Q1 2025 Zevia PBC Earnings Call
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Speaker Change: Greetings and welcome to the Zevia Pbc first quarter 2025 earnings call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operators to sense during the conference, please press star zero on your telephone key pass As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jean Fontana, Senior Managing Director with Pado Investor Relations. Thank you very much.
Thank you and you may begin.
Speaker Change: Thank you and welcome to Zevia's first quarter 2025 earnings conference call. On today's call are Amy Taylor, President and Chief Executive Officer, and Girish Satya, Chief Financial Officer and Principal Accounting Officer.
Speaker Change: By now, everyone should have access to the company's first quarter 2025 earnings press release and investor presentation made available this afternoon. This information is available on the investor relations section of Zevia's website at investors.cvia.com
Speaker Change: Before we begin, please note that all financial information presented on today's call is unauthored [inaudible]
Speaker Change: Certain comments may on this call include forward-looking statements which are subject to the safe harbor provisions of the private security's litigation reform act of 1995.
Speaker Change: These bold-looking statements are based on management's current expectations and beliefs concerning future events and are subject to a number of uncertainties that could cause actual results to differ materially from those described on these bold-looking statements.
Speaker Change: Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today.
Speaker Change: During the call, we will use some non-GAAP financial measures as we describe business performance.
Speaker Change: The SEC filings, as well as the earnings press release, presentation slides that accompanies today's comments and reconcilations of the non-GAAP financial measures to the most directly comparable GAAP financial measures were all available on our website at investors.tv.com. And now I'd like to turn the call over to Amy Taylor.
Amy Taylor: Thank you, Dean. Good afternoon, everyone, and thank you for joining us for our first quarter, 2025 earning profit call.
Amy Taylor: I'm incredibly proud of the strong execution demonstrated by our team in the first quarter. We delivered net sales at the high end of our guidance range and immediately exceeded our adjusted EBITDA expectations.
Amy Taylor: Our Productivity Initiative continues to deliver cost savings that fuel investment into building our brand while moving us closer to profitability. We are gaining traction despite the uncertain macro environment and highly competitive category.
Amy Taylor: So briefly highlighting our financial results, first-quarter net sales were $38 million million dollars.
Amy Taylor: Gross Margin hit a record of over 50% and adjusted EBITDA, improved by $2.2 million to negative $3.3 million.
Amy Taylor: We also made great progress in advancing our strategic growth pillars.
Amy Taylor: First, we sharpened our brand identity and strengthened our marketing approach to drive engagement with light-hearted campaigns that highlight Zevia as a naturally sweetened, affordable alternative to sugary soda.
Amy Taylor: Second, we raise the bar on product innovation with a more sugar-like taste experience that we are rolling out in exciting new flavors as well as in some of our legacy sodas.
Amy Taylor: And third, we expanded distribution through existing and new retail partners, building on-shelf visibility and inviting trial through new packaging options.
Amy Taylor: Building brand awareness takes time, but we remain optimistic about our future for three reasons. First, the robust growth outlook for the better for you beverage category.
Amy Taylor: Second, our unique market positioning with great pacing, clean label zero sugar soda at an affordable price and then third the green shoots we are seeing in our business.
Amy Taylor: Turning to our first growth-killer marketing, we are focused on raising brand awareness with a sharper brand identity. We are bringing Zevia brand to life through fun and engaging campaigns that we believe have broad relevance and cultural appeal.
Amy Taylor: In March, we launched a new campaign featuring the highly popular crossover artist, Jelly Roll, who has been actively sharing his journey for living a healthier lifestyle.
Amy Taylor: The advertising campaign entitled Get the Fake Out of Here was another lighthearted parody of artificiality building on our holiday campaign but this time cooking a little fun at celebrity endorsement.
Amy Taylor: The campaign extended its reach way beyond paid media with social and editorial impact proving that the creative was compelling to a broad audience.
Amy Taylor: The campaign was also covered by People magazine and several other broad-reaching mainstream digital media channels.
[inaudible]
Amy Taylor: The ad is currently running on broadcast and streaming channels, including spots on American Idol for a 12-week period, and is activated across TikTok, Instagram and other social channels.
Amy Taylor: And finally, we activated on the ground with a Zevia pit stop reminiscent of the ads gas station setting at events like South by Southwest in March and at various 5K and other events with Jelly Roll over the last few months.
Amy Taylor: The campaign delivered a record of 2.4 billion earned to impressions and the most shared and the most engaging content to be a history.
Amy Taylor: We will build on this momentum and look forward to sharing more details on our summer campaign as we continue to pull new creative, inviting consumers to take a break from artificial.
