TIDMCBX
RNS Number : 1981C
Cellular Goods PLC
21 February 2022
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014, as retained as part of
the law of England and Wales. Upon the publication of this
announcement via the Regulatory Information Service, this inside
information is now considered to be in the public domain.
Press release
21 February 2022
Cellular Goods PLC
('Cellular Goods' or 'the Company')
Strategy and trading update
Product launch on Amazon Marketplace
Board change
Cellular Goods (LSE: CBX), a UK-based wellness brand providing
premium consumer products based on lab-made cannabinoids, provides
the following update on its strategy and trading since the soft
launch of its inaugural product ranges on 1 December 2021.
Review of strategy
Since the appointment of Anna Chokina as Chief Executive on 6
December 2021, the Company has conducted a comprehensive review of
its strategy and go-to-market plans. Drawing on Mrs Chokina's more
than 20 years' leadership experience in the global consumer goods
sector, the review's key conclusions are that:
-- The Company continues to have a significant market opportunity
to establish a differentiated and premium British wellness
brand focused on lab-based cannabinoids with scientifically
proven efficacy, legally compliant provenance and environmentally
sustainable ingredients.
-- Cellular Goods will exclusively focus on wellness products
across its three market verticals, namely Look Better
(skincare), Feel Better (supplements) and Function Better
(recovery).
-- Good progress was made to develop, create and soft launch
a range of high-quality products last December. However,
initial sales of the inaugural products have been below
internal forecasts, principally due to market challenges
that are being addressed with remedial action, as discussed
below.
-- Based on the strategic review, Cellular has accelerated
its retail partnerships and is pleased to open sales of
the Company's Look Better range on Amazon Marketplace
on 21 February, the biggest online retailer in the UK.
-- The Company's marketing campaign has begun, and activities
in February have included the release of a white paper
highlighting the age prevention benefits of cannabigerol
(CBG) and cannabidiol (CBD) in skincare; consumer public
relations has seen Cellular Goods' products endorsed in
Marie Claire and Metro; and the use of influencers to
promote the products. The full-scale marketing campaign
will commence on 1 March, timed with the release of the
serum. This will be expanded to include an outdoor campaign
in the second quarter of 2022 and supported by a strong
digital campaign as well as an influencer push.
-- The Company's face serum product will go on sale on 1
March 2022, supported by a broadscale media campaign.
The Rejuvenating Cannabinoid Serum is the first and only
such product in the UK that uses CBG, scientifically proven
to have amazing ageing prevention properties. The campaign
will drive awareness not only of the new serum product
but of the Cellular Goods brand in general.
-- Four more products are expected to be launched during
2022.
Trading update
On 1 December 2021, the Company introduced an inaugural wellness
range of five Feel Better and Look Better products, less than a
year after its IPO and towards the back end of its planned launch
timeframe. The soft launch, which was developed and implemented
before the arrival of the new Chief Executive, was intended as the
precursor to a full-scale marketing launch in February 2022. It was
also aimed at introducing the Cellular Goods brand and the
Company's product proposition to consumers, as well as to gather
valuable market feedback to inform future promotional activity and
new product development.
Although the Company has gained a highly encouraging customer
response, with a returning customer rate of almost 60% and a 4.7
out of 5 average product rating on independent consumer reviews,
total revenues have been below internal forecasts.
The Company has identified various factors that negatively
impacted sales, including a policy decision by some of the world's
largest social media companies. Google, and Meta's platforms
Facebook and Instagram, prohibit advertising cannabis-derived
products, which has prevented the Company's products from being
promoted there. Cellular Goods' products are entirely based on
lab-produced cannabinoids, are not derived from the cannabis plant
and do not contain any illegal compounds such as THC. The ban
severely constrained the Company's ability to promote its products
to consumers, affecting sales.
In response, Cellular Goods has made significant changes to the
media mix for its upcoming marketing campaign to work around the
limitations imposed by these platforms. These changes required an
overhaul of the original campaign and took time to implement,
resulting in a deferment of the full marketing launch. The Company
continues to lobby Google and Meta for a change in their
policies.
Other factors that impacted sales included the anticipated delay
in the launch of the face serum and a decision to pause sales of
the After-Shave Moisturiser after some batches did not conform to
Cellular Goods' quality specifications.
The Company's cash and cash equivalent balances were GBP7.73m as
at 18 February 2022. The Company has no long-term debt.
Product launch on Amazon Marketplace
Commencing on 21 February, Cellular Goods' skincare products
will go on sale for the first time on Amazon Marketplace as part of
a pilot programme that enables selected cannabinoid products to be
purchased through the platform in the UK. The Company is also in
talks with Amazon to expand the pilot to its Feel Better
(ingestibles) range.
A direct relationship with Amazon will broaden the Company's
ecommerce channels and expand its reach as there is significant
consumer demand for cannabinoid products in the UK, according to
proprietary data from Amazon.
Board change
Alexis Abraham, who founded the Company in 2018 and served as
Chief Executive Officer from its IPO in February 2021 until
December 2021, will step down from the Board on 28 February and
will become a consultant to the Company on an ad-hoc basis.
Anna Chokina, Chief Executive of Cellular Goods , commented: "I
have reviewed the Company's long-term strategy and strengthened its
marketing plans in readiness for our big sales push which is ready
to go live imminently. As a result, we are now more consumer
focused and will be more aggressive in building our revenue base
and market presence.
"I am convinced there remains a major market opportunity to
establish Cellular Goods as a premium British wellness brand. That
said, much work needs to be done to execute this strategy
effectively and realise our vision. Although it will take time for
results of the actions we have implemented to become evident, I
look to the future with great optimism."
The Company will report its half-year results for the period
ending 28 February in late May 2022.
For further information please contact:
Cellular Goods
Anna Chokina via Tancredi +44 207 887 7633
Chief Executive
Neil Thapar +44 787 645 5323
Investor Relations
------------------------------
Tennyson Securities
------------------------------
Corporate Broker
Peter Krens +44 207 186 9030
------------------------------
Novum Securities
------------------------------
Corporate Broker
Colin Rowbury
Jon Belliss +44 207 399 9427
------------------------------
Tancredi Intelligent Communication
------------------------------
Media Relations
Helen Humphrey
Gabriela Amaya Garcia +44 744 922 6720
Edward Daly +44 791 503 5294
Charlie Hobbs +44 786 143 0057
cellulargoods@tancredigroup.com +44 789 755 7112
------------------------------
About Cellular Goods PLC:
Cellular Goods is a UK-based wellness company that provides
premium products based on lab-made cannabinoids. It was established
in August 2018 to develop efficacy-led and research-backed
cannabinoid-powered wellness products. The initial focus is on
three product verticals: Function Better, Feel Better and Look
Better. These three verticals encompass Cellular Goods' premium CBG
skincare and CBD ingestible and topical athletic recovery products,
with the first products launched in December 2021 initially through
the Company's website. The Company's shares are listed on the main
market of the London Stock Exchange. www.cellular-goods.com
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