Reed's, Inc. · AMEX:REED
Reed's — Investor Presentation (April 2020)
48 slides from Reed's's investor presentation, Apr 15, 2020
Slide 1: Reed's Inc April 2020
Slide 2: Safe Harbor
ao SAFE HARBOR wor «pikeles ‘his presentation includes “forward-looking statements,” within the meaning of the U.S. Securities Act of 1933, as amended and the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act.” Forward looking statements are not based on historical information a
Slide 3: Company Snapshot
aoe eee COMPANY SNAPSHO * Share Price (as of 4/3/2020) $0.47 Holder Gommon Stock; _ 74 Held Bello, John J 6,105,000 12.8% 52 Week High $4.05 Handelsbanken Asset Management 3,375,000 7 Union Square Park Capital Management 3,024,284 6.4 52 Week Low $0.36 Raptor / Harbor Reeds SPV 2,469,314 5.2 co Bard
Slide 4: Introduction
REED’S INC INTRODU ION John Bello Chairman + Reed’s Chairman since November 2016 + 20+ years of beverage industry experience + Founder and former CEO of SoBe, a national beverage brand with sales exceeding $275 million, which sold to Pepsi in 2000 for $370 million Norman E. Snyder Chief Executive Of
Slide 5: Consumer trends
REED’S? Rel ade Rls v v v Premiumization — steady march of US consumers embracing quality Natural — desire for all-natural products is going mainstream Clean Label — 75% of consumers believe that fewer ingredients = healthier Craft — continued appeal of higher quality, independent, authentic brands
Slide 6: Financial Highlights – Q1 2020 Guidance
REED’S2 ‘Quarter ended march 31 sin lions lo 4, 6? pth 99.0 $8.8 $8.4 Qi 2019 Q1 2020 —— New Guidance FINANCIAL HIGHLIGHTS Qi 2020 GUIDANCE Operating Expenses ‘quarter ended march 31 ‘quarter ended March 31 $'sinmilions 29.6% 29.5% Qi 2019 Q1 2020 Q1 2019 Q1 2020 New Guidance New Guidance 63.7% 55.6
Slide 7: Financial Highlights – Annual Guidance
goa FINANCIAL HIGHLIGHTS — ANNUAL GUIDANCE si) VRElls a — $38.1 32.0% 28.0% 23.3% 2018 2019 2020E 2018 2019 2020E (aie Guidance Guidance Core i Private Label / Discontinued SKUs
Slide 8: Accelerating Growth – IRI Data
REED’S INC ACCELERATING GROWTH — IRI DATA Co iki Period Ended March 22, 2020 $ Sales vs. Prior Year 4-Weeks 12-Weeks 20.9% 17.0% Metric % Growth 38.6 Points 22.2% + $0.57 / Unit 12.6% 6.7 Units 10.3% “Source: IRI Worldwide, US mult-outlet channel scan data
Slide 9: Total Ginger Beverage Sales Growth
aapeEy TOTAL GINGER BEVERAGE SALES GROWTH Co iRGits * — Reed’s is playing in the fast growing ginger beverage category 2016-2019 Sales CAGR 11.6% 10.1% TT | Soiith Central Plains Southeast Mid-South Great Lakes California
Slide 10: Supply Chain Issues & Solutions
REED’S? BES CHAIN ISSUES & SOLUTIONS © Supply chain snafus/capacity issues © Inadequate planning/no redundancy ° Minimal bandwidth for innovation © Suboptimal gross margin © Poor inventory management ° QC issues Supply Chain Solutions v Increased capacity/redundancy Integrated S&OP process implement
Slide 11: Current Supply Chain
2 Fa URREN UPPLY CHAIN Rls Noel Canning (Pepsi) @ x ii Clinton’s Ditch (Pepsi) jeacics) erewing © Total Bottle Capacity East (3.0M Cases) e @ tion Brewery West (3.0M Cases) Castle Co-Packers sonoma Beverage @ (angen) Total Can Capacity co @ East (1.0M Cases) West (1.0M Cases) @ Existing co-packers @