Amy Taylor: With respect to our second strategic growth killer product innovation, we are raising the taste profile of our zero sugar sodas. Creamy root beer and our unique limited edition offering salty caramel have garnered strong responses and consistently out the phone and taste test.
Amy Taylor: In conjunction with these successes, we are expanding this more sugar-like taste experience into new flavors as well as into some of our legacy sodas.
Amy Taylor: In time for the important summer season, we are very encouraged by the better than planned initial sales performance of our newest flavor, Strawberry Lemonber, which in testing received the highest purchase intent score in Zevia's history.
Amy Taylor: This highly anticipated launch will be at the center of our summer campaign.
Amy Taylor: and then exclusive to Sprout, Orange Creamsicle is also available now.
Amy Taylor: and there's more to come as a part of Zevia's rapid innovation efforts to support expanding
[inaudible]
Amy Taylor: And then finally, we planned to build on the success we saw at Wal-Mart with Variety Pack
Amy Taylor: We are now rolling out a 12 count variety pack across approximately 80% of our grocery and natural channel stores through Q2 during spring reset.
Amy Taylor: We remain optimistic about our strong performance at Walmart since the launch of the modern soda set across all U.S. stores.
Amy Taylor: We believe that Wal-Mart's better for use so-to initiative will help to raise awareness and increase the consumer base both for the category and for the Zevia brand. Our new variety pack, supportive of driving trial,
Amy Taylor: Has been and continues to be the top selling ZBSQ since its launch. We'll be introducing an additional variety pack and new flavors at Walmart in the coming month, as innovation remains key in the fast growing competitive category.
Amy Taylor: In the suit channel, Albert Schultz has launched its own better for you so to set with next gen best. We believe the Zevia's strong grandlock at eye level in a vertical, sheltered position sets us up well to capitalize on this expansion.
Amy Taylor: Very early Reed, including the same store sales lift and trial of new products are very encouraging.
Amy Taylor: And then in the drug channel, Zevia gains new distribution across nearly 8,000 Walgreens stores. The assortment features six flavors in one variety pack and will additionally be on an end cap featuring summer beverages starting at the end of May.
[inaudible]
Amy Taylor: In convenience, we're executing new distribution across a number of regional players and two national banners on a regional basis.
Amy Taylor: Each of these represents an opportunity to test and learn with our sleek single serve photo offering and with variable merchandising approaches. This small footprint with top operators and regional chain can help inform a broader rollout both for the brand and the category and convenience.
Amy Taylor: And then lastly on distribution, our DSC or Direct Store Delivery Strategy continues to unlock improved improved indoor presence and new channel distribution. So the focus for now on the West Coast
Amy Taylor: We're encouraged to see that our test market in the Northwest continues to outperform rest of the market and in April , we launched Crescent Crown in Arizona with neighboring states to follow in parallel with new single distribution commitment at retail. [inaudible]
Amy Taylor: So, in closing, we remain bullish on Zevia's competitive position with an enjoyable, healthier and more affordable offering, and a moment when consumers are more focused on health and clean label products than ever.
Amy Taylor: We're encouraged by the early proof points we're seeing across our strategic growth pillars as we continue to work to strengthen our foundation for future growth. And so with that, I'll turn the call for the Girish.
[inaudible]
Girish Satya: Thank you, Amy. Good afternoon, everyone, and thanks for joining our call today.
Amy Taylor: Our first quarter performance reflects great progress against our long-term strategic plan.
Amy Taylor: We continue to advance our productivity initiative, which not only wrote record gross margin but yielded operational cost saving that enabled us to increase investments into brand building initiatives.
Turning to our first quarter results [inaudible]
Amy Taylor: We delivered net sales of 38 million, a decrease of 2% as compared to the first quarter of last year. The decline was primarily due to increased promotional activity.
Amy Taylor: This is partially offset by pricing and improved volumes driven by expanded distribution at Walmart, upsetting the previously disclosed distribution losses in clubs in one major mass retailer last year.
Amy Taylor: Gross Margin reached a record high at 50.1%, an increase of 440 basis points from 45.7% in the first quarter of last year. This improvement reflects lower product costs and improving inventory management partially offset by higher promotional activity.
[inaudible]
Amy Taylor: Downing marketing expenses were 15.3 million for 40.3% of net sales in the first quarter of 2025 compared to 15.1 million or 38.8% of net sales in the first quarter of 2024.
