Cap: £39.89 m
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