The third quarter financial reports of two second-tier CSD companies may offer a cautionary tale to beverage firms considering a partnership with retail giants.
Jones Soda and Cott Corporation announced growing losses in the third quarter of 2008 – with Jones’ losses increasing from $1.5 to $5.3 million for the quarter, and Cott’s losses growing to $90.5 from $3.7 million – and both can trace some of their financial pain to retail shifts at Wal-Mart.
Jones, in its earnings release, blamed their $3 million net revenue drop in part on shrunken direct to retail sales to Wal-Mart resulting from the discontinuation of “certain business” there.
Cott pointed to 95.8 million in asset management costs for their spiking loss, but it wasn’t unaffected by the machinations of the retail giant. Cott’s stock plummeted 39 percent in February after Wal-Mart announced it would narrow Cott’s shelf space in U.S. At the time, UBS Analysit Kaumil Gajrawala noted that Wal-Mart represented about 38 percent of Cott’s total revenue. The private label company’s case volume dropped by 10.3 percent this quarter compared to last while its revenues fell by 9.5 percent.