Jones Soda Co. (OTCQB: JSDA), a Seattle-based craft soda maker, has announced a 15% revenue growth for 2024, reflecting its strategic shift into the cannabis market. The company, which is known for its unique flavors and customer-submitted label photos, has been expanding its offerings since launching its Mary Jones brand in the cannabis sector in 2021. Following a challenging 2024, the company plans to focus more on alternative adult beverages as part of its future strategy.
Newly appointed CEO Scott Harvey discussed the company’s recent operational challenges during the fourth-quarter earnings call. He stated that while Jones Soda started the year strongly, issues such as poor financial discipline in the latter half of the year hindered growth and tested the company’s resilience.
The financial report revealed that Jones Soda’s revenue increased to $19.1 million in 2024. However, the net loss also widened, increasing from $4.9 million in 2023 to $9.9 million in 2024. This widening loss is partly attributed to the financial pressures of competing in multiple beverage categories at once. A highlight for the company was the revenue generated by its hemp-derived HD9 products, which launched in January 2024 and brought in $1.7 million in their first year. The cannabis THC segment also saw modest growth, with revenue reaching $1.3 million, up from around $1.2 million in 2023.
The overall cannabis beverage sector has experienced significant growth, particularly with hemp, as more states legalize recreational marijuana use. Major companies, such as Canopy Growth Corp., which is backed by Constellation Brands, and Hexo, partnered with Molson Coors, have intensified competition for smaller operators like Jones Soda.
Harvey acknowledged the rapidly changing regulatory environment affecting hemp-derived products, which presents both opportunities and challenges for the company. He mentioned that Jones Soda is actively monitoring the landscape of the HD9 category and engaging with regulatory bodies to ensure compliance with evolving regulations.
He also referenced trend data indicating that in the next three years, $1 out of every $5 spent in the beverage category will be on alternative products like Mary Jones, which serve as substitutes for traditional adult beverages such as beer and wine.
Jones Soda’s venture into cannabis and hemp beverages marks a significant shift for a brand that has struggled with profitability since its inception in 1995. After enjoying peak popularity in the early 2000s, the company faced fierce competition from both established soda manufacturers and new craft beverage startups, resulting in years of financial difficulties.
CFO Brian Meadows, who has previously held executive roles at Black Rifle Coffee Company, Nathan’s Famous, and Dunn Brothers Coffee, stressed the importance of maintaining financial discipline moving forward. He noted that the company has introduced new processes for contract review and approval to enhance operational efficiency.
Meadows remarked that Jones Soda now possesses the right products to concentrate on, emphasizing that marketing expenditures will only be approved when there is a clear return on investment. He also highlighted their focus on improving supply chain and inventory management processes to bolster the company’s financial position.
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