Q1 2022 Zevia PBC Earnings Call
To discuss our progress against strategic initiatives in the first quarter of 2022.
Our growth in the first quarter as the past year was fueled by continued expansion of our consumer base and our household spending our brand continues to grow at two four times that of CSD in measured channels for the 12 month period ending March 31st.
<unk> gained another $1 3 million households, a 22% increase to yield of five 8% penetration.
We achieved gains across all pack sizes with over 500000, new households from the club channel alone.
Our growth is also bolstered by an increase in annual spend per household or buy rate of $33 92 up 9% versus the prior 12 months.
Translating this into business results are 24% growth in the first quarter came from a healthy split of <unk>.
51% from velocity and 49% from new and existing channel distribution growth I'll speak to these outcomes of our channel strategy now as well as innovation and unit Economics, and then turn it back over to Pat to provide a deeper dive into financial results and an outlook for Q2 as our first of two.
2022 price increases take effect.
In the first quarter, the food channel accounted for more than 40% of total CBA gross.
Food was bolstered by increases in store count, adding 643 store selling and buy new distribution on three reformulated citrus flavor six pack all three flavors are outpacing in growth versus last year and they added almost a half million dollars in sales growth for the quarter with two flavors topping the growth ranks proceedings.
This speaks well for the velocity impact of flavor improvement within our core portfolio.
The food channel also continued expansion and growth on premium beer 10 packs with most notable gains in east coast grocery where the brand penetration lags that of other regions.
Creamy root beer now ranks as maybe as number two selling 10 pack of the channel and was the number one growth scheme for the quarter.
We also saw significant expansion of top U S soda flavors, such as creamy root beer and Dr <unk> and Canadian grocery and.
Strong new distribution of CVR energy drinks and grocery across Canada.
Going forward, we remain bullish on the food channel for Q2.
Our summer limited time offer flavors are on display at several thousand U S retail outlets.
And our single serve 12 ounce sleek can soda line is rolling out through the quarter.
Club accounted for 45% of the growth in the quarter as a new channel in Q1, almost 250000 incremental households purchased Cvs cluster.
Then two thirds of Veeva buying households were new to purchasing the soda category in the channel emphasizing <unk> strategic value to the retailer.
Critically as maybe a household and club are also increasingly via trips in the food channel as these shoppers quickly become heavier <unk> consumers.
Performance in mass was solid in Q1 with the bigger news headlines in April with 13000, new points of distribution driven largely by moving from five flavors to our brand blocked 12 flavors and moving from six packs to a cardboard wrap APAC and the CSD aisle of one of the two major players nationwide.
A few miles down. This retailer has also expanded from two to four of our kids flavors and the other top mass retailer has also newly taken on four of our kids flavors penetrating a new portion of 2500 stores.
Results from these step changes in the mass channel will be forthcoming in Q2, and the balance of year results and we will open up further opportunity as 3500 mass merchandiser stores have yet to sell Cvs.
We await fall reset to open new opportunities there based on strong velocity in our existing footprint.
These channel developments underscore a healthy mix of 49% of growth from new distribution from food club and mass and 51% of growth from velocity.
The drivers of velocity, our mix shift to larger pack sizes, such as 10 packs and 12 packs and performance from individual improved soda flavors, but also from increased promotional efficiency, which is a good segue into my next topic unit economics.
Improving unit economics, and the fundamental focus of the organization and certainly of new incoming leadership and a key to our path to profitability in.
In the midst of rising costs, maybe you took pricing actions that will result in a 6% increase in core soda packages effective in the second quarter and has communicated an incremental 10% increase across also to packages in all retail channels and geographies from which we will begin realizing price in the second half of 2022.
Our second material initiatives and our drive to profitability is enhancing promotional effectiveness focusing on feature and display activity rather than shelf price promotion. This drove a 12 point improvement in lift versus the first quarter of 2021, while our total commercial spend was reduced by over a percentage point across the <unk>.
Versus prior year.
Finally, I'll speak to cost optimization initiatives.
