NEW YORK — Last year, Jones Soda Co. posted its first profitable quarter since 2007. The transformation effort was led by chief executive officer Jennifer Cue, who returned to the company in 2012 after a six-year hiatus. From 1995 to 2006, she oversaw the initial growth and profitability of the brand as chief financial officer and chief operating officer. During her absence, the company experienced a series of leadership changes and operational struggles.
“Over the years the business had been run by ex-Coke and ex-Pepsi c.e.o.s who knew how to spend a lot of money, and it was beyond the size of the business,” Ms. Cue told Food Business News. “We went from spending $11 million a year when I came back to spending $4 million a year. We changed the culture back to where Jones was in the early days, which was a very entrepreneurial minded, passionate team. We’re there now. We have that same feeling we had when we first started Jones back in the late ‘90s.”
In fiscal 2016, the Seattle-based beverage company generated revenue of $15.7 million, which was up 15% over the prior year. The company substantially shrunk its full-year net loss to $183,000 from $1.1 million the year before.
“I’ve been so thankful that we’re still around and we have a chance again,” she said. “So, we’re sort of at the starting line now. I feel like we’re a start-up with 21 years of history.”
At the Summer Fancy Food Show, held June 25-27 in New York, Jones Soda Co. is unveiling its latest launch, Lemoncocco. Inspired by a popular refresher found in Rome, the premium, noncarbonated blended beverage is flavored with extracts of Sicilian lemons and coconut cream with a hint of cane sugar.
“It’s just in the beginning stages, but when consumers taste it, they love it,” Ms. Cue said. “We’re really excited by the response to this brand. It’s hydration, it’s function, it’s a cocktail mixer, it’s a great food pairing item. Kids love it, too. It has mass appeal.”
In an interview, Ms. Cue discussed the newest innovation from Jones Soda, the pillars of her turnaround plan and her long-term vision for the company.
Food Business News: How did you return Jones Soda to profitability?
Jennifer Cue: We brought down the level of marketing expenditures as well as administrative expenditures, and we put the sales team back on a commission structure and put the company into new offices for half the cost of rent.
And then, at the end of the day, growth really helps. We have been able to partner with some great partners that are bigger than us. Our big one last year was 7-Eleven USA. We have developed glass bottles in their stores. We have done one Slurpee program with the Orange & Cream Slurpee in the Pacific Northwest. Our green apple soda is on fountain in the Pacific Northwest. We’re about to launch another Slurpee flavor there.
Really, it’s about new account acquisitions to grow the brand on top of a disciplined and streamlined operating structure.
Did you rationalize some of your stock-keeping units in this process?
Ms. Cue: Yeah. Definitely along the way, Jones has had a fair number of s.k.u.s. We still do … Jones has 10 different flavors. There were five or six other flavors. There was an energy drink. We scaled those back down, and we are launching new items in a disciplined way.
How did Lemoncocco come about?
Ms. Cue: I left Jones in 2006 and moved to Europe to take a break from work life, and I ended up discovering this Lemoncocco flavor in Rome. I just fell in love with it.
I came back to San Francisco and always had the idea of bringing this wonderful flavor combination back into North America. When I came back to Jones as c.e.o., my first task at hand was focusing on the turnaround of the business and the core brand, but it seemed like an opportunity to leverage the beverage expertise we have and bring this idea to life at this beverage company. We were looking to diversifying away from just soda.
That is how it came to be. We did a brainstorming and really created something completely new from what is offered in Italy. In Italy, lemons are used for digestion, and the coconut is for hydration in the hot summers of Rome. It’s an all-natural functional beverage.
I married an Italian, and I see the passion in North America for everything Italian, so we wanted to leverage that, too, and really make this brand scream Italian.
Are there any plans to expand this brand with additional flavor profiles?
Ms. Cue: I was adamant to start with one s.k.u. for a number of different reasons. One s.k.u. helps solidify the brand in what we feel is a completely new category. It’s a premium noncarbonated blend. At some point we definitely could look to that, but we really wanted to focus in on this particular item and make Lemoncocco, the brand name and the category, stand out.
What else is new at Jones Soda?
Ms. Cue: We have launched Jones Soda on fountain, which is a really interesting opportunity for us. It’s a huge barrier to entry with Coke and Pepsi obviously dominating that set, but we saw an opening.
Our brand is 21 years old. It has enough of a national brand presence, and the opening comes from a move away from mainstream to more independent craft. We have focused on independent accounts, and it’s still small for us now but really building. We’re starting to test in regional chains.
We’re offering Jones classic flavors, some of our exclusive flavors like berry lemonade, and then we’re also doing some development of new items that are easier to do on fountain… We have two interesting opportunities where we’ve actually created new beverage brands and products that are going to go into these fountain programs. That includes sparkling waters and a few other types of products.
Any thoughts on expanding the sparkling water line into a ready-to-drink format?
Ms. Cue: The water category is pretty inundated. LaCroix is everywhere. Water is so thin margin. We don’t want to play there right now. If this sparkling water brand gets legs itself, then maybe at some point down the road, but this is an easy and cost-effective way to get our sparkling water out on our fountain.
You also recently introduced a first-ever alcoholic offering.
Ms. Cue: Jones is turning 21. Every year we do some fun things. Last year when we turned 20 we launched birthday cake soda. For our 21st, we wanted to do something that was appropriate for the brand. Just in our home market, it may just be a one-year thing, but we’ll see how it goes, Spiked Jones launched this year. It’s a hard cider soda. We’re using Washington state apples to create it, and we’ll be celebrating our 21st birthday starting in the summer of 2017.
Jones used to offer some wacky flavors, like a Thanksgiving collection with a turkey and gravy soda. What happened to that?
Ms. Cue: The group did it five years in a row. I think it got overplayed a little bit. The first year was so exciting and so funny. It got so much P.R.; it was amazing. But having it year after year almost detracted from it.
We did birthday cake last year, which is something that tastes great, too. If you tasted turkey and gravy, you’d think this brand was horrible if you didn’t already know it. It’s been an effort to make sure we have great tasting flavor profiles right now. Especially with what’s happening in the soda industry. There’s this movement toward craft, and we want to be there with classic flavors so we can go head to head with Coke or Pepsi — a cola, a diet cola — and then we do have some exclusive flavors that are just known to Jones like berry lemonade.
We did peanut butter and jelly for back to school, and that was a great tasting one that was a lot of fun.
You have been outspoken on soda taxes. How have you expressed your stance on this issue?
Ms. Cue: Our beverage is a treat. We don’t try to get kids to drink three a day. Our business model is set up that it’s a treat; if everyone had one Jones soda a year, we’d be off to the races.
We’re obviously cognizant of the fact that tastes are changing, so we’re reducing our sugar content every year quietly in the background.
That being said … if it’s sugar, then go after all sugar products, if sugar is so sinful. I have a 9-year old, and I give her a half bottle of Jones every now and then, but I have to watch how many ice creams she wants, too. Chocolate bars, fast food, everything.
In the past, the company has introduced and since discontinued organic teas, energy drinks and sports nutrition beverages. What has the company learned from these experiments?
Ms. Cue: We tried various things with Jones Soda, but Jones is known as a soda.
With that in mind our new brand was created with no association with Jones whatsoever … it takes longer, too, because there’s a whole education process with Lemoncocco.I don’t know how the execution worked and why it didn’t work on some of them in the six years I wasn’t here, but we’re a small company and we need to focus our limited resources as well. We can’t do much, even though we also have to continue to take shots, too.