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REEDS, Inc. Message Board

  • barbarasf1 barbarasf1 Apr 8, 2013 1:40 PM Flag

    Favorable article on REED in today's LA Times

    Favorable article in today's LA Times business section: "Reed's nears profitability amid thirst for healthful drinks"

    Last year, revenue jumped to $30 million from $25 million the previous year. About $5 million came from private-label sales — bottling Reed's did for other drink makers. The company bottles beverages sold under the Martinelli's and Izze names, among others.

    Consumers are drinking less soda. Beverage Digest, a trade publication, reported that sales of carbonated soft drinks fell 1.2% last year and that consumption of 8-ounce bottles dropped to 9.2 billion cases — down to 1996 levels.

    More people are concerned with soda's link to obesity, diabetes and other maladies, opting for more water and teas, the trade publication noted, even though energy drinks have continued to increase in popularity.

    Reed's wants to set itself apart by offering healthful drinks. A 12-ounce bottle of Coca-Cola contains 140 calories, 39 grams of sugar and 45 milligrams of sodium. In contrast, one of Reed's 13.5-ounce kombucha drinks has 30 calories, two grams of sugar and 10 milligrams of sodium.

    Kombucha accounted for 8% of the company's sales last year, and Reed expects it to generate as much as 15% of sales this year and help the company become profitable.

    The shift to lower calorie drinks with perceived health benefits, or "awakening" as Reed called it, opens the door for his company's niche products.

    "I bet my life on this trend in 1989," Reed said with a laugh.

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    • What is your meaning of pofitable. Look at MENB and tell me what you think REED should trade- $2.50?

    • Weird that the article would refer to Izze and Martinelli's when talking about about private label.Neither case would be private label,but would be licensing or co-packing as Martinelli is a privately held family brand and Izze is of course owned by Pepsi.If they handle the bottling and distribution for Izze near the Reed factory, that is a nice bit of business,but there is not any room for growth away from the plant as Pepsi will obviously have the product produced close to retail to save on shipping and Reeds does not have anymore production facilities .

      Martinelli's is even stranger as they have their own production facilities in California already.In 2011 Martinelli's warehouse facility across from its plant burned down.If they temporarily used Reeds as just a co pack location during the 2011 holiday season that could explain some of the revenue coupled with the low margin, but that would also mean that the company knew well in advance what would be happening in the fourth quarter of 2012, as Martinelli bought an old Birds Eye factory and prepared it to be their new warehouse in 2011.While this would mean there was not a real unexpected account loss in the fourth quarter, it would cause me to question their guidance if it was something they knew in advance and never modified expected fourth quarter revenue projections.

      Despite that I am expecting the stock to be over 6 after they report second quarter numbers and whether it is time to get out again or stick around for the ride should be dictated by how well the Kombucha ends up holding accounts.

      By the way, I am not sure if it has anything to do with Reed's or just new competition in the market (Kevita,Celestial) as a whole, but GT/Synergy Kombucha is on sales at NGVC for 1.89 for the months of April and May.

    • Thx for posting this. We need more good press. GLTA

      Sentiment: Strong Buy

    • The board is not allowing me to post more of the article. Go read it, especially the last section called "Challenges", or someone else please post it. Rising revenue and high hopes for turning a profit this year... one analyst that covers REED and ranks it a buy.

      • 1 Reply to barbarasf1
      • Challenges

        The company, which went public in 2006, hasn't posted a profit for 15 years. It lost $524,000 last year, an improvement over losses of $941,000 the previous year.

        "That's not bad from losing $5 million in 2007," Reed said.

        Consumer sales haven't been high enough to offset the costs of running the company, and revenue from bottling drinks for other companies has been lower than expected.

        Reed said the company hopes to garner as much as $7 million this year from bottling for private labels, which would be a 40% increase over last year.

        He said his high hopes for turning a profit this year are based on rising revenue — it has doubled in three years — and the introduction of new flavors for its kombucha.

        The company also plans to step up promotions to increase its recognition among shoppers.

        Analyst opinion

        Joseph Munda of Sidoti & Co., the lone analyst who covers Reed's, has rated the company's stock a buy.

5.42-0.07(-1.28%)Jan 23 4:01 PMEST

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