We are optimizing packaging for a variety pack, resulting in a 15% savings on packaging cost per case. This will benefit both club and e-commerce channels.
We have multiple initiatives to optimize freight costs.
Based on increased volumes with a number of our customers. We are implementing a full truck policy across a larger portion of our business, resulting in savings opportunities of almost $500000 for the balance of the year.
As mentioned in the Q4 call, we will continue to remove freight miles from our supply chain as we scale new product lines packages geographies and customers.
We have also launched a new initiative to optimize inventory levels, which will reduce transfer freight and warehousing costs and improve cash flow.
The second area to review from our strategic initiative is product innovation and marketing.
January saw the Omnichannel DVA leave your best campaign, which supported new distribution and increased in store presence without increasing promotional spend strong marketing and sales execution flow through February and March and drove promo performance improvement versus Q1 prior year.
We've launched two new energy drink flavors in the market Strawberry Kiwi and pineapple Paradise with distribution in approximately 4000 outlets and exceptionally strong performance in E Commerce.
As mentioned previously our three new and improved flavor profiles in the citrus portfolio Orange Lemon lime twist in mountain and Cvs have driven increased SKU distribution and velocity across food and mass in the second quarter, we began selling the Cvs soda and single cans for the first time in a 12 ounce sleek format available cold and snow.
Grocery retailers in Delhi, grab and go and open air perimeter coolers, some of which is shipping now and finally, we will introduce new product rotations with one of our club partners. This summer and energy variety pack a T variety pack and a special summer edition mix of soda flavors.
New products, new variety pack mixes and improve existing formulations are all a part of our growth plans going forward.
And finally regarding our environmental social and governance or social impact priorities, we made strides in the first quarter asphalt.
We estimate we eliminated 3000 metric tons of sugar from our consumer diets in this quarter alone by replacing legacy sugary soda.
We eliminated over 48 million plastic bottles from littering, our roadways waterways in our communities by selling beverages in aluminum cans.
And lastly, unlike most better for you beverages, our soda is affordable to most American households, priced at the 30, <unk> percentile and all non alcoholic ready to drink beverages.
It is less expensive than 65% of those beverage options and affordable for a broad range of income levels.
With that I'll turn the call back over to Patti for a review of our financial results.
Thanks, Amy with Q1 net sales of $38 million, we achieved the upper end of our guidance of $36 million to $38 million.
Net sales growth of 24% in Q1 was primarily from unit volume, which increased 21%.
Optimized promotional spend accounted for the majority of the balance.
In the second quarter of 2022, we are achieving price realization from the actions. We previously announced and then Q3 anticipate realizing price from the pricing actions, we announced in May.
Cost of goods per equivalent use case in the first quarter increased by 17 points versus the same period last year.
Of the 17 points 12 points were from inflationary cost inputs, including aluminum and co pack manufacturing costs with product mix accounting for most of the balance sheet.
First quarter gross margin was 38, 4% compared with 46, 2% in the first quarter of 2021.
Turning to operating costs, selling and marketing expenses in the quarter were $4 $8 million higher than in prior year.
<unk> experienced $3 $8 million of increased transportation and warehousing costs largely due to increases in case volumes inflation and higher freight costs amidst a challenging transportation market in the U S in Canada.
Marketing expense increased by <unk> $9 million, reflecting our increased investment in growing the zebra brand.
General and administrative expenses in the quarter were $4 $5 million higher than in prior year, primarily from staffing costs to support our growth and costs associated with being a public company.
On a GAAP basis consolidated net loss was $17 5 million in the first quarter of 2022 compared with net income of $1 2 million in Q1 of 2021.
Equity based compensation of $8 9 million was a significant factor in our reported loss.
This $3 $1 million related to restricted stock unit Awards and Phantom stock awards that vested upon the expiration of the IPO lockup period in January 2022, which are nonrecurring.
Adjusted EBITDA loss in the first quarter 2022 was $8 $3 million.
