Reed’s: Growth Plans Outlined in Q4 and Full Year Earnings

Speaking to investors on the company’s fourth quarter and full year earnings report call yesterday, Reed’s CEO Val Stalowir said since completing its three-phase rebrand and company restructuring the ginger beer maker is now focused on accelerated growth in 2019.

Following a rebrand of the core Reed’s line, which debuted at Natural Products Expo West 2019 earlier this month, Stalowir said the company is now looking to add new outlets and improve sales velocity. The company is aiming to expansion distribution “across existing and new channels supported by investment in new brokers, distributors, sales resources, and merchandisers,” he said.

According to Stalowir, Reed’s — funded by $16.2 million raised from an underwritten public offering of shares of its common stock — will increase trade spending and slotting for retail doors with an eye on adding between 5,000 to 10,000 new locations this year, of which 3,000 have already been confirmed. The new accounts include an 1,100 store expansion with Walmart nationwide rolling out next month. The company has also partnered with UNFI to distribute its complete Reed’s line and have expanded in retailers including Price Chopper, Safeway, Circle K, and Costco.

“We’re increasing our trade investment, including upgraded and increased displays, promotions, coupons, point-of-sale, and sampling, which now also include the dedicated team and Reed’s vehicle traveling to various events across the West Coast throughout 2019,” Stalowir said. “Each of these investments are designed to drive accelerated sales and build brand awareness and trial.”

Reed’s reported 10 percent revenue growth last year, led by a 33 percent increase in sales of its Virgil’s line. The company finished 2018 with a 28 percent gross margin for the fourth quarter and full year. The brand reported fourth quarter net sales of $9.6 million. For the full year, net sales grew 1 percent while core brand growth sales grew 8 percent, according to CFO Iris Snyder.

Stalowir said the company now plans to leverage the ketogenic diet trend to further boost sales of its Virgil’s Zero Sugar line. The company will promote the brand by calling out its all natural ingredient label with the slogan “Soda Smarter.” The campaign includes digital and print advertising, social media, trade investment, couponing, promotions, and sampling.

Marketing for the core Reed’s line will focus on the brand’s use of real ginger, with Stalowir noting plans to capitalize on recent negative media attention against competitors like Canada Dry, which was hit with a class action lawsuit last year alleging the product contained less than two parts per million of ginger despite its “Made from Real Ginger” slogan.

“We’re excited to have developed these compelling consumer campaigns and we now have the capital to launch them into the market in a meaningful way for the first time in the company’s history,” Stalowir said.