‘Our business model offers attractive profitability…’

Los Angeles-based Zevia has been on the market since 2007, but is still generating strong double-digit growth, growing net sales by 29% to $110m in 2020 and generating a profit in Q1 2021, although it made a net loss of $6m in FY 2020, said Spence.

“When you even look at some of the mature food companies, a lot of them have gross margins in the mid-30s. We were at 43% in 2019, 45% in 2020, and 46.2% in Q1, 2021, so you can see a progression,” ​added Spence, who said two things consumers are consistently looking for are less sugar and natural ingredients.

“Higher-margin innovation items are also increasing as a proportion of our mix. When you look at a category like energy, that offers really exciting gross margins relative to soda.”

Asked when Zevia might become consistently profitable, he said: “We’re addressing a massive global $770bn opportunity, so right now it’s prudent to invest in growth and continue to scale this business, but our business model does offer attractive profitability… we’re fortunate to be in beverage where there are high gross margins.”

‘There are 50 jurisdictions around the world with taxes on sugar, soda or sugary beverages’

Looking at growth opportunities from a channel perspective, he said Zevia had distribution in 25,000+ locations in the US and Canada, but sees significant white space in convenience and foodservice as well as international markets and e-commerce.

“We started in the natural channel where we’ve been dominant for a decade. And even there, we’re still growing at double digits. And then we went for food, drug and mass, and there’s still a tremendous amount of upside there.

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