Compared with an adjusted EBITDA income of $5 million in Q1 of 2021.
Turning to the balance sheet, <unk> had $58 $8 million of cash and cash equivalents and short term investments at the end of the first quarter and had no debt outstanding.
Xavier recently closed on a $20 million asset based line of credit with Bank of America expandable to $30 million to add to our available liquidity.
Inventory at $32 4 million.
Days of inventory outstanding of 125 days down from 140 days at the end of 2021 as a result of programs to reduce finished goods inventory.
We continue to grow our mission driven team focused on delivering positive results for our business and impact to the communities we serve.
As previously stated we announced two new executive leaders, the new Speckles as our Chief Financial Officer, and current GBM Independent director Quincy troupe, as our Chief operating officer.
Both Denise and Quincy bring deep experience across a range of consumer packaged goods and beverage companies and will be instrumental in continuing to drive cost optimization and improvements in unit economics as we scale.
<unk> began in her new role last Tuesday may three and is with us today.
Quincy will join the team and a full time capacity on June 13.
With that we will conclude our prepared remarks and open the lines for questions.
Thank you for our Q&A, if you'd like to ask a question. Please press star followed by one on your telephone keypad now.
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Our first question today comes from Bonnie Herzog from Goldman Sachs. Your line is open. Please go ahead.
Thanks, Good morning, everyone.
Good morning, Bonnie I guess my first question.
Morning is on your guidance. Your your topline guidance is I guess pretty back half weighted with your full year guidance, implying you know around 34% to 38% growth in the second half. So that's a pretty big acceleration from the first half Patti and you know really it's ahead of your historical.
And then your long term targets I, just want to really understand how much visibility you have on NASDAQ you know I guess gives you the confidence I mean, maybe you could help break down for us what's going to be driving that is it you know some of the distribution gains is it the stronger pricing that you've called out that would be helpful.
Yeah, absolutely so I think youre exactly right it starts with the pricing actions that.
We announced that we're realizing in Q2 as well as the incremental pricing action, we announced in May for which we anticipate realization in Q3, so price certainly underpin some of our assumptions, but certainly we also are anticipating acceleration in terms of volume Amy maybe you can comment on that further.
Yes.
Yeah, Bonnie Thanks, it's good it's certainly in price so realizing both price increases which are not reflected in Q1, but we also had strong velocity and new distribution trends in.
Historically, we've seen slight slowdowns in March and April preceding retailer resets in the key summer selling months of this year, we continue to post double digit growth week over week and expect acceleration as we launch limited time offer of new items and expanded assortment of time in market all within critically the new pricing architecture.
Okay, and then maybe just a follow up on that because just thinking about the pricing.
<unk>.
I believe you said, it's in May but then.
Kind of looking at some of the track channel data, which I know is not always.
Great.
Think we're still seeing some negative price growth in the data. So just wanted to understand the disconnect there and then thinking through.
No the pricing youre implementing it and.
How confident are you with the elasticity is holding you know just trying to get an understanding of how you expect your volume to hold up with the stronger pricing that you're putting into the market.
Sure Fair question.
Very early so just a few weeks into pricing effect actually on shelf, but we've had 100% acceptance on the retailer side of the increase and we anticipate strong consumer acceptance of the new price points, given our brand strength and given obviously category wide price increases. So we don't anticipate a material pricing.
<unk>, there and as we've said before our affordability puts us in a really strong position.
Broader inflationary environment. So when we think about pricing power, we think about strong brand loyalty, we think about strong velocity trends and we think about the fact that we stay in the 35th percentile of affordability from an index standpoint on all non out beverages. So.
Lot of pricing power going forward, we seek to see that showing up in syndicated data in the coming weeks and.
And we are hand in hand, optimizing promo spend so we saw a 12% as we said in our prepared remarks, a 12 point increase in lift while taking spending down by one percentage point relative to quarter prior year.
Rolling all of these up together, we don't expect.
Volume impact of negative volume impact on price and have tremendous momentum going into the increase is starting to show up on shelf now.