Amy Taylor: 70 expenses 9.1 million or 24.1% of net sales compared to 12.3 million or 31.8% of net sales in the first quarter of 2024 a decrease in 25.8%
Amy Taylor: In addition to cost efficiencies, we achieved record customer fulfillment rates during the court of
[inaudible]
Amy Taylor: Mark B. Expans was 6.2 million or 15.2% compared to 2.7 million or 7% of net sales in the first quarter of 2024. The increase was primarily due to higher marketing investments fueled by cost savings initiatives and freight and warehousing.
Amy Taylor: General Administrative Expenses were 7 million or 18.4 percent of net sales in the first quarter of 2025 compared to 8.1 million or 20.9 percent of net sales in the first quarter of 2024 largely due to top saving measures including player reduction to right size the business and focus on growth driving initiatives.
Amy Taylor: Re-structuring expenses were 2.1 million in the first quarter, which primarily includes employee-related severance costs and largely completes our planned restructuring initiative.
Amy Taylor: As a result of the aforementioned factors, net loss was 6.4 million compared to a net loss of 7.2 million last year in the proven 0.8 million.
Amy Taylor: I just said EBITDA lots of 3.3 million compared to the I just said EBITDA lots of 5.5 million in the prior year period. The 2.2 million improvement came despite the decrease in net sales as we continue to deliver on our project to be initiative and reinvest in the business.
Amy Taylor: Turning to our balance sheet, winning the quarter with approximately 28 million cash and cash and have an undrawn revolving grant line of 20 million.
[inaudible]
Now for Neatura Outlook
Amy Taylor: The success of our productivity initiative, which led to an annualized cost savings of 15 million, not only sets up on a strong cost of profitability, but enabled us to make key investments accelerate future growth.
Amy Taylor: We continue to find opportunities to streamline our operations and drive efficiencies in order to offset impending care of costs.
Amy Taylor: We are focused on what we can control in a challenging macro environment in the highly competitive category and it's working.
Amy Taylor: Based on our first quarter results, incurring trends in the business. We are maintaining our full year net sales guidance from the range of 158,163 million.
Amy Taylor: We're also maintaining our adjusted EBITDA loss range of $8 million to $11 million despite the impact of higher tariffs which are working offset with additional cost savings throughout the year.
Amy Taylor: Turning the second quarter, we expect net sales of between 40.5 million to 42.5 million.
Amy Taylor: We would note that Q2 and Q3 are historically the highest following quarters of the year due to suitability.
Amy Taylor: We expect you to adjust the EBITDA last to be between 2.2 million and 2.9 million. Receptive of increased marketing investments and higher promotions in addition to the higher tariff related costs that previously mentioned.
[inaudible]
Amy Taylor: In closing, we plan to continue to reinvest savings from our productivity initiative into driving future growth while managing our business frequently in an uncertain environment.
Amy Taylor: We remain confident that the work we are doing now will further strengthen our market position to capitalize on the robust growth and that better for you so to category and deliver sustainable, healthy, profitable long term growth.
Amy Taylor: I will not turn it over to the operator to begin Q&A.
Operator
I don't know, I don't know. I don't know. I don't know. I don't know.
Speaker Change: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment please, Oli Poe, for questions. [inaudible]
Our first question comes from Bonnie Herzog with Golden Chef.
Please proceed with your question.
Speaker Change: Thank you, everyone. I guess my first question is on your guidance. You maintain your full year guide and then provide it a Q2 guide.
Speaker Change: which I guess implies your top-line growth will accelerate to about 7% at the midpoint in 2H versus, I guess, about Black.
Speaker Change: in 1-8, as well as Eva Dock, Celebration, or, I guess, lower declines in the second half. So just hoping to hear a little bit more about the drivers behind this and maybe the visibility you have on this.
[inaudible]
Speaker Change: Sure. Thanks, Bonnie. You know, we feel really good about the progress that we've made and I'm hopefully see that as we ridder at the guide.
Speaker Change: There's strong execution across the board. Our productivity initiative in particular has really enabled important investments with the priority being driving brand awareness. We have a long runway for growth given the sustainability of the health and wellness trend coming from a macro perspective and then also related growth outlook for the better for you beverage category.
Speaker Change: and we've found our voice and brown marketing. Hopefully you can really see that and what we're putting out in our distinctive campaign. Our product innovation pipeline is stronger than ever and innovation really hitting the shelves now. So impact Q2 and following. Thank you very much.
Speaker Change: And then as you're aware, we have national distribution in Walmart and expansion within Albertsons in that footprint and others that all demonstrate momentum. I think Walgreens is another example.
Speaker Change: and then our DSD strategy to show it, showing some early promise of impact, including launching now finally some regional convenience.
activity.
Speaker Change: So while the macro backdrop keeps us, let's say prudent, could give a low visibility on consumer sentiment overall and we know the tariffs are a headwind.
