Jones Soda Co. has been a player in US soda since its founding in 1995, since expanding into CBD and THC beverages.
The Seattle-headquartered company markets and distributes craft soda under the Jones Soda and Lemoncocco brands. Jones Soda’s product range also includes a line of cannabis-infused beverages, which was launched under the brand Mary Jones in 2022.
Jones Soda, however, has been in a fight to regain profitability. In the third quarter to 30 September, Jones Soda posted a revenue of $4.5m, down from $4.8 year on year and a net loss of $0.9m, an improvement compared to its net loss of $1.7m in its third quarter of 2022.
In 2022, as a whole, the company generated revenue of $19.1m, up 29% on a year earlier. It booked a net loss of $6.4m.
In June, Jones Soda named David Knight as its president and CEO. Knight’s career includes roles at PepsiCo, where he was vice president of marketing at Gatorade International and vice president of marketing of Asia Pacific for Quaker Oats.
Most recently, he was CEO and co-founder of SX Latin Liquors, where he built a beverage division that included CBD beverages.
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Just Drinks talked to Knight about his role at Jones Soda and his roadmap for the craft-soda portfolio and cannabis products.
Just Drinks: What is Jones Soda’s growth strategy?
David Knight: We are now focusing back on the convenience channel, where we should have some wins in convenience this year and next. Then, more of an innovation push getting into some other categories.
Delta-9 [Cannabinoid] is a big opportunity for us. We’re looking at a caffeine plus. We tested a Jones plus version, which has got 160 milligrams of caffeine, so kind of the original energy drink, which is caffeine plus natural cane sugar. That has had some great reaction.
Then we’re looking at other opportunities with a low-cal, no-cal play, what other functionality can we bring. We really started a pretty aggressive innovation agenda for both Jones Soda and Mary Jones.
JD: You mentioned you’re going to focus on convenience. What was the focus previously?
Knight: So the brand has been around 27 years, In the very early days, there was like the cool, down-the-street distribution opportunity: delis, corner stores, skate shops, bike shops.
As of about 12 years ago, they [Jones Soda] kind of chased big box retailers so that we’re now at Walmart, Kroger, Target. Those businesses have been doing well but they should have been additive rather than replacing convenience. We’re going back to the drawing board – and convenience, which is both an innovation play and packages play.
We have a great slush capability as well. That’s really started to get some attraction in the convenience channel as an alternative to Coke, Pepsi, etc.
I think we need to understand where we play in the zero-calorie, low-calorie segments. Flavoured sparkling water is a category that we’re interested in bringing our equity of great bold taste. We are looking at other kinds of functionality; as I mentioned, Jones pluses, Jones with caffeine. We think there’s some other functional ingredients that may resonate there.
We’re looking at some new packaging alternatives. Glass bottles have been our mainstay but there’s other packaging formats we are starting to explore.
Just Drinks: How important is the cannabis side of the business?
Knight: We have been in the regulated market in California for nearly two years in 350-plus dispensaries, so that’s a regulated cannabis market. We’ve only recently launched a Delta- 9 alternative and we’re in seven states with probably another 20 to 30 states coming online pretty rapidly. A very small base because we’re literally just starting but an exciting growth opportunity in terms of where that category will end up.
I think it’s probably our number one growth [area] already right now. We’ll have a majority of our focus in terms of driving distribution and then starting to have pull through from the shelves. So yeah, it’s probably our number one priority right now. Get that off to a good start.
Just Drinks: Will that category be the main focus above Jones Soda’s products?
Knight: I think we’ve got to do both right. How do we grow Jones Soda and Mary Jones? Delta-9 is going to be riding a very strong category wave where that category is going to develop really quickly. Our goal was to take a leadership position in that category.
Just Drinks: What growth plans do you have for the Jones soda portfolio itself?
Knight: We’re challenging the organisation to say can we double the business, can we double it again, and double it again. So, we’re really in hyper-growth mode right now and that’s really through channel expansion and innovation.
We set ourselves pretty aggressive growth targets that we’re confident that we will hit those. It’s just making sure that we’ve got the team focused on that priority. It’s all about execution, right? How are we executing every day in the marketplace?
Right now, we see foodservice being a huge opportunity for us – large-scale restaurants, pizza chains, college campuses, hospitals, recreational events. We’re developing the right resources behind that.
Beverages is a really large category. It’s driven by innovation and just making sure that we’ve got availability within arm’s reach at that point of thirst. We’re just really getting back to the basics, building the brand, getting into the distribution and then really coming out with some exciting innovation that will have people try Jones again.
We’ll be profitable by Q3, Q4 this year
Just Drinks: When do you think the company will reach profitability?
Knight: We’ll be profitable by Q3, Q4 this year. We made great improvements on our margins side. Now it’s about getting scale so we can leverage our overhead. We were close to breakeven [at the] end of last year. We’ll be profitable I would say Q3, Q4 this year.
Just Drinks: Where did the company go wrong?
Knight: I think they just lost sight of some of the basics, continually building a young franchise, right? I think we almost lost a generation of Jones consumers by not having us available in channels where people have that formative beverage experience.
Then innovating in some of these other beverage segments that make sense. Be it cannabis, ready-to-drink alcohol beverages, or zero calorie and other functionality. You have seen a lot of beverages about gut health, mental well-being and I think there’s potentially avenues there that Jones could play in. So an exciting space to really investigate where Jones can get in the beverage repertoire of the future.
I think people are looking for more functionality across a broad range of spectrums right now in their repertoire. Where are they getting functionality, whether that be caffeine, probiotic or THC as an alternative to alcohol. There’s a lot of things out there right now that we’re excited to get involved with or at least look at and investigate.
Just Drinks: How do you see consumer confidence in North America?
Knight: The beverage space that we play in, I think there’s confidence there in terms of brands that people like and enjoy. Not a high price, you know, indulgence and a fun experience. We’re not caught up I think in some of the broader, larger macro tensions. It’s a nice thing to go and spend a couple of bucks on a Jones Soda and enjoy the day. We’re not seeing any of that kind of macro-economic impact on beverage business.
I think the logistics warehousing pressure through Covid has kind of started to dissipate. That’s been something that we’ve been able to navigate through. There are] no major headwinds. We’re keeping an eye out for the pricing but, otherwise, things look good for this next year.
Just Drinks: How is the company using technology?
Knight: We have customer photos on bottles and now we’re actually taking that to the next level with augmented reality. So, through an app you can focus your camera on the Jones bottle and that label will turn into a video that you can watch through your phone.
So that’s pretty cool technology that we’re kind of leading the way on. It just enhances that whole brand experience and brings our packaging to life.
Just Drinks: Any international markets of interest outside North America?
Knight: We want to get the US right and growing. We’ve talked about some opportunities. Whether that’s Latin America, whether that’s Europe but nothing definitive yet. We’ve still got a little bit of work to do here in Canada, in the US, and we’re really dialling up the innovation and just see if some of this innovation resonates here and then we can start taking it internationally.
Just Drinks: What changes have you seen in the six months since you took the helm?
Knight: I think again it’s that focus on growth and that focus on innovation. Making sure we’re building deeper relationships with our customers, really leading the charge in craft soda, so what can Jones do that is taking a category leadership stance and really growing this category the right way.