The Los Angeles-based firm announced the pricing of its IPO of 10.7m shares at $14, and also granted underwriters a 30-day option to purchase up to an additional 1.6m shares of its Class A common stock at the IPO price, less underwriting discounts and commissions.
Zevia enjoyed a stellar year in 2020, increasing net sales by 29% YoY to $110m, while increasing gross margins from 43% to 45%. While it posted a net loss of $6m last year, it was in the black in the first three months of 2021, and – according to an S-1 form filed with the SEC on June 25, "anticipate[s] enhancing our profitability in the coming years.”
Zevia said growth was coming from a combination of velocity gains, a surge in its e-commerce business (now accounting for 13% of sales), and increased distribution, with products now available on Amazon, Zevia.com, and 25,000+ retail locations in the US and Canada.
In the US market, it said, “There is significant opportunity for our products in the drug, warehouse club, convenience, and foodservice channels, which accounted for more than 50% of carbonated soft drink sales in the US.”
However, Zevia also sees opportunities for international expansion beyond the US and Canada: “We are particularly focused on regions such as Western Europe, Latin America, and Asia where there have been significant sugar tax implications, as well as further legislation to combat sugar consumption.”
According to SPINS data for the 52 weeks ended May 16, 2021, retail sales of Zevia grew 25% YoY, outpacing 9% growth in the overall zero calorie soda category, said the company, which says its offerings are becoming increasing relevant as consumers seek to reduce their sugar intake and avoid artificial sweeteners (sucralose aspartame, ace K), which still dominate the diet soda category.
Core zero-calorie soda line accounts for 86% of sales
While stevia-sweetened variants of Coke and Pepsi (Coke Life and Pepsi True) failed to set the world on fire, Zevia has continued to gain traction, particularly with Millennials, claimed the company, which has refined the sweetening system deployed in its core recipe over the years, removing monk fruit and erythritol, and focusing solely on stevia leaf extract (coupled with carbonated water, citric acid, and natural flavors).
“Our passionate consumer base over-indexes to Millennials, whom we believe will continue to favor our better-for-you, more sustainable liquid refreshment beverages as they age... Zevia drinkers have historically increased their brand spending over time, and tend to spend more on average than traditional shoppers within the soft drink, energy and ready-to-drink tea categories.”
Zevia's core zero-calorie soda range still accounts for the majority of sales, while its cola SKU alone accounted for 24% of its retail sales last year.
However, brand extensions launched since 2016 (sparkling, Energy, Kidz, Mixers, Organic Tea) comprised 14% of net sales in 2020, said the company, which has an ‘asset-light’ business model deploying third-party contract-manufacturing and logistics providers.
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