According to statistics, the global CBD market is expected to grow from $3.67 billion in 2021 to $55.79 billion by 2028, thanks to increasing popularity and broader utilization.
CBD, short for cannabidiol, is extracted from cannabis or hemp and has several benefits, including anxiety relief and pain reduction.
The industry is highly competitive, with dozens of ambitious brands launching every year to take advantage of the general adoption of CBD products. What does it take for a brand to stand out in the CBD sector? Well, a premium domain certainly helps.
In this edition of On the Record, I'm chatting with Callum Sommerton, the CEO of Chill Brands, a leading CBD brand. In 2021, the company secured the Chill.com domain name on a $1.6 million payment plan, which Chill Brands paid off mid-2022.
Here, Callum and I discuss Chill Brands and the acquisition of the phenomenal Chill.com domain name.
Can you tell me about your entrepreneurial background and how it has led to you becoming Chill Brands' CEO?
I started my professional life with a law degree and worked in intellectual property law, helping to protect and expand brands, including luxury fashion houses and tech businesses.
In 2019 I set up two ventures on my own, one in PropTech and the other supporting and advising start-ups on marketing positioning, investor relations, and business development. One of the businesses I found myself working with was Chill (then known as Zoetic International PLC).
After just over a year of consulting, I came on board fully in late 2021 to help them develop their brands in the UK, US, and Europe. I had a strong vision for what I thought the brand could be and should be, and I had also built some close relationships with our investor base in the UK. In April 2022, the company needed to raise money and overcome certain commercial challenges - that's when I stepped into the CEO position and started executing a turnaround plan.
What does Chill Brands do, and what services do you provide?
Chill Brands is a consumer goods company operating two brands in the US and the UK. We're primarily focused on CBD products, but we're planning to expand our ranges with various other natural, functional ingredients.
In the UK, we sell luxury cosmetics and oils/tinctures under a brand called Zoetic (www.Zoetic.com), while in the US and UK, we sell gummies, wellness products, and tobacco alternatives under the Chill brand (www.Chill.com).
You're mainly in the CBD industry; what's the attraction of that industry, and how is Chill Brands innovating?
The cannabinoid industry is a huge growth area, and it's really in its infancy. We didn't start to see CBD products really entering the consumer market until the US passed its Farm Bill in 2018 to legalize the commercial production of hemp. The industry is still rough around the edges, there's lots of legal and commercial uncertainty, but that's typical of completely new product categories and it's why there's such tremendous potential upside.
Chill is slightly different from many of the CBD brands you'll see on the market. We still sell the stable products of tinctures (CBD oil) and cosmetics, but we also have more novel recreational and tobacco alternative products. We produce and sell what we believe is the world's only CBD-isolate-infused herbal cigarette made via our proprietary method. Our gummies are made in partnership with an acclaimed confectionery company, so they are of a higher quality and better taste profile than many others that are just a CBD delivery mechanism.
For us, the next stage of development is looking beyond CBD to other products that induce or support "Chill". Cannabidiol is great, but it's just an ingredient, and we aim to have more diverse offering.
How did you go about acquiring the Chill.com domain?
We'd been exploring ways to expand our online reach for a while when we realized that Chill.com was up for sale.
We made a frankly embarrassingly low initial offer to the broker handling the sale and got into a serious discussion both with the seller and internally about acquiring the asset. We did our due diligence but already understood that if you want your retail business to succeed, location is everything. That's true for physical shops, where the strongest businesses choose prime real estate for their storefront, but it's also true online. If you want to be successful in e-commerce, you need a killer domain. I think of Chill.com as our flagship store, and while there are a lot of other things we need to execute on, we now have that all important piece of the puzzle secured.
As soon as we were comfortable with the investment and figures discussed, we pushed to get the sale over the line as we weren't the only ones interested in Chill.com.
We opted to pay in installments to enable us to continue resourcing the rest of our business while securing the domain. The registration was held in escrow during this time until we made the final stage payment in June 2022.
Why did you opt to acquire the Chill.com domain?
The Chill brand was first conceived in 2019, but in the past, it was operated under TheChillWave.com. In 2021, the capital markets were booming for many CBD companies, and the growth trajectory was very encouraging.
Chill already had a few unique features. One is our CBD-face trademark which is the hallmark of all our products. We named our brand because we wanted it to be synonymous with the net effect of the products - helping people to Chill. What better way to signal our intent to pursue that mission and take it to the mainstream then by acquiring this digital asset?
It was reported that the domain cost $1.6 million. How did you go about determining how valuable the domain would be to your company?
