Reed`s, Inc. - Reeds, Inc.

Reed’s, Inc. Making the Best Sodas in the World… Naturally September Investor Presenta6on SAFE HARBOR STATEMENT Some por6ons of this presenta6on, par6cularly those describing Reed's goals and strategies, contain "forward-­‐looking statements." These forward-­‐looking statements can generally be iden6fied as such because the context of the statement will include words, such as "expects,” "should," "believes," "an6cipates" or words of similar import. Similarly, statements that describe future plans, objec6ves or goals are also forward-­‐looking statements. While Reed's is working to achieve those goals and strategies, actual results could differ materially from those projected in the forward-­‐looking statements as a result of a number of risks and uncertain6es. These risks and uncertain6es include difficulty in marke6ng its products and services, maintaining and protec6ng brand recogni6on, the need for significant capital, dependence on third party distributors, dependence on third party brewers, increasing costs of fuel and freight, protec6on of intellectual property, compe66on and other factors, any of which could have an adverse effect on the business plans of Reed's, its reputa6on in the industry or its expected financial return from opera6ons and results of opera6ons. In light of significant risks and uncertain6es inherent in forward-­‐looking statements included herein, the inclusion of such statements should not be regarded as a representa6on by Reed's that they will achieve such forward-­‐looking statements. For further details and a discussion of these and other risks and uncertain6es, please see our most recent reports on Form 10-­‐KSB and Form 10-­‐Q, as filed with the Securi6es and Exchange Commission, as they may be amended from 6me to 6me. Reed's undertakes no obliga6on to publicly update any forward-­‐looking statement, whether as a result of new informa6on, future events, or otherwise. NYSE MKT:REED 2 Company History:
World’s First Commercially Brewed Soda
Reed’s Culture
Club Kombucha is
launched!
Virgil’s Orange
Cream Launched
Launched
Reed’s ice
cream and
expanded
candy line
Introduced additional
varieties of Reed’s
Ginger Brew’s
Purchased
Virgil’s Root
Beer brand
Virgil’s
Black
Cherry
Cream
Soda
launched
Expanded
Virgil’s
product line to
include Cream
Soda and new
packaging
Reed’s
introduced to
marketplace
Products
received trade
industry
Reed’s goes
recognition
national
Co-pack
facility
opened
Management &
sales team
strengthened
Acquired China
Cola, launched
Reed’s ginger
candy and
opened the
Brewery in LA,
CA
NYSE MKT:REED Reed’s Natural
Energy Elixir
launched
Reed’s
Nausea
Relief
Expansion of
Virgil’s brand: Diet,
draught sodas &
Real Cola
Reed’s Acquires
Sonoma Sparklers
Ginger Health Proper6es •  One of the most researched natural ingredients – In addi5on to the desired flavor of ginger, studies conducted on ginger have discovered the following: – 
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Improves Diges6on Relieves Nausea High in An6oxidants An6-­‐Inflammatory Benefits Effec6ve in Irritable Bowel Condi6on An6-­‐Cancer in a number of recent medical studies Be_er than Dramamine for mo6on sickness in medical tests Used for arthri6s in Europe Cold remedy in Chinese Medicine •  Over the past year 2 million pounds of fresh ginger went into the produc6on of Reed’s products NYSE MKT:REED 4 Core Product Assortment Reed’s Ginger Brews
Reed’s Rx Energy Elixir
Candies &
Ice Cream
Virgil’s
Virgil’s Zero
NYSE MKT:REED China Cola
5 Carbonated Soc Drink Industry Overview •  Natural premium carbonated soc drinks (CSD) are a steady and growing segment of the $60 billion CSD market na6onwide •  Crac sodas, a subset of natural premium CSD, are gaining new recogni6on, similar to crac beers •  The trend in grocery stores is to expand the offerings of natural and premium products •  Reed’s is established as the #1 player and has the scale and capability to fulfill these direct customer needs throughout grocery stores na6onwide NYSE MKT:REED 6 Company Growth Drivers •  Core Soda Brands: Reed’s Ginger Brews and Virgil’s Sodas represented approximately 71% of 2013 sales and are growing at 15-­‐20% annually •  Reed’s Culture Club Kombucha probio6c tea represented approximately 10% of sales in 2013 and is an6cipated to grow approximately 40-­‐50% this year -­‐ currently #2 in market share •  “Other” product category, that includes private label, candy and non-­‐core beverage assortments, is expected to be be flat versus last year NYSE MKT:REED 7 Core Brands 8 Distribu6on Channels
