Reed’s Inc. sees growth at fast casual restaurants ditching undesirable ingredients

“The big established paradigm that we grew up with of the fast food restaurant and the high tech sodas, that paradigm is shifting,”​ Christopher Reed, CEO and president of Reed’s told investment analysts May 11 during the firm’s first quarter earnings call.

He noted that Panera Bread’s recent announcement​ to no longer serve food with artificial sweeteners, preservatives, colors and flavors along with a laundry list of other ingredients “effectively says that [it] won’t be carrying Coke or Pepsi, unless there’s some vast change in what they’re producing for beverages and what chemicals they’re putting into food.” ​

He also pointed to Chipotle’s announcement​ that in addition removing GMO ingredients it is “embarking on a quest to eliminate all of the remaining additives,”​ as support for the larger trend away from conventional sodas and the opportunity it presence craft soda makers.    

“It sounds big and almost too much to hear it from a small $50 million company, but the conversations we’re having right now are: We are the solution, the next generation. We’re the right thing to have as a replacement for your Coke and Pepsi products,”​ Reed said.

He added that “the outreach from fast casual restaurant formats in the U.S. are unparalleled for our company​." However, he added, he is “not at liberty to talk about the specific names of people that are talking to us.”​

To take full advantage of the potential Reed said that the company is developing a fountain program, which will be announced soon.

The company currently is in the fast casual restaurant channel “on a smaller-chain basis,”​ primarily in independent establishments where the owner is more empowered to select beverages for sale, Reed said.

New leadership​

To help the company court this potential growth opportunity, Reed’s has brought on board two more top executives from large beverage companies.

Daniel Miles joined Reed’s as the chief financial officer May 12 and brings with him 20 years of experience at Pepsi Bottling and Miller Coors, where he held senior finance positions in the field and corporate offices.

Mark Costa also joined the company as director of operations and he will report to Mark Beaton, who joined Reed’s two months ago as the chief operation officer.

Costa has 20 years of experience across all levels of the operational supply chain in beverage companies with a focus on improving efficiency through cost reductions, eliminating waste and building plant capacity, according to the firm.

This aligns with Reed’s efforts to “optimize”​ its Los Angeles plant, which includes new equipment and a 66% increase in capacity, according to the firm.

Costa also will work with Beaton to deliver on a three-prong plan to improve sales and margins, including improving capacity and infrastructure; eliminating waste and reducing operating costs; and building operations competencies and skill sets, Beaton said.

Reed said having Beaton and the others come on board “has been such a relief”​ because of their level of experience.

“It is great to have these guys coming in here and giving the whole organization quite an education on the ways and understandings of beverages at the highest level of maybe Pepsi or Miller Coors,”​ Reed said, noting that the addition of these leaders makes him feel like the company has “grown up.”​

Sales results​

In addition to these changes and opportunities, Reed’s is off to a good start for the fiscal year – hitting its first quarter targets.

The firm announced revenues for the period reached $10.60 million compared to the consensus estimates of $10.50 million and earnings per share were 2 cents as expected by analysts.