4/5/2007

By Melissa Allison
Seattle Times business reporter

Jones Soda dipped its toe into the big-time Thursday, announcing it has begun selling canned sodas to the nation's largest retailers, including Wal-Mart, Kmart, Safeway and Kroger.

Until recently, the Seattle company sold cans only through Target, which had an exclusive arrangement and will continue to carry the brand.

The boost takes Jones cans from 2 percent of all food and drugstore outlets -- the amount Target represented -- to 25 percent, and the company plans to add more retailers over the coming year.

Shipments have already begun, helping to more than triple Jones' fourth-quarter earnings to $2.1 million from $580,000 a year ago. Revenue climbed 14.8 percent to $10 million.

In the world of soft drinks, selling cans is a major step. Consumers prefer them, and they are more profitable than bottled soft drinks.

Technically, Jones is selling flavor concentrates to another company, which adds carbonated water and packages the drinks.

"The profit per case for Jones is huge," said Alton Stump, a food and beverage analyst at Longbow Research in Cleveland.

For now, Jones will sell cans only in 12-packs with prices averaging $3.99 to 4.29 -- roughly the same as a four-pack of bottles.

Jones' canned soda comes in 10 flavors, and the 12-pack cartons feature Jones' black-and-white photos sent in by customers -- something that's become a brand signature with its bottled product labels.

Chief Executive Peter van Stolk said the canned flavors will vary, and the company is considering adding a cola flavor.

"Retailers are asking for it," he said.

Van Stolk said he does not want Jones to become another Coca-Cola or Pepsi. He said he wants it to be a premium soda brand.

Even a cola flavor from Jones would be more upscale than Coke or Pepsi, he said, because it would be sweetened with cane sugar rather than high-fructose corn syrup.

Jones is switching to cane sugar and will launch an ad campaign this spring featuring the slogans "Drink less soda, just better soda" and "Corn is for cars, sugar is for sodas."

It plans to debut its television commercials this spring. The company also recently began shipping a new product, 24C, which is a noncarbonated multivitamin beverage in a bottle.

Investors celebrated Jones' news, which came after regular trading hours, by sending the stock more than a dollar higher than it has traded over the past year.

Shares rose 35 cents to $13.95 in regular trading, then catapulted another $2.35 in after-hours trading to end at $16.30. Over the past year, Jones shares have traded between $6.51 and $15.28 a share.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

Jones Soda's results
Dollar figures in thousands, except per share; parentheses denote losses.
Dec. 31 %
4th QTR 2006 2005 CHG
Profit $2,063 $580 +255.7
Per share 0.08 0.03 +166.7
Revenue 10,048 8,751 +14.8
Annual 2006 2005 CHG
Profit $4,574 $1,283 +256.5
Per share 0.19 0.06 +216.7
Revenue 39,035 33,511 +16.5

Copyright (c) 2007 The Seattle Times Company