Slide 12: Reed's Transformation Roadmap
waa REA TRANSFORMATION ROADMAP rm REIL v= completed initiative = ongoing initiative 4 Scams Transition Business Assessment New Strategy Price Increase SKU Rationalization x &, € Turnaround Optimize Operating Model Sell LA Plant New Credit Line Build Marketing & Sales Infrastructure and Refresh aS, H
Slide 13: Driving Growth to Profitability
aRREa DRIVING GROWTH TO PROFITABILITY INC v Top Line Revenue o Channel Expansion o Relevant products o Better execution ¥ Margin Enhancement o Leveraged purchasing power o Co-packer upgrades o Improved efficiency ¥ Smarter Spending o ROI thresholds on S&M co Value added services o Tightening the bel
Slide 14: Outlet Expansion
Outlet Expansion
Slide 15: Significant Volume Upside via Distribution
NaREE SIGNIFICANT VOLUME UPSIDE VIA DISTRIBUTION * — Investment in new brokers, distributors, sales resources and merchandisers * — Investment in slotting, trade spend, point of sale, couponing, racks and sampling Estimate Door US Channel Universe* 2018 Reed’s Doors’ NATURAL / SPECIALTY 8,000 6,600
Slide 16: 2020 Retail Wins
REED’S2 FOOD LION Walmart 2020 RETAIL WINS ACROSS THE ale as 5 New SKU’s into 1,000+ stores First retailer to launch NEW Ginger Ale 24/7 Marketing activation Social media Digital Food Lion cardholders Front-end display June into 4% of July NEW REALLY REAL Ginger Ale 8 PK can Walmart exclusive pack O
Slide 17: Reed's Introduces Really Real Ginger Ale
a0Rera REED’S INTRODUCES REALLY REAL GINGER ALE * Q1/Q2 Launch in Food lion, Walmart, Giant Eagle, Albertsons, Sprouts, etc. * 6K+ doors to date, exceeds Virgil’s Zero Launch of 1.8K in year 1 ORIGINAL REAL GINGER ALE
Slide 18: Examples of Retail Wins Across the U.S.
yadeREa EXAMPLES OF RETAIL WINS ACROSS THE U.S. wie) viRClts In Process / Expand Distribution @\ Albertsons - FOOD LION (, Walmart >;< we Giant OMMISSA py. Cub SPROUTS TA seer PD UDILX. } Jewe!-Osco BULO FRSC BBW Winnvdixie ag
Slide 19: Retail partners
REED’S? (ae oe ae hums ihe sure, (Hae) (ARs 2 4 “Tm © Meijer ee —— | vat Jewel Osco otter 0% vo pene Lyfe Winco Cub ipa, Heath SAFEWAY), ews RUUD wo Se a BevMo! ee Hyvee focal co GUAT owine Gelson sD [wes] Total Wine ‘exc roger Bea fous? Smart3Final va TRAD R gy, Cait Ingles Hare Tester EO Rails Wal
Slide 20: Trader Joe's Results
REED’ Bra TRADER JOE’S RES EST 52 WEEKS * Addition of new Reed’s Extra Zero and Virgil's Zero Sugar Root Beer provide strong incremental Total Virgil’s 79,997 Reed’s Extra Zero — growth and draws new users to category TRADER JOE'S Cases LY Cases TY % Diff Sly Say, % Diff 79,997 85,549 6.9% $ 1,279,9
Slide 21: Marketing
Reed's Marketing
Slide 22: 2020 Reed's Marketing – Tactical & Strategic
REED’S 2020 REED’S MARKETING — TACTICAL & STRATEGIC REIL INC * Support key product launches, where and when they are in retail PRIMARY R GINGER ALE Ginger Ale Zero Sugar Extra Ginger Beer Virgil’s Zero Sugar Shots / Candy 23
Slide 23: 2020 Reed's Marketing Big Rocks
