Reed’s, Inc. Completes Acquisition of Sonoma Sparkler Brand

Deal marks the ‘maker of the top selling sodas in natural foods stores’ entrance into new market that exceeds $100 million year in sales

Asset purchase brings Reed’s six new brands of established premium sparkling juice with proven distribution

LOS ANGELES, October 28, 2009 (MARKETWIRE) — Reed’s, Inc. (Nasdaq:REED), maker of the top-selling sodas in natural food stores nationwide, announced today that it has purchased the brand and certain assets of Sonoma Sparkler, including the six beverages sold under the brand, for a price of $252,000. The Company commenced packing and selling the Sonoma Sparkler products in June 2009.

Branded sparkling juices sold in the 750ml size bottles represent a significant part of the overall beverage market. Two privately-held companies, Martinelli’s and Knudsen’s are generating roughly $50 million in sales from mainstream supermarket accounts alone. According to recent IRI data, Martinelli’s generated roughly $45 million per year in sales and Knudsen’s did roughly $5 million in sales of sparkling juices from this category.

Reed’s has proven its success in acquiring and growing brands. The company bought the Virgil’s brand less than 10 years ago when it was doing approximately $600,000 in sales. Sales have increased by 1200% in that period of time. Reed’s has expanded the SKU’s for Virgil’s to 10 items. Today Virgil’s is generating roughly $7.5 million in sales and over $2 million in gross profit on an annual basis.

Mr. Chris Reed, Founder, Chairman and CEO of Reed’s, Inc. commented “The Sonoma Sparklers brand is a natural complement to our existing product lines. The sales are through our distribution channels and we share many of the same customers.” He added, “Sonoma Sparklers have great potential. These beverages are 750ml size celebration drinks, a category that is traditionally sold more heavily in the 4th quarter. This will enhance our seasonality-by bolstering fourth quarter sales. More strategically, it strengthens our 750ml production capabilities and re-focuses the efforts of David Cortz, the founder of Sonoma Sparkler, toward Reed’s business development in private label sales. David’s experience is invaluable in our launch into this new line of business.”

Mr. Reed continued, “While the Sonoma Sparkler brand products will comprise a small part of our overall revenues, the premium products fit nicely within our corporate strategy. They are comprised of all natural ingredients of the highest quality, with strong brand recognition and customer loyalty in the markets that are served.”

The purchase will be paid in cash from gross profits generated from sales of the Sonoma Sparklers brand over the next 24 months. The Company stated that because this was a cash purchase and did not involve stock, it will not result in any dilution to existing shareholders.

For more information about Sonoma Sparklers please visit: http://www.sonomacider.com
The Company has filed an 8K, which can be viewed at: http://www.sec.gov.