Reed's Holds Talks to Get Into Restaurant Chains' Soda Fountains

  • Maker of Original Ginger Brew talking to three national chains
  • One deal could almost double the company's sales, CEO says

Reed’s Inc. is in discussions to get its natural beverages into soda fountains in major restaurant chains, aiming to capitalize on a shift by companies like Panera Bread Co. away from fare with artificial ingredients.

Reed’s is in talks with three different fast-casual restaurants that aim to end or lessen their dependence on the industry’s Big Two -- Coca-Cola Co. and PepsiCo Inc. -- for soft-drink service, Chief Executive Officer Christopher Reed said in an interview. One of those deals, worth $40 million, would almost double the company’s sales, he said. Reed declined to name the potential partners, beyond saying they were national brands.

The restaurants want to replicate their existing soda flavors, though without the artificial ingredients, Reed said. His company, which is known for its Original Ginger Brew, has been experimenting with “knocking off” other flavors for years, he said.

“What we’re trying to do is say, ‘We’re taking what you like to eat and making it healthier,’” Reed said.

Reed’s shares jumped 11 percent to $5.90 after Bloomberg reported on the discussions. The stock had been down 10 percent this year before the rally.

Panera’s Plans

Beverages are seen as the next battlefield for fast-casual companies such as Panera and Chipotle Mexican Grill Inc., which have already stripped chemicals and other additives from the food on their menus. Panera said in August that it was offering more beverages without artificial flavors, colors, sweeteners and preservatives. At the time, Panera said it was trying out different bottled drinks but hadn’t yet altered its fountain sodas.

Panera declined to comment on a potential partnership with Reed’s, which is based in Los Angeles.

Chipotle has removed all genetically modified organisms from its food menu, but it hasn’t taken a stance on beverages. Other companies also have made a push toward more natural menus. Papa John’s International Inc. eliminated additives from the chain’s pizza, and Starbucks Corp. removed artificial ingredients from its pumpkin spice latte.

Reed’s makes traditional colas as well as drinks customized for specific menus. For example, the company is working with a restaurant that sells a Thanksgiving-style turkey sandwich and has offered to make it a cranberry soda, Reed said. The company also can make his drinks low-calorie without artificial ingredients, he said.

“We are the most disruptive beverage company out there,” he said.

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