EEE 2020 REED’S MARKETING BIG ROCKS af iRGlis 1 3 DRIVE PURCHASE & VELOCITY W/ MEASURABLE STORE LEVEL TACTICS (Retail Marketing, Amazon, Catalina) MAINTAIN AWARENESS & TRIAL TO AMPLIFY REED’S INC BRANDS VIA 2019 VALIDATED TACTICS (Social Media, Sampling Truck) REEDS FUTURE STATE- LOOK AHEAD (Packagi
Slide 24: Partnership Case Study at Food Lion
REED’S FOOD#ALION Intend to execute a measurable marketing program to drive velocity at Food Lion. Why Food Lion? Vv First retail partner on New Ginger Ale Slim 4 PK Cans v Geographically aligned with Ginger Ale consumption, avg CDI for North Carolina is 120+ Vv Astrategic partner for Reed’s v Measu
Slide 25: Reed's / Virgil's Are Riding the Trend
REED’S INC REED’S / VIRGIL’S ARE RIDING THE TREND Sparkling Beverage Reduced Sugar Functional/ Healthy Premium Better For You Cocktail a. Plant Based Natural Clean Label Craft Rise of the Mocktail 26
Slide 26: Non-Alcoholic Beverages
ee «iRblts "gS" ~— NON-ALCOHOLIC BEVERAGES PARTLY TO MOSTLY SUNNY HIGH 49 27
Slide 27: 2020 PR – In the News
REED’S INC 2020 PR — IN THE NEWS (cont’d) EVERYDAY ®HEALTH @ The Daily Meal BIT 5vaFOX AlLThings Food & Drink The Top 10 Healthy Food 20 Things Pregnant Women A Cocktail for the New Year, Trends to Expect in 2020 Should Add to Their Diet New You: Pom 20/20 Ginger : Hemp and CBD Are Going Mainstream
Slide 28: Cocktail recipes in media
[REED'S ROSE COCKTAIL This bourbon and ginger beer-based beverage from Reed's Ginger International Business Times Galentine’s Day Cocktails: 8 Easy Pink And Red Drink Recipes tines Day rein. ls the aah that will make i perfect forthe Ingredients: + 2 ounces Four Roses Bourbon + Tounce Amaro Nonino +
Slide 29: Reed's Sampling Green Machine Tour
REED’S INC 2019 Coachella — CA Keto Con - TX Newport Jazz Fest — RI Lime Rock Raceway — CT Rose Bowl Stadium — LA REED’S SAMPLING GREEN MACHINE TOUR 2020 Tahoe — CA Vail Spring Break — CO Rose Bowl — Pasadena Carolinas East Coast Summer 30
Slide 30: Financials
Financials
Slide 31: Income Statement & Q1 2020 Guidance
REED’S INC INCOME STATEMENT & Q1 2020 GUIDANCE : Fiscal Year Ended December 31, Three Months Ended March 31, 2018 2019 2019 2020 Tow High Net Sales $38,102,000 $33,820,000 $8,449,000 $8,800,000 $9,000,000 % Growth 10% (11.2)% 4.2% 65% Cost of Goods Sold $27,424,000 $25,944,000 (Gross Profit $10,678,
Slide 32: Modified EBITDA
aeEEa MODIFIED EBITDA al Year Ended December 31, 2018 2019 Net Income $(10,325,000) _$(16,112,000) Modified EBITDA Adjustments: Depreciation and Amortization $ 108,000 $152,000 Interest Expense 2,201,000 1,286,000 ‘Stock Option and Other Noncash Compensation 2,081,000 1,296,000 Financing Costs inclu
Slide 33: Balance Sheet
aDEEa BALANCE SHEET x As of December 31, 2018 2013, Assets Current Assets Cash $624,000 $913,000 Accounts Receivable 2,803,000 2,099,000 Inventory 7,380,000 110,508,000 Prepaid Expenses and Other Current Assets 131,000 776,000 Total Current Assets $10,938,000 $14,296,000 Total Long Term Assets $1,55
Slide 34: Appendix
Appendix
Slide 35: 2020 Portfolio
Slide 36: 2020 Portfolio
aera 2020 PORTFOLIO Core Packages (18 skus) Package / Channel Innovation (8 SkUS) Category Innovation (8 SKUS)
