Jones Soda Co. (Jones Soda) develops, produces, markets, and distributes premium beverages that the company sells and distributes primarily in the United States and Canada through its network of independent distributors and directly to its national and regional retail accounts.
The company also sells products in select international markets. Its products are sold in grocery stores, convenience and gas stores, on fountain in restaurants, ‘up and down the street’ in independent accounts, such as...
Jones Soda Co. (Jones Soda) develops, produces, markets, and distributes premium beverages that the company sells and distributes primarily in the United States and Canada through its network of independent distributors and directly to its national and regional retail accounts.
The company also sells products in select international markets. Its products are sold in grocery stores, convenience and gas stores, on fountain in restaurants, ‘up and down the street’ in independent accounts, such as delicatessens, sandwich shops, and burger restaurants, as well as through its national accounts with several large retailers. The company refers to its network of independent distributors as its direct store delivery (‘DSD’) channel, and it refers to its national and regional accounts who receive shipments directly from it as its direct to retail (‘DTR’) channel. The company outsources the manufacturing process to third-party contract manufacturers. The company also sells various products online, including soda with customized labels, wearables, candy, and other items, and the company licenses its trademarks for use on products sold by other manufacturers. In addition, during 2022 it developed and began to license a THC infused cannabis products under the ‘Mary Jones’ brand name.
Products
The company’s strategy is to continue to focus on its core brand, Jones Soda, while also investing in additional initiatives, including fountain related beverages and the Mary Jones brand for cannabis infused sodas, edibles, and syrups. Its product line-up consists of the following:
Jones Soda
Jones Soda is its premium carbonated soft drink. The company sells Jones Soda in premium glass bottles and cans, with labels featuring photos sent to it by its consumers. Over one million photos have been submitted to it. Additionally, it releases various label campaigns that celebrate its consumers and the positive impact such consumers have on the world. Its products are made from high quality ingredients, including cane sugar and natural colors and flavors when possible. The company also sells Jones Soda in more traditional flavors such as Cream Soda, Cola, Root Beer, and Orange & Cream.
Fountain
Drawing inspiration from its traditional bottles, its fountain equipment and cups are branded with an engaging collage of consumer-submitted photos that are inspired by the business themes of its retail partners and the regions in which they are located. The company’s fountain offerings include traditional flavors, such as Cane Sugar Cola, Sugar Free Cola, as well as cane sugar sweetened Ginger Ale, Orange & Cream, Root Beer, and Lemon Lime. Rounding out the lineup are two of its most popular cane sugar flavors, Berry Lemonade, and Green Apple. It has developed other products in select markets that include teas, lemonade, vitamin enhanced waters, hydration beverages, as well as naturally flavored sparkling waters.
The company continues to see growing interest from larger quick service restaurants, corporate accounts, retailers, celebrity chefs, and a variety of other outlets looking for differentiated offerings in their fountain soda.
Mary Jones
The company markets and licenses through indirect subsidiaries its Mary Jones brand in California and Washington. These licensed products include 10mg Cannabis-Infused sodas and 100mg cannabis-infused soda packaged in a 16oz, 10-serving can. The flavor of these beverages is based on the Jones Soda original flavors. Additionally, in February 2024 the company received approval to operate in Ontario, Canada, and intends to launch in that province 10mg THC infused sodas in a variety of flavors. Manufacturing and distribution of Mary Jones products in Canada is intended to be done through Tilray Brands, Inc. The new Mary Jones products continue Jones Soda's tradition of using photographs submitted by consumers on their bottle labels and printing quotes from fans under the bottle caps.
The company intends to expand both the products offered under the Mary Jones brand as well as the number states and Canadian provinces it offers such cannabis infused products in.
Co-Brand and Private Label Products: From time to time, when opportunities meet its required financial and operational metrics, the company utilizes its industry expertise to provide private label products for customers.