Speaker Change: We look at each of the initiatives that we are driving and the discipline with which we are executing them and we know that while marketing will take time for an impact net net, each of these strategic growth pillars will bear fruit in the balance of the year.
Okay, thank you, that's all from the media.
Speaker Change: Second question from me if I may. Just, you know, let's you mention Amy, you have some success at Walmart to just
Speaker Change: Hoping to get a little bit more color on your business fare. I guess you know, my understanding is your past initial channel so . . .
Speaker Change: And so, how are things, you know, at the accounts of forming maybe relative to your internal expectations?
Speaker Change: And then, ultimately, you know, what are your expectations for the brand in Walmart and maybe, if you could help contextualize the space you currently have at the retailer and then, you know, how much more runway might there be. [inaudible]
Speaker Change: Thank you. Sure. Understood. Yes, thanks, Bonnie. So we're really pleased with our performance at Walmart, and it's a great partnership, and I say that in a couple of different ways. First of all, yes, we had to answer one of your subset questions there. The initial pipeline fill in the fourth quarter of last year.
So we're past the initial pipeline bill.
Speaker Change: So we have the first several months of the year to look at performance. We should just a consumer response to the category modern soda and Zevia's presence within it. And we're getting a combination of new consumers, trialing the product as well as Zevia fans picking up their favorite flavors.
Speaker Change: The new distribution is driving trial. Our early self through performances been encouraging and you know it is very early but I think there's also evidence that the partnership is quite strategic and collaborative and what I mean by that is. [inaudible]
Speaker Change: You know, as I mentioned, I hate briefly and prepared remarks. We are bringing another variety pack to the shelf at Walmart. We are bringing a new flavor that will launch first. [inaudible]
at Walmart, and we're able to do that mid-stride.
Speaker Change: in the year. So I think that demonstrates Walmart's agility, despite their size, and they're committed to modern soda and kind of moving with the category as the category moves. So we're excited to be a part of what is really a limited number of brands featured in that set.
Speaker Change: We have a strong, kind of anchoring position within the set, and while the set will be agile, given the competitive and fast growing nature of the category on the whole, we're really pleased with our position within it, and our opportunity to continue to innovate with Walmart, move fast with Walmart, and react to the learning that we've garnered based on consumer pull-through. [inaudible]
Okay, thank you all, have a good one.
Thank you. Bye.
[inaudible]
Speaker Change: Our next question comes from Jim Salera with Stevens. Please proceed with your question.
Speaker Change: Okay. I mean, Girish, good afternoon. Thanks for taking our question. Here's actually one to start up on the gross margin. Is, you know, 50% plus gross margin sustainable on a go-forward basis. And if you could maybe help us bridge, you know, the puts and takes between. [inaudible]
Speaker Change: Tara Pedwins, maybe to quantify how much of that is exposed in your cogs with the potential risks there are and then how we kind of offset that on the credit committee side.
Yeah, absolutely. Thanks for the question, Jim.
Speaker Change: We do believe, and I do believe that, you know, gross margins in the upper 40s are sustainable. I would note that the gross margin of 50%, you know, is also inclusive of what I believe to be a right size promotion spend as well for both the company and the category.
Speaker Change: as we think about sort of the rest of the year outlook.
Speaker Change: You know, a terrorist will be about a 200 basis point headwind that we will seek to overcome vis-a-vis product at the portfolio adaptations. Vis-a-vis continued work around price back architecture and continued changes in sourcing strategy. So we do have the levers to offset that in the very, very short run. You know, we will we will see some you know, we will see some of that impact it in Q2 more.
and be more impactful in Q3, but by then, meeting by Q3, Q4 will begin to offset some of it from that net.
Speaker Change: Gross margins of the upper 40s are sustainable, inclusive of this, you know, 200-biped headwind that we are about to, but we're beginning to see the impact of it.
Speaker Change: Okay, that's helpful. And then Amy, I wanted to ask a little bit on the convenience side. If I interpret your your prepare remarks correctly, it's just going to be the single cans, the thin cans and inconvenience. It is that. Thank you.
Amy Taylor: expansion, kind of governed by where you have the DSD relationships and that's where we should expect to see the single cans distributed with regional players in those areas and I guess the, you know, national brands that operate within those regions as well, that the right way to think about that.
[inaudible]
Amy Taylor: Yes, Jim Franklin, you nailed it on all points, so it's the 12-ounce sleek soda can that will be featuring in convenience.
Speaker Change: and the combination of both regional players as well as national banners on a regional basis.