So that's helpful. And then so just to put the two together thinking about your guidance. So when you think about the back half with this pricing sticking and being in the marketplace Youre expecting I don't know mid single digits.
Price realization in the back half at minimum to drive the the accelerating top line growth is that how we should think about this.
Yes, So I think Thats correct and then are you, saying Youre down in addition, Bonnie.
The one other factor that we have that we touched on briefly in the prepared remarks is optimized promotional spend which contributes in.
In addition, so I think when we look at <unk>.
Original 6% on soda.
The incremental 10% pricing action plus call it two points from optimized promotional spend.
We are comfortable that we are both outrunning inflation, but also going to see those acceleration as reflected in the top line in the second half.
And okay. That's helpful and just remind us in terms of historically Patti has there ever been a.
Time that you put in this much pricing I know its unprecedented during this period with inflation, but just curious that you know historically, if you've seen other periods, where you've been able to pass through successfully some some pricing.
Well I think what we've seen is historically Bonnie we've watched retail pricing for <unk> continue to migrate down and we've ticked down from the 37th percentile on affordability two quarters to go to the 35th.
So certainly we have seen our affordability improve as Amy noted, we're seeing category price increases across the board from both category leaders and emerging brands and so I think in an environment, where <unk> remains highly affordable at less than a dollar. It can it is an accessible brand for Americans of all income levels and so I think we are.
Comfortable with the pricing power that we retained in the retail market and we have not seen any volume impact to date.
And so it's still early days as Amy noted, but I think we're very comfortable with our pricing power and the ability to continue to take pricing actions as conditions Merit.
And Bonnie I might add mainly all the facts.
I might add one more quick factor too.
Dynamic with <unk> business I don't want to say entirely unique relative to the rest of the business, but certainly strength of ours as it really is a multi pack business to date and thus the homestar brand. So in the current economic conditions consumers going out less spending less discretionary income and impulse channels.
<unk> impacting those that play in fountain single C store, our core business as a take home one and we're really well positioned to weather economic downturns and inflationary impact on consumer spending and this was evident in the early stages of the pandemic as we were actually taking promotion out of the marketplace and had tremendous growth trajectory there.
And again, we have really strong velocity and new distribution and consumer trade up in the market right now so a strong position I guess relative to broader business.
Excuse me, Bob Barnum beverage going into <unk>.
Sort of an economic overall downturn. So we have a lot of pricing power and strong trajectory and positioning going into the next few months.
Okay that makes sense. Thanks for that appreciate it.
Our next question comes from Ben Bienvenu from Stephens. Your line is open. Please go ahead.
Hey, Thanks, good morning.
Good morning, Ben the pricing discussion on it.
Dynamics can we could.
Could you talk a little bit about what role if measurable mix is playing in the ASP per case equation.
And.
How does that evolve as we move through this inflationary environment.
Yeah, Great question I can take that down so I think.
From a mix perspective.
We did see an impact to asps based on mix in the quarter and.
Largely attributable to.
The increase in our club business as Amy noted I think there is some seasonality.
Our business in terms of Q1 being pre reset for conventional food drug mass and natural retailers. So historically, we see some acceleration in conventional channels so to multi packs in the second quarter.
So what I would tell you is I think we're going to see ASP trends continue to evolve through the year I think pricing is going to be the biggest driver of that certainly more than mix. If that's helpful.
Yeah makes sense okay.
And then I wanted to revisit the stock based compensation you mentioned.
But there were some.
Nonrecurring dynamics associated with the lock ups, maybe going forward.
It sounds like it might be in the $5 million range, a quarter, which still seems quite high.
So if you could talk a little bit about what you expect in terms of that settling out to a run rate that would be helpful.
Absolutely so.
I think we noted in the prepared remarks, the equity based compensation.
That we recorded in 2021 was largely related to vesting associated with our 2021 IPO and so many of those vesting events were onetime in nature in the first quarter I think we experienced some remaining IPO related vesting.