Sales Growth
The company focuses on sales growth through execution of the following key initiatives: expand the Jones Soda glass bottle business in existing and new sales channels; expand its fountain program in the United States and Canada; and grow the new Mary Jones brand of Tetrahydrocannabinol (THC) and cannabidiol (CBD)-infused beverages, edibles, and other related products, as well as the number of states where such products are sold.
Product Distribution and Sales Strategy
Premium Soda Beverages
The company’s core products are distributed and sold throughout the United States and Canada and in select international markets. Its primary distribution channels are its direct store delivery (DSD) channel (sales and distribution through its network of independent distributors) and its direct to retail (DTR) channel (sales directly to national and regional retail accounts). The company also have its online channel for internet sales of various products. It strategically builds its national and regional retailer network by focusing on distribution systems. In building and expanding its DSD channel, the company also considers international markets and look for regions that data suggests have a high affinity for the Jones brand and can be pursued within its financial resources.
Part of its strategy in building its distribution system is to blend its DSD and DTR distribution channels, delivering different offerings through alternate channels. In addition to determining the most advantageous distribution channel, it works to ensure that its products are placed on shelves that are normally restricted to national mainstream brands and in the cold aisle of stores, thus providing it access to the important ‘take home market.’ The company has also introduced the JONES Cane Sugar Fountain program through a network of fountain distributors in select regions across the United States and Canada to provide its premium products and uniquely customized fountain equipment.
For the year ended December 31, 2023, A. Lassonde Inc. ('Lassonde'), one of the company's independent distributors and the company's top account by revenue represented approximately 20% of revenue. The company intends to continue to expand its distributor network and DTR accounts, which the company intends will result in a decreased dependence on any one or more of the company's independent distributors or national retail accounts.
The company contracts with independent trucking companies to have the company's product shipped from the company's contract manufacturers to independent warehouses and then on to the company's distributors and national retail accounts. Distributors then sell and deliver the company's products either to sub-distributors or directly to retail accounts.
DSD (direct store delivery)
The company maintains a network of independent distributors across the United States and Canada. It has also secured distribution in select international markets and are evaluating other international opportunities for its products. The company chooses its distributors based on its perception of their ability to build its brand franchise in convenience stores, grocery stores, on fountain in restaurants and ‘up and down the street’ in independent accounts such as delicatessens and sandwich shops.
Typically, the company grants its independent distributors exclusive distribution rights in defined territories, which may include invasion fees in the event the company provides any of its products directly to one of the company's national retailers located in the distributor's region.
The company intends to continue its efforts to reinforce and expand the company's distribution network by partnering with new distributors and replacing underperforming distributors. In addition to the efforts of the company's independent distributors in obtaining distribution of the company's products, the company actively seeks to obtain listings for the company's products with key retail grocery, convenience and mass merchandiser accounts, which are serviced through the company's independent distributor network.
DTR (direct to retail)
The company’s direct to retail channel of distribution is an important part of its strategy to target large national or regional restaurant chains and retail accounts, including convenience store chains, mass merchandisers, and premier food-service businesses. Through these programs, it negotiates directly with the retailer to carry its products, and the account is serviced through the retailer’s appointed distribution system (rather than through its DSD network). These arrangements are terminable at any time by these retailers or the company and contains no minimum purchase commitments or termination fees.
Co-Brand and Private Label
The company offers private label products directly to retailers. Its expertise in innovation and managing the manufacturing process allow for efficiencies for both the company and the customer. The company is able to produce these products with minimal sell through risk and ship them through its network of independent trucking companies or a preferred partner of the customer.
Fountain Distribution
The company sells direct to certain retailers in addition to working with a network of fountain distributors in select focus regions within the United States and Canada to provide its premium products, including its fountain and slush products, and uniquely customized fountain equipment.
Sales
The company's premium beverage products are sold throughout the United States and Canada, primarily in grocery stores, convenience and gas stores, on fountain in restaurants and 'up and down the street' in independent accounts, such as delicatessens, sandwich shops, and burger restaurants, as well as through the company's national accounts with several large retailers. In 2023, sales in the United States represented approximately 81% of total sales, while sales in Canada represented approximately 19% (primarily through the company's distributor relationship with Lassonde).