Slide 37: Ginger Ale Is Growing – Reed's Enters $1B Category
REED’S INC US Ginger Ale / Ginger Beer Sales Sa Total Ginger Ale/Ginger Beer $986 million Source: SPINS MULO latest 52 weeks ending 2/23/20 Total Ginger $79 million GINGER ALE IS GROWING — REED’S ENTERS $1B CATEGORY Growth Rate vs YAG Ginger Ale Ginger Beer Total gaa Total cae Sugar Sugar * We belie
Slide 38: Category Leadership – Ginger Beer & Diet
aaapera CATEGORY LEADERSHIP — GINGER BEER & DIET INC Reed’s is the dollar sales leader in the ginger beer segment * Reed’s has an estimated 25% dollar share of Ec a the ginger beer segment in measured channels Nitainteereeeweingercieibrendsyulherableta ia Q consumers switching to get actual ginger b
Slide 39: Category Leadership – Zero Sugar Ginger Beer
aaaeera CATEGORY LEADERSHIP — ZERO SUGAR GINGER BEER Reed’s Zero Sugar gaining traction with only 6 months in the market! m L “ & Attribute Reed’s Goslings Fever Tree | Bundaberg QLight Light All-Natural (no artificial colors, ingredients, or preservatives) v 4 v 4 v Made from Fresh Ginger Root v 4
Slide 40: Category – Ginger Ale & Diet
REED’S INC In 2020, Reed’s Real Ginger Ale™ will deliver REAL in a category of fake = dé CATEGORY — GINGER ALE & DIET toe URE Source: SPINS data (combined mulo/natural/speciaty channels) S2w ending 2-23-20 with Reed's includes sales non-syndicated retailers in natural and specialty + aggregating SPI
Slide 41: Everything Is Ginger – 2020 Competitive Entrants
aera EVERYTHING IS GINGER — 2020 COMPETITIVE ENTRANTS 2 Q\Keurig DrPepper™ 42
Slide 42: Craft Soda Category Is Significantly Underdeveloped
REED’S CRAFT SODA CATEGORY IS SIGNIFICANTLY UNDERDE US Carbonated Soft Drink Retail Sales Total Craft $352 million Total Carbonated Soft Drinks: $20.2 Billion Growth Rate vs YAG Mainstream CSD Craft Specialty CSD Total Diet Craft Craft CSDs CSDs Specialty Zero Sugar tt Tf Craft soda category signifi
Slide 43: Craft Sodas Category
REED’S INC CATEGORY * Drive boldly natural taste in the Craft Soda Category * Virgil’s will take share from leading all-natural Zero Sugar brands driven by superior taste T SODAS Source: SPINS data (combined mulo/natural/speciaty channels) 52w ending 2-23-20 with Virgil's includes sales non-syndicat
Slide 44: Zero Sugar Extra Ginger Beer
aaDEEE ZERO SUGAR EXTRA GINGER BEER Ae «iil [ow Kelo (a Corlepied 1 45
Slide 45: Wellness Ginger Shots
Slide 46: Craft Ginger Mule
REED’S CRAFT GINGER MULE INC Launched March 2020 Full Sail Brewing licensing agreement Reed’s to receive royalty with minimum guarantees Five-year term and automatically renews for up to three additional two-year terms WFM’s/Albertson’s-Safeway/other PACNW $10.99 4-Pack SRP 47
Slide 47: Candy Packaging Restage to Flow in 2H
wa0era CANDY PACKAGING RESTAGE TO FLOW IN 2H New & Improved Look and Product to Phase In Q2 * Now made from organic ginger * — Tastier and chewier * Upgraded 202 packaging structure with side-opening for easier access * Refreshed packaging graphics, STALLIZED aligned with Master Brand look and = GIN
Slide 48: Sy Virals.
Sy Virals. Yesterday at 4:37 PM-@ It's simply the best root beer I've ever tasted! 49