EXCLUSIVE: Zevia CEO Talks Beverage Brand Differentiation, Distribution Strategy & More

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Paddy Spence is President and CEO of Zevia ($ZVIA), a B Corp certified beverage brand that makes calorie-free, sugar-free, and naturally sweetened beverages. Zevia first entered public markets on July 22, 2021.

Following Zevia’s first quarter earnings report on May 12, 2022, Spence took questions from retail investors via Public.com. Here’s an exclusive recap of the Town Hall event for Benzinga readers.

What were the best takeaways from Zevia First Quarter Earnings Report?

Paddy Spence: After being a public company for less than a year, we continue to transform the Zevia business. In the first quarter, we continued to increase net sales growth, added talented new leaders with experience in consumer packaged goods and beverages to the business, expanded distribution and continued our innovation pipeline. Going forward, we will continue to focus on growth, while improving unit economics through a combination of price realization, promotional spend optimization and ongoing cost optimization initiatives.

What is Zevia’s future growth strategy?

PS: Zevia’s net sales growth comes from a combination of velocity (higher dollar sales for each distribution outlet) and new distribution. In the first quarter of 2022, 51% of our growth was driven by velocity, as we increased the number of consumers buying Zevia in every store through a combination of better shelf placement, in-store marketing as well than out-of-store advertising and enhanced promotion. efficiency. During the first quarter, 49% of our growth came from new distribution, as we expanded into both existing retail channels such as grocery and superstores, and entered a new channel , Warehouse Club.

What is Zevia’s distribution strategy?

PS: Zevia’s distribution strategy started with retail channels focused on “at home” consumption, especially health food stores, conventional supermarkets, pharmacies and big box stores (like Walmart and Target), and e-commerce sites like Amazon.com. We have achieved success in these channels, with a significant increase in distribution, and in 2022 we began to expand into Warehouse Club chains like Sam’s Club and Costco. Going forward, we plan to expand into “immediate consumption” channels such as convenience stores and foodservice (restaurants, hospitals, educational institutions, etc.), and eventually the global market outside of the United States. States and Canada.

How have supply chain challenges impacted Zevia?

PS: We have been fortunate to maintain continuity of supply and strong stock and fulfillment levels for our customers. We have seen cost headwinds, particularly on aluminum cans and freight, which are impacting margins. Although the aluminum and freight markets have retreated somewhat from the price spikes we saw in the first quarter, we are cautious and do not expect further declines. Instead, we are mitigating them through pricing actions, optimization of promotional spend and various cost optimization initiatives.

How has the natural and organic products industry evolved and where is it going?

PS: More than ever, consumers are now looking for ways to control their own health through what they put into their bodies. This, combined with the increased availability of health and product information on the Internet, has allowed more and more people to find solutions to the health problems they were looking to address, resulting in rapid growth. and continues natural and organic products.

How does Zevia stand out in a crowded space?

PS: We have unique sources of competitive advantage, starting with our focus and authenticity. Being completely focused on sugar-free beverages with simple, plant-based ingredients and never having sold a plastic bottle in our history, we “stand for something” and have created strong consumer trust and loyalty.

What is Zevia’s mission?

PS: Zevia’s core mission is to impact global public health by helping consumers reduce their sugar intake. More than 80% of American adults seek to reduce their sugar intake, and this is due to the range of health effects of sugar. These include long-established links to obesity, diabetes and heart disease, as well as emerging studies linking sugar consumption to other diseases, including Alzheimer’s disease and cancer.

What is your plan to reach all demographics with this product, not only affluent consumers, but also working class people?

PS: Affordability is a key goal for Zevia, as we believe the options best for you should be available to people of all income levels. We track our affordability based on price per ounce against all soft drinks, and today Zevia is in the 35th percentile. This means that for still and sparkling water, sodas, energy drinks, mixers and children’s drinks, 65% of the products are more expensive than Zevia. We focus not only on affordability, but also on distributing our beverages to communities where we can have a positive impact on health by providing wider options.

Public.com members can view the full questions and answers in the application. Open To The Public Investing is a member of FINRA and SIPC. This content is not investment advice. Investing involves risk of loss.

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