Brand and Product Development - Premium Soda Beverages
The company continues to expand its Jones Cane Sugar Fountain program that allows for the company's Jones Soda product line to be offered 'on tap.' The company partners with restaurants and grocery stores that prefer to offer new innovative and pure cane sugar fountain opportunities for their guests and the company utilizes a select group of fountain distributors to service these retail customers.
The company's strategy is to focus on innovative products that will be accepted by consumers, retailers and distributors. This is accomplished by keeping open dialog directly with the company's consumers through its website, blogs and social media, as well as with the company's retail and distributor partners to ensure the company are current with consumer trends in the beverage industry.
The company develops the majority of the company's brands and products in-house.
The company recently completed a successful Q4 special release programs where the company sold the products ‘Orange Chocolate' and 'Turkey and Gravy.'
In addition to creating new brands, the company needs to continuously improve its core product line, Jones Soda, as consumer tastes continue to change. The company intends that each new flavor of Jones Soda that the company introduces will be made with less sugar and no artificial colors or flavors whenever possible. In addition, the company continues to re-formulate and re-introduce lower calorie content versions of each of the company's existing flavors of Jones Soda as and when the company has created an acceptable replacement that will appeal to existing customers and attract new customers.
Mary Jones Brand
The company’s Mary Jones Brand is currently marketed and licensed through indirect subsidiaries in California and Washington. It partners with different co-manufacturing and distribution partners in each respective state, region, or province in which it licenses these products.
Brand Marketing
The company’s marketing team has developed brand positioning and brand identity that is an integral asset. It focuses on positioning itself as an alternative to mainstream soda brands and try to focus on locations where such brands are not sold. The company also has a program of sponsoring alternative sport athletes to promote its products in youth alternative sports, including Ultimate Fighting Championship, auto-racing, skateboarding, BMX biking, snowboarding, and skiing. In addition, it completed a program of sponsoring up-and-coming musicians and artists.
Social Media
The company’s core marketing pillar is the open access its consumers have to define the brand through its social media channels and its website at Jonessoda.com. The company actively participate in social media campaigns as a way of direct engagement with its consumers in order to listen to their voices and better understand their issues and changes in consumer trends. Social media represents one of the largest shifts in modern business away from static advertising, and it have had success in creating social media hubs through forums such as Facebook, Twitter, and Instagram. Its consumers have responded by bringing it onto their social media pages and into their lives, creating a personal connection that it believes helps ensure they are actively engaged with its brand and its products.
Competition
The company is in direct competition with Keef Brands, Cann Social Tonics, and Tonik Beverages.
Cannabis Operations
During 2022, the company began to develop, market, and license its cannabis-infused beverage brand under the ‘Mary Jones’ brand name in California to complement its existing soda beverage business. Similar to the manufacturing process with its premium soda products it outsources the manufacturing and distribution of its products to third parties with whom the company enters licensing agreements with concerning its cannabis products being manufactured and sold.
Regulation
The production and marketing of the company's proprietary beverages are subject to the rules and regulations of various federal, provincial, state, and local health agencies, including in particular Health Canada, Agriculture and Agri-Food Canada (AAFC) and the United States Food and Drug Administration (FDA). The FDA and AAFC also regulate labeling of the company's products.
Trademarks, Flavor Concentrate Trade Secrets and Patent Rights
In the United States, the company owns a number of trademark registrations and pending trademark applications for use in connection with its products, including JONES, JONES SODA CO., LEMONCOCCO, and MARY JONES.
Seasonality
The company's sales are seasonal and the company experiences fluctuations in quarterly results as a result of many factors. The company historically has generated a greater percentage of the company's revenues during the warm weather months of April through September.
History
Jones Soda Co. was founded in 1986. The company was incorporated in 2000.
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