Accounts
Natural
Gourmet & Specialty
Grocery
Club Stores
Convenience stores, restaurants, delis, mom & pop shops
NYSE MKT:REED 9 Fastest Growing Brands: AC Nielsen NATURAL FOODS CHANNEL –  Reed’s/Virgil’s #1 selling soda in Natural Foods –  Reed’s Extra & Virgil’s Root Beer are the #1 & #2 best selling in Natural Foods (5 of the Top 10) MAINSTREAM GROCERY CHANNEL –  Fastest growing premium crac bo_led soc drink in mainstream supermarkets according to AC Nielsen supermarket data –  Reed’s/Virgil’s driving all category growth growing unit volume and retail revenue +56% and +31% respec6vely, while the total premium CSD category is -­‐0.05% on units and +6% on retail revenue NYSE MKT:REED 10 Core Brand Opportuni6es •  Increase consumer awareness •  Expand product placements and number of Supermarkets in Natural and Mainstream that are carrying Reed’s products •  Expand distribu6on network by adding direct store delivery (DSD’s) to service these accounts and open up the Food service, Convenience and general up and down the street business •  Develop addi6onal brands and brand extensions •  Enhance product margins by gaining economies of scale for purchasing and manufacturing •  Con6nue to grow and op6mize the sales force to manage rela6onships with distributors and retail outlets NYSE MKT:REED 11 Driving Consumer Demand Reed’s creates consumer demand through: –  First na6onal TV adver6sing campaign launched in July of this year –  In-­‐store sampling programs –  Ac6ve and ongoing public rela6ons efforts –  Adver6sing through store publica6ons –  Targeted magazine placements –  Social Media –  Par6cipa6ng in large public events as sponsors NYSE MKT:REED 12 Snoop Dogg Mind Gardens Tour (Snoop Dogg has 29+ million Facebook fans and over 11 million TwiNer Followers) 13 Life is Good – 30,000 person benefit in New England 14 Taste of Soul – 300,000 people 15 Private Label •  In 2009 Reed’s began producing private label products for some of the largest supermarket chains in the country •  Private label business improves plant u6liza6on •  Over 80 new beverages have been developed •  Allows Company to leverage product development and manufacturing exper6se •  Has built tremendous partnerships with some of the largest retailers in the country NYSE MKT:REED 16 Private Label Opportunity •  Con6nue to add more large chain retailers •  Con6nue to increase the number of products we sell to our exis6ng private label customers •  Every sales call for private label becomes a branded sales call and every branded sales call becomes a private label sales call •  Increases opportunity to open new doors for both Reed’s soda and its private label products NYSE MKT:REED 17 Kombucha – Latest Product Launch •  In 2012, Reed’s entered the Kombucha market •  Kombucha is a probio6c fermented tea that dates its origin back thousands of years •  Among consumers, Kombucha is believed to have healing and cleansing characteris6cs •  First year sold 200,000 cases and penetrated 50% of natural foods stores •  Landed Krogers, Wegmans, Fresh Market, Giant Eagle and Jewel-­‐Osco supermarket chains •  Opened DSD distributors in the Midwest, NYC, Maryland and San Francisco •  Established distribu6on with Lassonde – one of Canada’s largest food companies •  Reed’s Kombucha is now 2nd in market share NYSE MKT:REED 18 Kombucha Flavor Offering •  Eight flavors of Kombucha –  Coconut Water Lime –  Cabernet Grape –  Pomegranate Ginger –  Mango Passion Ginger –  Goji Ginger –  Hibiscus Ginger Grapefruit –  Lemon Ginger Raspberry –  Cranberry Ginger NYSE MKT:REED 19 Kombucha Product Assortment NYSE MKT:REED 20 Kombucha Plan •  Growth through new doors and addi6onal flavors in exis6ng doors •  Add more DSD distributors around the country •  Increase Consumer awareness through in store demos, magazine adver6sing, Social Media •  Partner up with supermarket chain marke6ng campaigns NYSE MKT:REED 21 Kombucha Opportunity •  The refrigerated juices and func6onal beverages segment grew by approximately $200 million in 2012 to an es6mated retail market of approximately $600 million according to SPINS data •  Kombucha comprises the overwhelming majority share of this explosive growth and comprises most of the segment •  Kombucha