Reed’s, Inc. (NASDAQ: REED), a producer of top-selling sodas in natural food markets nationwide, recently announced that the company has entered into a new co-pack production agreement with its primary brewery partner. The company anticipates that this new agreement will result in a 500 basis point to 600 basis points improvement in gross margins.
Under this agreement, Reed’s main co-pack facility will continue to brew and produce, bottle and package Reed’s products; this new agreement replaces Reed’s previous agreement with its current brewery partner. The agreement is effective as of November 1, 2008, and will extend for a period of three years. Reed’s has the option to extend the contract for an additional one-year period.
The founder and chief executive officer of Reed’s, Inc., Christopher Reed, stated, “This new agreement enables us to significantly improve our gross margins and save us over $1 million in manufacturing cost in 2009. We are pleased to announce our re-negotiated co-pack agreement. The brewery’s commitment to quality extends over 100 years since it began operations in 1905.” Mr. Reed added, “Our revised agreement enables Reed’s to substantially reduce co-packing production costs, our largest manufacturing expense, resulting in tremendous gross margin improvement.”
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