SOURCE: Reed's, Inc.

Reed's, Inc.

March 04, 2009 09:00 ET

Reed's, Inc. Announces Preliminary Fiscal Year 2008 Results

Company Anticipates Net Sales Increase, Gross Profit Increase, Margin Expansion and Improving Gross and Operating Margins in 2009

LOS ANGELES, CA--(Marketwire - March 4, 2009) - Reed's, Inc. (NASDAQ: REED), maker of the top-selling sodas in natural food stores nationwide, today announced preliminary results for the fiscal year ended December 31, 2008.

--  Full year 2008 net sales increased 17% over full year 2007 to $15.3
--  Full year 2008 gross profit increased 69% over full year 2007 to $3.4
--  Full year 2008 gross margin expands 680 basis points over full year
    2007 to approximately 22%
--  Anticipates additional improvement in 2009 gross profit; by another
    20% - 40%
--  Anticipates an additional 2009 OPEX savings of $2.5 million over 2008
--  Anticipates 2009 to be close to breakeven as a result of gross profit
    expansion and OPEX savings

Based on preliminary results for the full year of 2008, Reed's expects to report net sales of approximately $15.3 million, representing a 17% increase over 2007 net sales of $13.1 million. The growth in net sales was driven by a number of factors including increased sales of the Company's Virgil's and Reed's Ginger Brews product lines in existing natural food supermarkets, the launch of new products in specialty packaging, introduction of Virgil's Diet Cola, and rapid expansion into new mainstream supermarkets and distributors.

Gross profit for the full year 2008 is expected to be $3.4 million, or approximately 22.2% of net sales, an increase of approximately 69% from $2.0 million, or 15.5% of net sales, for the full year 2007. The year-over-year improvement in gross margin reflects the benefit of several strategic initiatives implemented in 2008 including pricing increases of the Company's Reed's Ginger Brew line by approximately 20%, better management of promotional discounting by the sales force and renegotiated production costs from the Company's largest co-packer.

Christopher Reed, Founder and CEO of Reed's, Inc., stated, "Our strong preliminary revenue and gross margin results reflect the inherent value in Reed's re-aligned business model centered on mainstream grocery store accounts. In 2008, we recognized the opportunity to leverage our position as the top #1, #2, #3 and #4 selling-sodas in natural foods into the mainstream marketplace. We subsequently repositioned our sales force to better capitalize on this opportunity and have made tremendous strides in expanding our presence in several nationwide grocery store accounts. In addition, we reaffirmed our commitment to innovation with the introduction of several new beverage products and specialty packaging which we believe will improve brand awareness and highlight Reed's as a trendsetter in the beverage category."

Mr. Reed continued, "In addition to driving top-line growth, we implemented several methods to improve gross margins and generate operating efficiencies. The initial success of these initiatives is demonstrated in our estimated 680 basis point improvement in our gross margins for the full year 2008 versus 2007. We also expect to generate approximately $2.5 million in additional operating expense savings in 2009 resulting from ongoing operating efficiencies implemented in the 4th quarter of 2008.

"Looking ahead, we expect to continue to improve our top and bottom line results as we build upon our positive momentum. We believe our focus on mainstream grocery store accounts, compelling new product introductions, like our Reed's Natural Energy Elixir Energy drink launch and expansion of existing product lines positions Reed's to continue to grow its market share in 2009."

About Reed's, Inc.

Reed's, Inc. makes the top selling sodas in natural food markets nationwide and is currently selling in 10,500 supermarkets in natural foods and mainstream. Its six award-winning non-alcoholic Ginger Brews are unique in the beverage industry, being brewed, not manufactured and using fresh ginger, spices and fruits in a brewing process that predates commercial soft drinks. In addition, the Company owns the top selling root beer line in natural foods, the Virgil's Root Beer product line, and the top selling cola line in natural foods, the China Cola product line. Other product lines include: Reed's Ginger Candies and Reed's Ginger Ice Creams.

Reed's products are sold through specialty gourmet and natural food stores, mainstream supermarket chains, retail stores and restaurants nationwide, and in Canada. For more information about Reed's, please visit the company's website at: or call 800-99-REEDS.

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Some portions of this press release, particularly those describing Reed's goals and strategies, contain "forward-looking statements." These forward-looking statements can generally be identified as such because the context of the statement will include words, such as "expects," "should," "believes," "anticipates" or words of similar import. Similarly, statements that describe future plans, objectives 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 uncertainties. These risks and uncertainties include difficulty in marketing its products and services, maintaining and protecting brand recognition, the need for significant capital, dependence on third party distributors, dependence on third party brewers, increasing costs of fuel and freight, protection of intellectual property, competition and other factors, any of which could have an adverse effect on the business plans of Reed's, its reputation in the industry or its expected financial return from operations and results of operations. In light of significant risks and uncertainties inherent in forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by Reed's that they will achieve such forward-looking statements. For further details and a discussion of these and other risks and uncertainties, please see our most recent reports on Form 10-KSB and Form 10-Q, as filed with the Securities and Exchange Commission, as they may be amended from time to time. Reed's undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

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