Chill Brands on disposable vape ban and post-disposable vaping landscape – ICYMI

On Feb 3, 2024

Chill Brands Group PLC (LSE:CHLL, OTCQB:CHBRF)’s chief executive Callum Sommerton discussed the company’s response to the UK government’s proposed ban on disposable vaping products in an interview with Proactive’s Stephen Gunnion.

While the specifics of the ban remain unclear, Chill Brands is already pivoting towards a post-disposable product landscape. Sommerton highlighted the company’s focus on compliance and innovation, emphasising their development of a fully compliant, reusable pod system, which is being accelerated in response to the proposed regulations.

Sommerton also raised concerns about the potential unintended consequences of the ban, such as the growth of a black market for disposable vapes and a possible resurgence in tobacco use. Citing studies and opinions from health and industry organisations, he argued for regulation over outright prohibition.

Stephen Gunnion (SG): You’ve been very quick to come up with a response to the government’s proposed ban on disposable vaping products. Does the proposed ban in its current form include any of the products you distribute?

Callum Sommerton (CS): The government’s ban, or proposed ban, I should say, is frustrating but not entirely surprising. We have prepared ourselves. At this stage, we don’t exactly know what the ban will specifically include or not include. We can take a good guess at that, but this is, at the moment, policy and PR as opposed to draft legislation.

So, we will have to wait and see. But that being said, regardless, we are already starting to, if we hadn’t already, pivot ourselves and position ourselves within the market for a post-disposables landscape, which we’re now sort of careering towards.

SG: You’re accelerating the launch of a fully compliant, reusable pod system. Will you have this in place in time, do you think?

CS: Yeah, certainly, I mean, this was a direction that we were moving in already; it will just move our timeline up a little bit in terms of the government’s response and when we now expect things to happen or not.

We’ve seen that they will provide retailers with a six-month moratorium period once any prohibition comes into effect. And from the ministers’ round robin yesterday morning, they’re expecting to kick off at the start of 2025.

So, there’s a very long lead time on this, in the context of change. It wasn’t all that long ago that we weren’t, in fact, even a vape-facing company. And so, certainly, we’re agile enough to pivot in that time.

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SG: An evolving landscape creates opportunities. Take us through some of the opportunities that you’ve identified.

CS: Above all else, there is obviously a clear opportunity to bring to market a product that is totally compliant, reusable, rechargeable, and contains a degree of novelty. That novelty for us focuses on actually helping people quit nicotine and tobacco rather than just keeping them hooked in a cycle of addiction.

We’ll be revealing much more about the products that we intend to place on the market in due course. But beyond that, I do think this is a sort of watershed moment for the industry, albeit the government’s measures are likely to have the unintended consequence of supporting a black market in disposable vapes.

In the legitimate market, I fully anticipate that we will see certain brands that are perhaps only interested in turning a quick buck and moving on, leaving the market, while those that are interested in longevity, building a business, and building a brand will stay in place.

SG: Do you think that the prohibition is a blunt instrument? Could it create a black market for disposable vapes? And do you think it could also drive people back to tobacco?

CS: I think that is absolutely the risk. And that’s what we’ve seen advocated by the likes of Action on Smoking and Health England. It’s what we’ve seen from the UK Vape Industry Association. But it also echoes what we’ve seen from studies by University College London.

They’ve recognized that a ban on disposable vapes is a blunt instrument and will likely affect millions of UK adults, both smokers and existing vapers, who are then at risk of reverting to tobacco. So, it is a very dangerous scenario.

Already, we see that about 50% of the disposable vapes sold in the UK are done so through illicit markets. And the challenge is, of course, the people who are buying these products as retailers are the same retailers that are quite happy to unscrupulously sell the products to perhaps minors, not performing the relevant age-gating.

If anything, this compounds the problem. You cannot truly regulate a product that is banned. It’s either a ban or regulation. We need to choose the most effective path….