Reed's, Inc. · AMEX:REED
Reed's — Investor Presentation (October 2019)
55 slides from Reed's's investor presentation, Oct 22, 2019
Slide 1: Reed's Inc. October 2019
Slide 2: Forward-looking statements
REED’S! SRE Gee viel This 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 and incl
Slide 3: Executive Summary
REED’S2 Executive Summary
Slide 4: Company Snapshot
NIABRE, COMPANY SNAPSHOT Share Price (as of 10/10/2019) $0.74 Market Capitalization?? $24.9 million 52 Week High $4.05 Debt (as of 6/30/2019) $9.6 million 52 Week Low $0.72 Cash (as of 6/30/2019) $1.6 million Average Volume (3 month) 0.2million Enterprise Value»? $32.8 million Fully-Diluted Shares O
Slide 5: Management team
REED’S2 REPT ION John Bello Chairman and Interim CEO + 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 Op
Slide 6: Opportunity
REED’S v v OPPORTUNITY iy viii INC 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, authenti
Slide 7: Financial Highlights
NIK FINANCIAL HIGHLIGHTS ae Reis Fiscal year ended December 31 S'sinmillions Fiscal year ended December 31 S'sinmillions $10.8 $9.4 aa $9.6 $8.5 $8.3 $22 $0.6 $8.5 $77 5 2018 2019 2020E 2018 2019 2018 2019E 2018 2019E T New Guidance on Ce Gh i} m= Core Private Label / Discontinued SKUs = Core Privat
Slide 8: Financial Highlights: Gross Margin Guidance
FINANCIAL HIGHLIGHTS Historical Gross Margi New Gross Margin Guidance 28.0% aee aioe 30.0% 32.0% a _ a | _ | 2017 2018 2019 YTD+ Q3 2019E Q42019E 2020E O18 Private Label 2019 Private Label Discontinued Discontinued skus? skus 18 14% Year-to-date as of June 30, 2019. eifidke Lnkel. J discontineed SKU
Slide 9: Supply Chain Issues
NII] SUPPLY CHAIN ISSUES iy viii * Lack of flexibility and redundancy in co-packer network * Previously had only three total co-packers ¢ East Coast 1— Packaging failures with pressure sensitive label (PSL) defect ¢ West Coast 1 — Shut down during delayed install of new high-speed equipment * West C
Slide 10: Supply Chain Solution
NAARRE SUPPLY CHAIN SOLUTION * Status of existing co-packers: East Coast 1 ¥ Resolved labelingissue and production planning enhanced West Coast 1 Y¥ — High-speed line up and running and locking in additional capacity West Coast 2 ¥ Continuous efficiency improvements * Status of new and targeted co-p
Slide 11: Co-packer network map
REED’S2 PST Existing co-packers New co-packer currently running production Near-term targeted co-packers ox Fex | Long-term targeted co-packers Ad
Slide 12: Reed's Transformation Roadmap
NAOKI] REED’S TRANSFORMATION ROADMAP is Transition Turnaround v Business Assessment ¥ Optimize Operating Model v New Strategy v_ Sell LAPlant v_ Price Increase v New Credit Line v SKU Rationalization ¥ Build Marketing & Sales Infrastructure and Refresh 2019 & 2020 Growth Plan Brand Build/Sell-Thru V
Slide 13: Outlet Expansion
Outlet Expansion
Slide 14: Significant Volume Upside via Distribution Expansion
NIAREE, SIGNIFICANT VOLUME UPSIDE VIA DISTRIBUTION EXPANSION + Investment in new brokers, distributors, sales resources and merchandisers * Investment in slotting, trade spend, point of sale, couponing, racks and sampling US Channel Estimate Door Universe! 2018 Reed’s Doors? YTD 2019 New Doors Gaine
Slide 15: Virgil's Zero cans in stores; Walmart
Tested NEW Virgil’s ZERO Cans in 900 stores Expanded ZERO to 1,600+ Incremental space comes from Dry Soda 24/7 Marketing activation: * Coupons * BOGO’s * Social/Smartphone * Red Card Reed’s ZERO Sugar Extra added in Sept set Walmart On shelf in May — 1,100 stores 7 Total SKUs authorized ~30% of craf
Slide 16: Examples of Retail Wins Across the U.S.