is part of the growing probio6cs market •  One company dominates the sales landscape; Reed’s is the first real contender and is now number two in the rapidly growing Kombucha space NYSE MKT:REED 22 Second Quarter 2014 Financial Highlights •  Net revenue increased 18% to a record $11.2 million •  Company achieved net income of $633,000 versus a net loss of ($494,000) •  Earnings per diluted share of $0.05 versus loss of ($0.04) per diluted share •  Gross profit margin increased to 33% from 26% •  Gross profit increased 51% to $3.7 million •  Modified EBITDA was $1.1 million during the 2014 second quarter versus a nega6ve $100,000 during the same period last year NYSE MKT:REED 23 Second Quarter 2014 Opera6onal and Marke6ng/Distribu6on Highlights Reed's Ginger Brew sales increased by 34% Reed’s Culture Club Kombucha sales increased by 35% Virgil's crac soda sales increased by 10% Reed's and Virgil's premium crac sodas are now authorized at SpartanNash stores throughout the Midwest •  Reed's and Virgil's premium crac sodas are now authorized at Food Lion grocery stores in the Mid-­‐Atlan6c and Southern states •  Reed's announced the rollout of Reed's Culture Club Kombucha into Dierbergs throughout Missouri and Illinois •  Reed's announced a new distribu6on partnership with Haralambos Beverage Company in Southern California • 
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NYSE MKT:REED 24 2014 Outlook •  The Company an6cipates revenue growth of 15-­‐20% in fiscal 2014* •  Core brands (Reed’s & Virgil’s) are expected to grow 15-­‐20% •  Kombucha is expected to grow 40-­‐50% •  Our “Other” product category, that includes private label, candy and non-­‐core beverage assortments, is expected to be approximately flat versus the prior year •  EBITDA is expected to range between $1.5 million to $2.0 million for the year •  The Company expects to generate a modest net income *Outlook as of Q2 2014 earnings announcement (8/12/14) NYSE MKT:REED 25 ($ in millions)‫‏‬
Reed’s Revenue History NYSE MKT:REED 26 Gross Profit Contribu6on Millions $ NYSE MKT:REED 27 SG&A as Percentage of Sales NYSE MKT:REED 28 Senior Management Team • 
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Christopher J. Reed, Founder/Chairman/CEO -­‐ Mr. Reed founded Reed’s in 1987, and has served as the Company’s Chairman, President and Chief Execu6ve Officer since its incorpora6on. Mr. Reed has been responsible for the Company’s design and products, including the original product recipes, the proprietary brewing process and the packaging and marke6ng strategies. Mr. Reed received a B.S. in Chemical Engineering in 1980 from Rennselaer Polytechnic Ins6tute in Troy, New York. Larry Tomsic, Interim CFO -­‐ Mr. Tomsic is a Cer6fied Public Accountant and has extensive experience as a chief financial officer, controller, and auditor, providing exper6se to public, private and non-­‐profit companies. Mr. Tomsic served as Chief Financial Officer of LiveDeal, Inc. NASDAQ (LIVE), a provider of internet based website development, web hos6ng and adver6sing services. He worked as a consul6ng CFO partner with B2BCFO and as Controller with Alliance Residen6al. Addi6onally, he served as CFO for John R. Wood, Inc. a luxury real estate broker. Mr. Tomsic received a Bachelor’s degree in Accoun6ng from the University of Delaware and a Master’s degree in Business Administra6on from the University of Denver. Mr. Cohane, SVP of Sales and Marke5ng – Mr. Cohane has been with the Company since 2007 and is responsible for leading and coordina6ng all aspects of Reed’s sales, distribu6on and marke6ng efforts. Neal’s experience includes over 20 years with beverage giants Coke and Pepsi as well as the successful start up South Beach Beverage (SoBe) -­‐ which Pepsi bought for $370 million in 2001. Mr. Cohane holds a B.S. degree in Business Administra6on from Merrimack College in North Andover, Massachuse_s. Management team owns approximately 20% of outstanding stock NYSE MKT:REED 29 Stock and Market Informa6on Ticker REED Exchange NYSE Shares Outstanding 13.1 Million Float 8.7 Million Recent Price $6.02 Market Cap $79 Million Average Daily Volume (3 Month) 58,000 52-­‐Week Range $4.26 -­‐ $8.98 Price informa5on as of close on 8/29/14 – Source: Yahoo Finance NYSE MKT:REED 30 Thank you for your par5cipa5on! Chris Reed, Founder & CEO Reed’s, Inc. [email protected] Ph: 800-­‐99-­‐REEDS ext. 10 NYSE MKT:REED 31