It's very difficult to ascribe a true market value to domains. They're intangible, but I view them no differently than prime real estate. They're really worth what a buyer is willing to pay, but look at the facts - comparable domains have sold for a significant premium to the price we paid, other world-renowned brands bake the word 'Chill' into their advertising campaigns, and the brand itself (notwithstanding our current direction) could be taken in many directions. The universal use of 'Chill' means that there's likely to be an extensive pool of potential buyers for Chill.com, and that gives it life in financial value not only as an anchor for our business but as a standalone digital asset.
Our due diligence process before buying the domain was very robust. While it's hard to quantify a measurable financial impact that exists from just the domain in isolation, it is an essential element of our wider strategy and we continue to monitor our ROI.
With Chill, our ambitions are greater than simply selling some CBD products via the site. Chill.com provides us with a strong foundation from which to expand as we try to aggregate the very best recreational supplements and relaxation products.
You acquired Chill.com using a payment plan. What was the advantage of using a payment plan to secure the domain name?
It allowed us to continue to resource our business and put money into other projects while still gaining use of the domain. The decision was really about the time value of money - being that the balance of our payment could be put towards other potential revenue-generating activities in the meantime.
Between us initially signing for the domain and our final stage payment, the capital outlook for CBD companies (and the cannabis market more generally) really declined. Our share price fell very significantly, and we were operating in a very difficult environment. We ultimately went back to the markets to raise funds in April/May 2022 to generate money for the business but also to complete the transaction.
Given the information and forecasting we had when we signed for the domain, the payment plan was the right decision at the time. If we had known what 2022 would hold, we would likely have paid up front instead.
How does Chill.com fit into your company's product strategy both offline and online?
The domain is a transformational part of our new digital strategy. It's a single-syllable, natural English word that's easy to say and spell. That makes it exceptionally easy for us to relay the site to the consumers.
As we work on SEO and proliferate our brand to a wider section of the consumer market, we're helped along by the fact that our domain is a word that is pervasive in everyday life. I'd encourage anyone to take note of how many times they hear the word chill in popular culture nowadays. If we can introduce them to our brand, we will have seeded a constant and repetitive association with our product offering every time they hear the word. The domain helps with that because not only will those consumers know what Chill is, they'll also know where to go get it.
The domain also acts as an anchor for all our activities, both online and offline. When our products are sold in stores, passed around at an event, or picked up by retail chain buyers, they know where to go to find us.
You've been operating on Chill.com for some time now. What have been the noticeable benefits of operating on Chill.com so far?
We saw an increase in web traffic almost immediately after activating our site on Chill.com. This has grown incrementally month to month ever since. As with all e-commerce, more relevant traffic equals more conversions and, therefore, more revenue.
Until about June/July 2022, we did not start pairing the inherent benefits of the domain with web development and digital marketing initiatives. We're only just starting to maximize the potential on the domain by giving it the care and attention it deserves.
Ownership of the domain has also opened doors to us with partnerships and conversations right across the capital markets and retail food chain. People see that we purchased this domain and know that we're serious about making this work and growing our brand.
It looks like you rebranded to Chill Brands around the same time as acquiring Chill.com. What was your thought process behind the rebranding, and why was Chill.com important for the rebrand?
Chill.com was a transformational acquisition for our entire business. It was the final change made to signal a wholesale shift from the company's original base of activities in oil and gas production. While changing the name was largely semantic, it was also a chance to tie all our efforts to the online destination we're building.
Chill Brands Group is set up as a platform to bring together strong retail business properties. Right now, we are focusing on recalibrating and improving our own Chill and Zoetic brands, but there are lots of other opportunities on the horizon for us to capitalize on.
In a recent statement about the domain, you said, "we intend to maximize the potential of the Chill.com domain by expanding and improving our brand" - can you elaborate on your plans for Chill.com?
In the past, the company tried to target active lifestyles, including rodeo in the US. The products and branding had been matched to the wrong consumer, but were now putting that right and developing a more coherent brand that addresses the relaxation and wellness market. Our target consumers care about their well-being, are seeking authentic experiences, and want to unwind from their busy lives.
We're developing Chill.com and our wider brand to deliver products and media that help people to relax and unwind. We're expanding our own product ranges beyond CBD, and we're welcoming other brands and product categories to our platform as part of a marketplace model. If it's quality and helps you to be cool, calm, and chill, we want it.
All of this will be implemented in the coming few months.
Thanks to Callum for participating in On The Record. To find out more about Chill's product range, visit Chill.com. You can follow Callum on Twitter at @callumsomm, and you can follow Chill at @Chill_CBD.