AAD EE EXAMPLES OF RETAIL WINS ACROSS THE U.S. Say ils @\ Albertsons circus (| Ga A fo SAFEWAY C9 7 Cor ane _ FOOD LION ( P ee Costco Stas EE meijer Giant & e ~~ ‘Stary TARGET PUbLIX. =e ‘market BIOLO FC EY Winnvdixie ean Walmart >|< 16
Slide 17: Retail partners
OOO” RTE CosrTco. DRUGS SAFEWAY () — ae tiyVeo - bigg’s Grn enfin _ | SRITEAID Ukrops am "Your Neighborhood Food Market a7,
Slide 18: 2019 Merchandising Plan
NIAIREE] 2019 MERCHANDISING PLAN © survey.com Mobile technology & on-demand workforce applied to merchandising THE WORKFORCE * 300,000 workforce “The UBER of Merchandising” MOBILE TECHNOLOGY & REPORTING * Survey.com's mobile technology delivers high impact reports and photos showing the results from
Slide 19: Marketing
REED’S2 Marketing
Slide 20: Reed's Activation Summary
REED’S2 REED’S 360 ACTIVATION SUMMARY DIGITAL MEDIA ((Siriusxn) SATELLITE RADIO oS — hulu SOCIAL MEDIA/INFLUENCER 20
Slide 21: Virgil's Pull Campaign
Relig SIAIBEE, VIRGIL’S 360 PULL CAMPAIGN DIGITAL MEDIA SAMPLING a a = Ry INFLUENCERS oe — 0°06 SOCIAL (a) (9) OUTDOOR KETO COMMUNITY CERTIFIED KETOGENIC certketo.com KETOCON AUSTIN 2019 2a
Slide 22: Marketing Campaign Results
aikGits REED’S MARKETING CAMPAIGN RESULT ‘REEDY Brand Health Numbers Show Significant Impact of Summer Marketing Efforts National Target Markets? Wave 1- April | Wave 2- Sep Wave 1- April | Wave2- Sep (N=1,426) (N=1,713) (N=487) (N=465) Key Drivers * Paid social media likely the driver of the 79% ju
Slide 23: 2019 Marketing Results: Ginger Beer Awareness
aikGits NIAIBEE, 2019 MARKETING RESULTS Growing Awareness Over Increasing Number of Ginger Beer Competitors April 2019 Survey September 2019 Survey Fever Tree JN 33° Fever Tree [NN 35% Bundaberg IN 31 Bundaberg I 33: Banit’s I 30% Banit’s SS 3. Maine Root JN 19% Maine Root [IN 22° 1s: Cock NBull NS
Slide 24: Reasons Customers Purchase Reed's
SNHAREE] REASONS CUSTOMERS PURCHASE REED * The 6% increase in packaging was due to the restaging of products in stores * Customers who tried a sample from the Reed’s “truck,” purchased product 4% between surveys April 2019 Survey September 2019 Survey Customer’s Reason for Purchasing Reed’s roomed T
Slide 25: Reasons Customers Don't Purchase Reed's
VAAREE] REASONS CUSTOMERS DON’T PURCHASE REED * Customers did not have the option to buy Reed’s products due to unavailability, which rose 6% April 2019 Survey September 2019 Survey Customer’s Reason for Not Purchasing Reed’s (don't no! TT 31°: {don't kno TI 25:5 Don’t buy ginger beer frequently I 3
Slide 26: Innovation Update
REED'’S2 Innovation Update
Slide 27: 2020 Reed's Portfolio
WAAR] 2020 REED’S PORTFOLIO Core Packages (13 SKUS) Se GF gm é 6 he joel wel Vaal i= us be oles er Set/On-F Premise Store Category Innovation (7 skus) 2020 Package / Channel Innovation (8 kus) fhe ils 27,
Slide 28: Core Innovation: Zero Sugar Extra Ginger Beer
SIIBEE, REED’S CORE INNOVATION — ZERO SUGAR EXTRA GINGER BEER ‘gee Consumers love it! eay vA 17 likes surlysue I've been trying to cut back on sugar, but | love ginger beer. Especially when it's mixed with whiskey. | was thrilled to stumble across this gem yesterday. No | don’t have to feel as guilt
Slide 29: Category Innovation: Flavored Malt Beverage
WURRE] REED’S CATEGORY INNOVATION — FLAVORED MALT BEVERAGE ee In Q1 / Q2 2020, Reed’s anticipates it will launch its ready-to-drink mule nationwide through a proposed licensing agreement with a craft brewer * Packaging — consistent with new base brand design with tie to iconic copper Mule imagery *
Slide 30: Category Innovation: Hemp
IIRL, REED’S CATEGORY INNOVATION — HEMP Reed’s Ginger Chill CBD infused beverage is “ready to go” pending clarity from federal regulators * Packaging — consistent with new base brand design with color differentiation; 100z sleek can to reinforce functional halo and separation from core offerings * P
Slide 31: Reed's Wellness Shots: Ready to Launch
I Reed’s Wellness Shots: Produced and Ready to Launch * Reed’s Shots were shared at UNFI and NACS in the beginning of October * Strong interest from several c-store chains and distributors * Rollout planned in natural food channel in Q4 2019 REABY FOR REAL GINGER?
