GO
Loading...

Jones Soda Shares Fizzle on Loss of Starbucks Account

AP
Thursday, 14 Jun 2007 | 3:27 PM ET

Shares of premium soda maker Jones Soda lost some of their fizz Thursday after coffee chain Starbucks said it would stop selling the company's drinks by the end of June.

Jones Soda shares dropped 91 cents, or 5.8 percent, to $14.77 in afternoon trading.

Starbucks , which has been selling Jones Soda bottles since March 2004 in its U.S. stores, said it would discontinue the company's products to make way for more sandwiches and food products.

Starbucks spokesman Brandon Borrman said "we're taking a different direction with what we have in the cold cases" refrigerated display cases next to cash registers that showcase sandwiches and cold, bottled drinks.

The news was first reported Wednesday in the Seattle Post-Intelligencer.

Besides making room for more food offerings, Stifel Nicolaus analyst Mark S. Astrachan suggested Starbucks may also be pushing Jones Soda bottles out in favor of more PepsiCo products.

Pepsi and Starbucks have had a joint venture called the North American Coffee Partnership since 1994. The venture sells bottled Frappuccinos. Starbucks also sells Izze drinks, a brand owned by PepsiCo.

"Overall, we believe the move by Starbucks is indicative of a strategy shift by the retailer towards increased cooperation with PepsiCo and to selling more food items in its cooler space," Astrachan said in a note to investors.

Astrachan said Jones will lose some visibility by not being offered in Starbucks locations, but the loss of revenue should be slight.

"While we consider the news negative because of the high visibility afforded by the relationship, we believe that the percentage of Jones Soda's revenue represented by Starbucks is low," the analyst said.

According to Stifel Nicolaus data and Jones Soda company reports, in 2006, 40 percent of Starbucks stores were selling Jones Soda. The stores' sales contributed $2.5 million, or 6 percent, to Jones Soda's total revenue of $39 million for the year in 2006.

Jones Soda Chief Financial Officer Hassan Napha said revenue from the Starbucks stores is now less than 1 percent of the company's total revenue. At the beginning of 2007, the company began distributing its sodas to a much larger number of retailers, including Wal-Mart, Safeway and Albertson's.

"From our end, we've got significant distribution across the country," Napha said.

Napha added that Jones Soda is beginning a national advertising campaign to introduce more consumers to the product.

  Price   Change %Change
JSDA
---
PEP
---
SBUX
---

Featured

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video