Jones Soda (NASDAQ:JSDA) made headlines recently when it beat out Coke (NYSE:KO) for an exclusive distribution deal at Qwest Field as the official soft drink for the Seattle Seahawks. Now the rumor mill's rumbling that deals with more sports teams may be in the soda company's future.
This marks the first time an NFL team will sell a soft drink other than Coke or Pepsi (NYSE:PEP), and at Jones' annual meeting of shareholders last week, CEO Peter van Stolk said other sports teams have talked to Jones about the possibility of similar deals.
Granted, this is just another example of why some investors are upbeat about Jones -- it has been stepping up distribution, moving past arrangements with retailers like Target (NYSE:TGT) and Starbucks (NASDAQ:SBUX) and onto the shelves at other mega retailers like Wal-Mart (NYSE:WMT), Safeway (NYSE:SWY), and Kroger. Deals with sports venues could certainly be helpful, exposing Jones to large crowds of potential new fans.
But there might be a hiccup. According to the Seattle Post-Intelligencer, Jones will launch new cola, diet cola, and lemon-lime drinks to be included in its lineup of at least six flavors for the Seahawks deal. This speaks to one of my thoughts: Other flavors of this edgy little company, like FuFu Berry, might not appeal to the broad sports fan crowd.
It's also interesting that van Stolk told the Seattle P-I that the company is moving into fountain distribution and plastic bottles through this deal, and canned drinks in suites. The bottles will feature photos of Seahawks players. Van Stolk cited the patent Jones has to use images of players and fans as a key component of getting the deal, which does hearken back to trading cards and the way 7-Eleven used to distribute collectible plastic cups featuring athletes.
Personally, though, I have to wonder if Jones' plans for widespread distribution will negatively impact its brand. It grew up as an edgy little soda maker; its original distribution strategy included venues like tattoo and piercing parlors and skate, surf, and snowboarding shops. It was quite successful in gaining a cult following of people craving alternatives to corporate giants like Coke and Pepsi, and its grassroots efforts paid off.
Jones is also well known for user-generated photos on its bottles, which are often pretty artsy, and clever sayings contributed by customers are hidden under its bottle caps. But, is this for everyone? Will the demographic that was originally attracted to Jones feel alienated by moves into sports arenas and retailers like Wal-Mart?
I do consider Jones to be an interesting company. It carved out a successful path for itself despite huge, entrenched players in the industry, and I have a soft spot for edgy companies that defy conventional wisdom. However, even with recent hits to Jones' stock price, just a quick glance at its P/E ratio turns me off immediately, especially given my concerns as to whether current optimism might be on the bubbly side -- and might signal coming erosion of its brand.
Longtime Fool Rick Munarriz developed a taste for Jones Soda long ago, as you will see in the following articles:
- Flat Soda
- Canned Laughter at Jones Soda
- And a blast from the past: 10 Stocks Under $10 for 2005
Coke and Wal-Mart are Motley Fool Inside Value recommendations. If you're looking for stocks that are more bargains than bubbly, click here for a 30-day free trial.
Starbucks is a Stock Advisor pick.
Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy.