Providing a specific forecast for equity based compensation as it is dependent upon some events departing and incoming employees that are outside of our control, but I do see.
That expense moderating over time.
As we get past that IPO lockup and the best thing that was associated with our 2021 transaction. So hope that's helpful.
Although we can't provide a crisp.
Forward looking forecast on equity based comp.
Okay fair enough.
Thanks, So much best of luck.
Thanks Pat.
Our next question comes from Andrew <unk> from BMO capital markets. Your line is open. Please go ahead.
Hey, good morning.
Wanted to start on some of the efficiency initiatives that you talked about trying to understand.
The expectations you have for the contribution in the back half of the year in terms of the margin recovery that you've talked about just trying to get a better sense for kind of how and when those layer into the back half versus what's incremental beyond that.
Absolutely well, thanks for joining Andrew and I can take that in terms of maybe I can start by just bridging the gross margin impact that we experienced in the first quarter.
So what I would tell you is it was driven first and foremost by aluminum inflation and aluminum pricing.
Accounted for slightly more than half of our gross margin impact in the first quarter.
Additional cogs items, including labor and co pack fees accounted for approximately an incremental 300 basis points of gross margin impact.
And then mix accounted for approximately 300 basis points now offsetting these was approximately 250 basis points from optimization of promotional spend.
So I think that backdrop is important in terms of understanding our go forward opportunities now lets start with aluminum in the first quarter, we paid slightly above $3000 per metric ton for aluminum.
Aluminum market today as reflected by pricing on the London metal exchange is currently in the mid 27 hundreds so after a spike to nearly $4000 per metric ton, we have seen aluminum or seed. So that's I think the first driver.
Some of that receding inflation that we anticipate at least on aluminum with regard to <unk>.
Other opportunities I think it's really around scale, a mix shift to higher margin innovation items, and then cost optimization throughout the supply chain, particularly as regards freight initiatives.
We are achieving through our full truck utilization policy to ensure that we're shipping full trucks in reducing freight cost per case.
Some inventory reduction initiatives, which provide a tailwind both in terms of the inventory carrying costs and warehouse expense, but also internal transfer freight and then finally continued optimization of our variety pack business, which currently.
Has slightly decretive margins because of additional labor associated with those repacked. So we're taking cost out of the system in a variety of different ways. In addition to the pricing actions that we discussed.
The promo optimization and the continued scale benefits. So I think those things in combination give us confidence that we will see that acceleration as well as enhanced or recovery on margins to historical levels in the back half of 2022.
Okay great.
Color was really helpful. And then I also wanted to ask about the T and energy drink categories. Generally Rajeev you I mean, I know, you're obviously not the biggest categories within the portfolio, but longer term what seem to be pretty significant opportunities.
At least in the measured channel data that we see it's been lagging. So I'm just curious how you think about the positioning of those those are <unk> in those categories is this kind of just a transition period as you kind of think about the go to market strategy.
Anything just broader thoughts about those categories longer term with your aspirations there.
Sure I can comment on that briefly so you are right to say there are tremendous opportunity distribution is moderate at best on those categories right now, but thats, our greatest opportunity because where we have distribution we have good performance.
I would mentioned, particularly in E Commerce, which is Ah trial ground for US and then upcoming in club with some rotations to to reach new consumers with both of those categories.
Particularly in energy, obviously, an exploding category, we have a really relevant proposition to be a clean energy drink zero calories. All plant based ingredients same five simple categories of ingredients as with our service proposition and so there is an opportunity both to trade up existing consumers into win new ones and you're right to mention.
Distribution as a key opportunity. So we're marching afternoon distribution in food, which of course with upcoming resets presents an opportunity for that to take place in the market and then obviously may manifest in the scan data and then we all have a clear opportunity as I mentioned in club and then most of all as these are our single serve cold <unk>.
<unk>.
Categories that we play in today now complemented by our sleek 12 ounce single soda for the first time in the market. We have a portfolio of three categories in immediate consumption proposition that we're taking to the market and math and so we're supporting them with cold equipment as we've discussed before but we should also see those in.
