A local company trying to break into the beverage industry big leagues with a Hawaii coffee cherry fruit drink recently altered its approach to counter financial challenges.
Kauai-based KonaRed Corp. cut back on advertising, withdrew its products from about 2,100 Walmart stores, suffered a major sales decline and had a larger net loss during the third quarter.
On the other hand, the company got its product into some Target stores, started selling coffee beans and hired a new president with major beverage firm experience.
The mix of developments — announced in a financial report filed Monday with the U.S. Securities and Exchange Commission — appeared to have little impact on the company’s depressed publicly traded stock. Shares of KonaRed closed at a 52-week low of 5 cents a share Monday, down from its prior closing price of 5.5 cents. On Friday the stock closed at 6 cents. Shares of KonaRed peaked at $1.24 in January 2014.
KonaRed has been trying to expand sales after spending years and much money on research and development, though growth has been slow and costly. The company was established in 2008, started selling beverage products in 2011 and moved to have its stock publicly traded in 2013.
Since inception and through Sept. 30, KonaRed has accumulated a deficit of $18.8 million. That was up from $14.6 million at the end of last year’s third quarter. The company has been funding itself largely through stock sales, debt and promissory notes that can be converted to stock later.
The company said its net loss for the July-September period rose to $867,965 from $814,521 in the same quarter last year. The year-ago loss was revised upward from an earlier reported loss of $752,485.
Third-quarter revenue fell 38 percent to $174,418 from $279,228 a year earlier that was revised downward from $341,264.
KonaRed said the recent decline was due to capital restraints that curtailed spending on advertising and marketing. The company reported spending $70,500 on promotion in the recent quarter, compared with $296,400 a year earlier.
Sales also were affected by ceasing distribution to Walmart stores after the retailer advised that it would raise fees charged to 10,000 suppliers for products carried in stores, KonaRed said in its report.
"We have discontinued sales to Walmart due to these fees," KonaRed said.
KonaRed also noted that in July it began selling its beverages in "select" Target stores with an aim to expand sales with this retailer.
"Re-orders have been steady since the start date and we believe Target will be a major customer as our relationship develops," KonaRed said in the report.
In August the beverage firm hired a new president and chief operating officer, Kyle Redfield, former general manager of beverage and fruit extracts company Pom Wonderful LLC.
Shaun Roberts, KonaRed’s co-founder, previously served as president and chief executive officer. Roberts remains CEO and board chairman.
In a departure from its focus on coffee cherry drinks promoted as having antioxidant health benefits, Kona