Slide 32: Core Innovation: Chews
SIGIEE, REED’S CORE INNOVATION — CHEWS aiRGlis New & Improved Reed’s Chews Refresh Now made from organic ginger Tastier and chewier Upgraded 202 packaging structure with side-opening for easier access New 3oz size — the best-selling size in the category Refreshed packaging graphics, aligned with Mas
Slide 33: Financials
REED’S2 Financials
Slide 34: Income statement summary
REED’S2 Ree Fiscal Year Ending December 31, LIM as of Six Months Ending June 30, 2017 2018 6/30/2019 2018 2019) Net Sales $37,714,000 $ 38,102,000 $38,354,000 $17,677,000 ___$ 17,929,000 % Growth (11.2)% 1.0% 1.4% Cost of Goods Sold $30,821,000 ___$ 27,424,000 $ 28,244,000 $12,332,000 __$ 13,152,000
Slide 35: Modified EBITDA
aiRGlis HSSSpRE) MODIFIED EBITDA Fiscal Year Ending December 31, Limas of ‘Six Months Ending June 30, 2017 2018 6/30/2019 2018 2019 Net Income $(18,373,000) $(10,325,000) $(13,058,000) $(4,991,000) $(7,724,000) Modified EBITDA Adjustments: Depreciation and Amortization $551,000 $ 108,000 $(159,000)
Slide 36: Balance Sheet
NAOKI BALANCE SHEET ‘ged As of December 31, Asof ‘Asof December 31, As of 2017 2018 6/30/2019 2017 2018 6/30/2019 Assets Liabilities (Cont'd) Current Assets Long Term Liabilities cash $12,127,000 $624,000 $1,604,000 Capital Leases Payable, Less Current Portion $236,000 $801,000 $759,000 "RecGuries R
Slide 37: Ginger Ale Fooled Your Mom
GINGER ALE | FOOLED YOUR | MOM
Slide 38: They Fooled Your Mom
4% FOOLED as b, YOUR MOM |=
Slide 39: Category Leadership
SAREE] CATEGORY LEADERSHIP Reed’s is the dollar sales leader in the ginger beer segment * Reed’s has an estimated 25% dollar share of the ginger beer segment in measured channels ¢ Mainstream ginger ale brands vulnerable to consumers switching to get actual ginger benefits = fe Attribute Reed’s | Ca
Slide 40: Product Leadership
NIIARRE] PRODUCT LEADERSHIP aiRGlis Reed’s is unsurpassed in taste, high-quality natural ingredients and the use of fresh ginger root No Artificial Flavors, No Artificial Ingredients, No Artificial Coloring, No Preservatives BREWED Directly from Roots, Herbs, Spices Fruits 25% Juice & Significant am
Slide 41: Sources of Awareness
NADABEE] SOURCES OF AWARENESS re * Paid social media likely the driver of the 8% jump in “Recommended by a Friend” + Also “Received a sample from a branded truck” up 3% nationally (significant); Boston up 9% / San Diego 5% (directional due to small sample sizes) April 2019 Survey September 2019 Surv
Slide 42: Reasons Customers Try Reed's
NDABRE] REASONS CUSTOMERS TRY REED’ * The Reed’s “truck,” which goes to events to serve product, was the source of a 9% increase in customers trying Reed’s product April 2019 Survey September 2019 Survey Customer’s Reason for Trying Reed’s Wanted to 2c t commented TT 35: Uses fresh ginger All-Natura
Slide 43: Reasons Customers Don't Try Reed's
REED’S 2 RGSS oS We a * Lack of availability was the cause for customers not trying Reed’s products, which rose 3% between surveys April 2019 Survey September 2019 Survey Customer’s Reason for Not Trying Reed’s Not faniliar with brand TT 2° Not familiar with brand I 379 Idon'tknow [I 24% Idon'tknow
Slide 44: Craft Soda Category Is Significantly Underdeveloped