Really strong lineup in the natural channel and then increasingly in conventional food.
And so as you as you mentioned route to market then we will layer on the next opportunity in the fall and going forward. When we think about more broad immediate consumption channels such as convenience.
So each of those represent an opportunity for us from a distribution perspective, the products are really strong and it reaches a new consumer for us at a complimentary margin.
Okay, Great that makes sense and then just one last quick one here.
I apologize if I missed this did you or can you quantify the delta on the marketing investments and how should we think about that evolving.
Evolving through the rest of the year.
Sure, we anticipate continuity and marketing spend balancing here as it relates to a percent of net sales. So if we didnt mentioned that before that that's really clear and ocwen.
Got it thank you very much.
Thanks, Andrew.
Our next question comes from Bryan Spillane from Bank of America. Your line is open. Please go ahead.
Thanks, operator, good morning, everyone.
Good morning, Brian My question.
So my question is really.
<unk> discussed with you and Amy back in March just.
The up the process or the potential for.
A bit of a refreshing of the brand of the graphics the positioning.
Can you just update us on kind of where you stand in that process now.
Just.
Just from a timing perspective is that something maybe we will see.
Over the course of this year does that kind of move into the next year, just kind of just an update on that that whole process.
Sure I appreciate you asking about it as you know I'm passionate about this the most efficient pound per pound dollar for dollar way too.
Present, the brand in a stronger way to new consumers. So we are excited that our retailers will be the first to see.
The new look and feel Xenia, and we would be talking about that with them in what I'll call. This year's CMA season, the late summer and fall and speaking about 2023, and then you'll see a new look and feel video along with complementary marketing with a focus on trial and new consumers rolling into the next year. So that's helpful.
And I guess as you.
Is would you contemplate maybe an increase in marketing to support this.
Once you get into the market.
I think what we're anticipating is a shift in how we spend so as we continue to improve promotional effectiveness and.
And as we continue to shift our marketing dollars toward away from retail and towards trial out of the marketplace, where consumers live work and play we can achieve a lift in our impact from an impressions and cans.
And Hans perspective without.
Increasing our net.
Percentage spend on sales and marketing and Thats in our calculus for the balance of the year.
From a from a plan perspective, and it's certainly a principle that we're operating with and are building. The plan for 2023. So net net yes, we will spend more on consumer marketing, but it will come from within the sales and marketing budgets.
Alright, thanks, guys.
Our next question comes from Chris Carey from Wells Fargo Securities. Your line is open. Please go ahead.
Hi, Good morning, Patti you mentioned that gross margin.
Our expected to return to historical levels in the back half of the year can you dimensionalize that against historical levels are more in the mid forty's that would be pretty nice acceleration there.
I have a specific question on that.
Yes, absolutely well so Chris we are not providing specific guidance around those margins, but certainly despite that recent decline that was driven by inflation.
We're going to see that improvement.
Really it's derived from recent and future pricing actions and ongoing cost optimization and I should note.
Cost optimization is a huge opportunity and I think it's an important reason.
That both Denise <unk>, who has joined us as CFO and Quincy troupe as joining us COO. Denise maybe you can just kind of touch on your perspective on that cost optimization piece.
Yes, good morning, everyone.
So I wanted to and Super excited about the opportunity with CVI not just because of the company's rapid net sales growth, but also for the opportunity to drive profitability through improvements in unit economics and also on cost optimization initiatives for me the opportunity is clear and I think.
This supports very much looking at our gross margins and the work we're doing there.
Thanks, Patti Thanks Denise.
Chris a follow up on that.
So.
Yeah. So I just want to level set our pricing so you had announced.
6%.
<unk>.
And so but you are also implying more pricing and so is it 6% plus additional pricing you had noted there are 10% pricing coming in.
Maybe if you could just dimensionalize the various rounds of pricing and also to what level those are going to be coming in at and when that would be helpful.
Yes, absolutely. So as you noted the initial pricing action.
