Zevia doubles down on platform brand vision: 'We're sourcing volume from, candidly, everywhere,' says CEO
Founded in 2007 as a better-for-you soda using the natural sweetener stevia instead of high-intensity artificial sweeteners prevalent in the category, Zevia went public on the New York Stock Exchange (NYSE) in July 2021 under the ticker symbol ZVIA and currently is trading at $7.75/share as of January 18, 2022 at 12 p.m. EST, down from its opening day share price of $13.65/share.
"Our market is a $770bn global TAM (total addressable market) across soda, energy drinks, mixers, and kids drinks... it’s almost the perfect market," noted Spence.
Speaking during the ICR virtual conference held last week, Spence said the company is firing on all cylinders investing in everything from innovation and consumer marketing to entering new retail channels such as club/warehouse where the brand can reach shoppers who have never tried a Zevia product.
"We are expanding into the warehouse club channel, which consumer data indicates is highly incremental for our brand, so it’s exciting for our brand. We’re showing very positive results there," said Spence.
In terms of new product innovation, Spence shared that the company has made significant advancements in the taste profile of its three citrus Zevia soda SKUs and will for the first time roll out limited edition flavors, fruit punch and orange cream, for the summer months.
"For the first time, we’re doubling down on marketing taste," Spence added.
The company also will introduce slim 12-ounce cans of its soda for less than $2 per can to offer consumers another affordable way to try the Zevia brand.
As for the rest of its portfolio, the company will be expanding its energy drink line with two new flavor editions, pineapple paradise and strawberry kiwi, which continues to be a high-volume, high-velocity segment for Zevia, added Spence.
Strategically, Zevia's expansive portfolio draws consumers from across the beverage segment from diet and full-calorie soda drinkers who want to switch to a better-for-you option to sparkling water drinkers who miss the carbonated sweetness of soda, according to Spence.
"We're sourcing volume from, candidly, everywhere," said Spence.
"Much of our growth is incremental, and that’s exciting not just for us but for the retailer. Folks that switch to Zevia, generally increase their category purchases."
Growth opportunities ahead
Zevia's cross-business efforts add up to a projected 30% long-term growth outcome for 2022, Spence said.
"A big driver of our ability to even accelerate those growth rates, is the new resources we have as a public company. We can really leverage those to enhance our shelf positioning but also create excitement at retail," added Spence.
"One of the things that we know is that the greatest driver of awareness is at store."
And the macro-trend of consumers looking to reduce their sugar intake will mean there's always a place for a zero-calorie beverage products that replace traditional sugar-sweetened beverages such as soda and energy drinks, noted Zevia president Amy Taylor
"We’re super bullish on the immediate and long-term opportunities with our retail partners, because they know as well as we do that 80% of shoppers are looking to reduce their sugar and that’s all year long and over 60% of shoppers are looking to introduce artificial sweeteners," added Taylor.
"We see shelf gains coming in the typical March, April, May reset season of this year."
Pricing and margin pressures
Asked about pricing and supply chain pressures, both Spence and Taylor said the company would see some price rationalization in 2022, but that Zevia would remain a more affordable beverage option compared to the rest of the better-for-you, premium beverage category.
"Zevia took a price increase in Q3 on 10-packs, but hasn’t taken a broad price increase since it’s been established as a national brand," said Taylor, who added that there will be a price shift (i.e. price increase) in 2022 across its portfolio of products.
"As a brand that is more affordable than 64% of single-serve beverages on the shelf and yet still premium and better-for-you, we see price as a key lever to reinforce our revenue growth, profitability, but also to reinforce our positioning in 2022."