HARE] CRAFT SODA CATEGORY IS SIGNIFICANTLY UNDERDEVELOPED Craft Specialty Carbonated Soft Drinks (CSDs) Zero Sugars Growing US Carbonated Soft Drink Retail Sales 2018 Total Craft $350 million Total Carbonated Soft Drinks: $20 Billion Source: Brewers Association; SPINS MULO sales latest 52 weeks ende
Slide 45: Category Leadership: Virgil's
NADARRE CATEGORY LEADERSHIP Virgil’s is a Leading All-Natural, Full Line Craft Soda * Virgil’s will take share from leading all-natural Zero Sugar brands driven by superior taste IBC Attribute Stewart's | Hansen’s | Hansen’s Diet All-Natural (no artificial colors, ingredients, or preservatives) v v4
Slide 46: Product Leadership: Virgil's
NIIARRE] PRODUCT LEADERSHIP Virgil’s is unique among craft sodas for its great-tasting, all-natural recipes * Never Any Artificial Colors, Flavors or Preservatives, Gluten Free, GMO Free, Caffeine Free Virgil’s Root Beer Ingredients: * Cane Sugar * Natural Flavors ¢ Natural Colors * Sparkling Water
Slide 47: Virgil's Core Innovation: Zero Sugar
SIAR] VIRGIL’S CORE INNOVATION — ZERO SUGAR aikGits Virgil’s Zero Sugar helped drive 46% growth for total Virgil’s in Q1 CERTIFIED Now tracking to +S5MIM in annual revenues KETOGENIC In over 7,000 doors: Kroger, HEB, Stop & Shop, Walmart, Target certketo.com Significant distribution upside - Reed’s,
Slide 48: Additional Marketing Details
REED’S2 Additional Marketing Details
Slide 49: PR Highlights
PR Highlights - 104.6M-+ Earnep MevIA Impressions il 7 UNIQUE PLACEMENTS 5 INTERVIEWS WITH TOP-TIER MEDIA “They Fooled Your Mom” Campaign Launch 60 ae eereeNcER 3) SAMPLING KITS TO LIFESTYLE MEDIA yl Nasdaq SOCIAL POSTS AdAge _ cheddar BEVNET CAO dg t eM REEO'S HAS REAL YOUR MOM fei) [eia:3 (AND ALO
Slide 50: March – June PR Highlights
March — June PR Highlights Following the launch of “They Fooled Your Mom” campaign, the brand focused to reach consumers via lifestyle media, leveraging RD crafted ginger recipes and health tips to secure placements in top food and wellness outlets. COSMOPOLITAN WomensHealth The 11 Best Non-Alcoholi
Slide 51: Canada Dry Drops "Made from Real Ginger" Claim
NNAIRRE] CANADA DRY DROPS “MADE FROM REAL GINGER” CLAIM Bloomberg January 8, 2019 News Canada Dry to Stop Claiming It Has Real Ginger aikGits “Research found the actual ginger compound content of Canada Dry is below the threshold for human taste, and far lower than any amount that could have health
Slide 52: Real Mom's Contest
Real Mom’s Contest WIN $1,000 Raise a toast toa mommy that’s 100% REAL. below and be sure to tell us about a mom your life thats 100% REAL! FRESH GINGER ORIGINAL 35 253813 Win a $1,000 REAL experience! WIN $1,000 {j eee | 6 Ways to Enter ay Martin FE] Exit Logour Share With Friends For Extra Entries
Slide 53: Rose Bowl Sponsorship
WIAIREE] ROSE BOWL SPONSORSHIP “Official Ginger Beer of the Rose Bowl” mone Total Integration of 5 Reeds SKU’s into all Rose Bowl Games and Events in and around the Rose Bowl property - almost 1MM attendees annually Selling and Sampling activities - RTD Mule sales, Reed’s Original, Reed’s Strongest
Slide 54: Green Machine Tour
's Green Machine Tour Reed’ 54
Slide 55: Trader Joe's Results Year-to-Date
REED’S INC TRADE JOE’S RESUL YEAR-TO Cases LY Cases TY % Diff SSLY SSTY % Diff Total Virgil's Root Beer 59,377 69,939 17.8% $950,032 $1,189,042 25.2% Total Virgil's Zero Root 0 22,491 NA 0 390,436 NA Total Virgil's 59,377 92,430 55.7% $950,032 _ $1,579,478 66.3% Total Reed's Extra 106,789 93,474 (12