So there I was, sipping some caramel apple soda, carefree as a lark, over the weekend. But if I were a bolder man, I would have been chugging perhaps some candy corn or pumpkin soda instead. As it was, I chickened out and stuck with an old standby. You see, caramel apple soda is a staple in every kid's diet these days -- or so it seems when strolling through a Target (NYSE:TGT) store these days.
The eclectic soft drinks, sold in packs of four 8-ounce cans, are limited-edition Halloween flavors by Jones Soda (NASDAQ:JSDA). The odd pop is actually pretty tame by Jones' seasonal standards. Thanksgiving breeds the strangest of all concoctions from Jones -- Turkey and Gravy Soda.
The Halloween cans are an exclusive deal with Target. It follows the more conventional canned soda deal with Target that finds 12-ounce cans of flavors like cream soda or berry lemonade. Still, most sippers don't associate Jones with cans. It's the company's glass bottles with user-submitted photographs on the labels that generate most of the company's retail reach.
Jones' colorful bottled sodas can be found at select supermarket chains, as well as at your local Starbucks (NASDAQ:SBUX), Barnes & Noble (NYSE:BKS), or Panera Bread Company (NASDAQ:PNRA) location. It's a pretty impressive span for a tiny Canadian company out to compete against pop stars like Motley Fool Inside Value pick Coke (NYSE:KO) and Pepsi (NYSE:PEP).
Then again, it's that alternative beverage positioning and its offbeat flavors like Blue Bubblegum that have allowed the company to grow in the shadows. Last year, Jones Soda's profits tripled to $0.06 a share on a 37% spike in sales. Things haven't gone as well this year, with sales growing by just 20% and the company posting a $0.01-per-share deficit through the end of June.
That likely explains the wild ride that Jones Soda has provided for its investors. When I first wrote about the company back in March, shares could have been had for just $4 apiece. By early June, the stock had nearly doubled. It has since fallen back to roughly $5.
The prospects are promising as Jones Soda expands into energy drinks, juices, and even frozen pops. With its relationship with Target expanding (thanks to the new Halloween lines) and chains like Starbucks and Panera continuing to grow, Jones Soda should have little problem growing the top line. Getting margins back in line so that the company could continue to build on last year's profitability has posed the more serious challenge.
This doesn't mean that Jones Soda will ever pose a threat to Coke and Pepsi. It certainly doesn't have to in order to continue to appreciate from here. However, the company's aloof Snapple-like approach is worth watching here. Coke and Pepsi have had problems even with the most simple of variations (think Pepsi Blue, Coke C2, or Pepsi Edge), so they aren't likely to launch a cranberries-and-stuffing flavor over the holidays. Yet it was also that kind of offbeat attack that allowed Virgin to sneak up on British Airways in the United Kingdom.
So let Jones Soda pack some tricks into its bag of treats. That's the kind of disruptive tact that has produced some big winners in our Rule Breakers ultimate growth newsletter service. Candy corn in drinkable form can't be any worse for your teeth than the real stuff, can it?
Yes. Can it.
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Longtime Fool contributor Rick Munarriz enjoys Jones Soda's products and he also owns shares in the company. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