With the beginning to be realized in the beginning of Q2 and that was 6% on U S. Soda six packs, 8% on our energy and <unk> lines, We then announced an incremental pricing action, which we anticipate realizing in.
Q3 <unk>.
It's an incremental 10% on soda across all packaging types and geographies. In addition to those two pricing actions as noted we anticipate continued promo optimization, which we anticipate contributing an incremental two points in the back half of the year. So when you take that initial.
6% soda action, 8% energy and T plus the 10% incremental soda price increase plus the 2% anticipated optimization of promotional spend in addition to the cost optimization strategies that we've outlined I think we're quite comfortable with the opportunity to for those gross margins to return.
Turn to historical levels in the second half.
That's very helpful. So basically pricing is going to be tracking more in the double digits in the back half and are mid singles was thrown out there earlier, but it sounds like it's going to be decidedly double digits in the back half.
Headed into the front half of 2023.
That's correct.
Understood. Thanks, so much.
Absolutely Thanks, Chris.
Our final question comes from Alton Stump from Loop Conference call. Your line is open. Please go ahead.
Great. Thank you.
Hey, good morning, just wanted to ask about obviously.
It is the big question that everybody in the consumer space right. Now obviously, there is a strong need to pass through higher pricing, which everybody was doing to offset inflation.
<unk> also got consumers facing inflation, so how do you balance kind of the.
Outlook over the rest of the year, you're obviously raising pricing.
What youre doing but then also trying to be promotional particularly for lower end consumers to make sure that you are still.
And pricing them provide your products what after there.
First of all its carbon squeeze as well.
Yeah, I mean, maybe I can make some broad comments on.
Our view on the inflationary environment Aten, Amy I don't know if you have anything you want to jump in on but what I would say broadly is I think it's important to note where we're starting from 35 percentile across all non alcoholic or liquid refreshment beverages, which that's a product set that includes bulk stillwater and so at.
Less than a dollar of can call. It low 90 per can this is a brand that is affordable for Americans of all income levels and I think it's quite different than the inflationary impact we're seeing on hard goods, whether thats automobiles or household appliances.
This is not at 90 cents a can splurge for consumers, it's an affordable luxury with premium simple plant based ingredients and so tremendous value with the brand promise of reducing your family sugar by 50% overnight with the zero sugar simple plant based ingredient brand. So I think.
There's a really strong value perception for this brand among consumers, we have significant pricing power and as such I think we're anticipating continued response notwithstanding these pricing actions. So Amy I don't know if you have anything to add there.
Also I think the other thing as I mentioned at the top of the call, but our core business is and take home multi packs where home talking brand.
And so we're really well positioned to weather economic downturns and also just simply follow the market and price and stages of tick ahead of inflation.
And what we see is when if and when retailers have taken price up we see very little volume response, and thus consumer resistance to rising prices. That's just the environment. We're operating in and then incrementally advantage is veeva, because we're not reliant upon selling environment that that are.
The benefit from consumer discretionary spending such as.
Fountain in a restaurant environment or <unk>, such as convenience now those foodservice.
<unk> and convenience are strategic opportunities for us in the future as we put the right products in there at the right price point the right merchandising strategy that is a test and learn environment for us in the near term.
The vast majority of our volume that's in and take home and home stocking business and we the growth trends at the start of the pandemic.
Gave us a number of learnings that we will carry into this period of time with tremendous confidence about our consumers' response.
To price into our price I hope that's helpful.
Yes. Thank you very much I think that's all I got thanks, so much that evening.
Absolutely thanks for joining Alton.
We have no further questions I'll now hand back to Patti Spence for closing remarks.
Thank you well I want to thank you all for joining the first quarter 2022 earnings call for <unk>.
We continue to execute on our long term plan to create shareholder value by disrupting the global beverage industry, while changing the world one can at a time. Thank you for joining and we look forward to further conversations.
That concludes the <unk> Q1, 2022 earnings call. Thank you for your participation you may now disconnect your lines.