Jones Soda Plots Path Forward Under New Leadership

Last month, Jones Soda reported 17% revenue growth, up to $3.5 million, in a turnaround that reversed 18 months of declining sales. For the company, the earnings report signaled the end of a dark period for the brand and, hopefully, the beginning of a return to past glory for the Seattle-based craft soda maker.

The growth was in large part spearheaded by new CEO Mark Murray, the former president of JGC Foods who was initially named president of Jones in September before being promoted to the chief executive role last month. He is hoping a back to basics approach will spark a resurgence for the ubiquitous and colorful soda brand.

Murray was initially hired by interim CEO Jamie Colbourne in May as an independent consultant tasked with developing a three-year strategic redevelopment plan. Coming on board, Murray witnessed Jones in a squeeze: the company’s quarterly revenue had been consistently down for a year, longtime CEO Jennifer Cue had stepped down from her post in April, and the company laid off nine employees and furloughed four others, including the bulk of its sales team, in an effort to conserve capital and reduce costs amid restructuring.

Speaking to BevNET in May, several former Jones employees described the company as “dysfunctional,” noting that the brand had been slow to respond to changing consumer trends, struggled due to a lack of innovation and that leadership did not provide significant support for the sales team. The challenges persisted for months, despite an influx of cash from CBD portfolio company HeavenlyRx Ltd., which took a 25% stake in Jones in 2019.

“Jamie came in and had to reset the organization and kind of downsize and scale it back from not only a people perspective but also a spending perspective, because at the time, like most companies, it was about just preservation of cash flow,” Murray said. “So when I got there, everything was on hold mode until we started putting together a plan to move forward.”

Though COVID-19 was the impetus to launch these cost saving measures, Murray acknowledged that the company had suffered from a “lack of focus on the core business” for a long time before the pandemic. Among the issues were, despite the brand’s legacy and strong consumer awareness, there was a significant lack of marketing spend with almost no digital or social media presence.

Jones’ approach to the market had also fallen into disrepair, Murray noted, as there were sizable regions with almost no retail presence. The launch of Lemoncocco, an Italian-styled lemon and coconut fresca, in 2015 also led to some of the disorganization as focus was drawn away from the core Jones brand despite the line never gaining significant traction.

To right the ship, Murray said his three-year plan includes rebuilding the sales operations and investing in marketing campaigns to rebuild brand equity. Jones has since taken initiative to develop action plans for its distribution partners, both to give them guidance but also to create accountability and to encourage strong performance. In May, Jones hired Dan Buchanan as director of sales. Buchanan previously held the same position at Utz Quality Foods. The company has also worked to strengthen its relationships with retailers and has driven sales through promotions and standard merchandising.

“I realized you’re not going to be able to save your way out of this, you’re going to have to grow your way,” he said.

Murray said that because Jones’ operations had shrunk so much by the time he came on board, the brand’s return to growth has been relatively quick due to the focus on the core business essentials that weren’t being carried out before.

Founded in 1986, Jones Soda flourished in the 1990s as it found a niche among Gen X consumers, particularly those in the alternative and extreme sports subcultures. Positioned as a naturally sweetened alternative to mainstream soda competitors like Coke and Pepsi, Jones also benefited from its robust and often quirky product portfolio (with flavors such as Bacon and Turkey & Gravy accompanying more traditional SKUs like Cola and Root Beer).

As Jones reinvests in marketing, Murray’s plan partially takes Jones back to its roots. This summer, the company enlisted pro skateboarder Tony Hawk — a former brand ambassador back in the 90s — to take a 10-day cross-country van tour with his family to promote the company. Murray called the “It’s My Craft” campaign a success not just from a consumer perspective (Hawk has a sizable social media presence with 6.1 million followers on Instagram alone), but it also worked as an internal morale booster signalling to employees that “Jones is back.”

The campaign was also well-timed to the August release of Tony Hawk Pro Skater 1+2, a reboot of Hawk’s best-selling video game series that garnered considerable attention for the skater — some of which bled over to Jones, Murray said.

“I think [Hawk] really was a shot in the arm for the brand,” Murray said. “And for the organization too, because the people within the organization are going like, ‘wow, this is big. We’re actually putting their money where our mouth is here and we’re going to actually invest in the business.’”

Many Jones consumers today are the adults who first adopted the brand as teenagers decades ago, Murray said, but the brand is also looking towards the next generation of Gen Z shoppers. While skaters are one subset the company plans to target, there are other niches as well Jones may be suited towards, including gamers. For millennials, the company will seek to play up the sodas’ versatility as a mixer, with plans to release variety packs in the near future.

In retail, Murray said the brand needs to look beyond the convenience store and begin focusing on additional channels to drive growth, including food service and club. Former Jones employees said in May that declining sales in 7-Eleven had led the company to lean heavily on chains such as Kroger and Walmart. Looking ahead, c-stores will continue to play a pivotal role, Murray said, but much of the runway is elsewhere including in stores such as Costco and by creating new products such as slurpee flavors for takeout restaurants.

Though Jones has begun rebuilding its sales team, much of that part of the business will be outsourced. The company has hired several brokers which specialize in food service and national accounts, Murray said.

While Jones is undergoing a significant transformation, one part of the business that will remain unchanged is the product itself. Despite consumer trends largely turning against sugar, Murray said the company has no plans to pivot or develop new better-for-you products, instead pointing to the fact that the company uses real cane sugar as a sweetener rather than corn syrup. While Jones does offer diet options, Murray said he believes the core of the brand is in indulgence. And although CSDs have been in decline for years, craft soda as a subcategory has continued to grow, he noted. Rather, Lemoncocco will be the brand’s health and wellness play (though that product is sweetened) and the company plans to expand that line in the near future.

“There’s always going to be room for indulgent products and we make no bones about it,” he said. “Especially during COVID, we see people reaching out for these kinds of items as a special treat, you know, maybe it’s movie night at the house or stuff like that. So it’s an indulgence, it’s a treat.”