Speaker Change: give us the ability to test and learn with pricing and merchandising strategies and combinations of featuring in the co box featuring a cold next to the register and a few other options with all with those singles. And yet you're also correct that we are executing that inside of our DSD.
Speaker Change: Footprint, which as of right now is the North West and the Southwest.
Speaker Change: So convenience and DSD moving together, which makes sense, it gives us a lot of opportunity to learn not only about our brand's performance and opportunity in convenience and readiness for convenience but also the category which is still very, very nascent within the impulse environment.
Speaker Change: I'd like you to sneak one quick fall upon that because you guys are going to have branded coolers in convenience and across the DC network.
Speaker Change: We do have the option to activate branded coolers and where those investments make sense so where volumes and space requirements would
Speaker Change: that type of placement, we would certainly do that. And as you probably remember from the past who had strong brand performance from branded coolers inside of a natural channel with sort of an impulse opportunity being near the register or near Delhi, you know, a natural channel often behave a little bit like a deli or like a convenience store in some ways.
Speaker Change: So yes, we have that option, but I would say that would be a bit of a phase two volume and space based opportunity.
Speaker Change: Got it. Thank you very much. I'll hop back in the queue.
victim.
Thank you. Bye-bye.
Speaker Change: Our next question comes from Eric Sarada with Morgan Stanley . Please proceed with your question.
Eric Serata: Great. So first housekeeping question. Should we think of, I guess what composes the bulk of the tariff exposure? Is it primarily aluminum or are there other items?
Eric Serata: in there that we should think about. And then bigger picture, I know it's early days of both some of your initiatives and the Walmart modern set. But what are you seeing in terms of household penetration changes?
Eric Serata: since, you know, the customer shell set changes and since some of your initiatives on the
Eric Serata: You know, product channel market standpoint and then, you know, sort of how does that inform your longer term, thinking in terms of 10 or household penetration for the category in brand.
Thank you for watching!
Speaker Change: Thanks, Eric. So I'll adjust your first question and then hand it over to Amy for the second part of your question. So in terms of the exposure to tariff.
He is Primarily Illuminum [inaudible]
Amy Taylor: There are some secondary impacts on some of our sources of stevia as well as, you know, some of the cross-border splash transportation costs between Canada and U.S., Canadian, rather, and U.S. production facilities.
Speaker Change: and so, but the real bulk of it is aluminum.
Speaker Change: Yeah, and I'm happy to talk just a little bit about, let's say, maybe sizing the opportunity and progress against that, starting with your first literal question I could put on Walmart
So while the war distribution has been additive
Speaker Change: to our household penetration. In other words, Walmart is helping us to grow the consumer base. That is in part just by the sheer number of stores, right? We've gone from 800 Walmart store selling to 4300, in other words, national distribution, and particularly in some geographies where we have slightly lower penetration and really fast growth rates like the South East.
Speaker Change: We're seeing support to reach new households through that new distribution.
Speaker Change: I think bigger picture, the healthier living and specifically sugar avoidance is not a trend, but it's really here to stay.
and the better for you, beverage category, remain.
Speaker Change: Highly attractive. I'll just share that better for you beverage comprises 25% of all FSD growth. So there's a big opportunity ahead for us. We are only in single digit powerful penetration at this stage. There's a lot of upside this brand.
Now, we're in 40,000 outlets selling.
Speaker Change: So, the game of growing distribution is a long-term one, and there is outside there in the mass channel, in the club channel, in the value channel, of course with convenience, which is a more strategic and long-term endeavor and then similarly in food service.
Speaker Change: So, yes, our health-hold penetration is now growing with especially tailwinds from Walmart.
Speaker Change: Yes, there's a lot of upside given it's in single digits at the moment and we have opportunity to grow it further, not only by penetrating existing customers further within the shell set and with in-store penetration to drive trials, but also with growth over time into
Our next question comes from Andrews.
Strelzik with DML, please proceed with your question.
Great. Good afternoon. Thanks for taking the questions.
Speaker Change: I wanted to start by asking about the marketing, and in particular, [inaudible]
Speaker Change: You mentioned the impressions which are great to see and the fact that you won't see the benefits in the P&L for some time. So I guess in the interim, how are you engaging the effectiveness of the marketing is it? [inaudible]
Speaker Change: Brand awareness or other metrics that you're looking at and have you seen any changes over the last couple of months as you started to step on the gas there [inaudible]
I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: Yeah, thanks, Andrew, obviously, of the topic around which I'm very passionate so...
Speaker Change: You know, brand building remains a top priority and marketing as a driver of awareness and trial therefore remains a top priority and you're right, it takes time for that to show up in the business. So long-term women's success through growth of the user base, right? In other words, that household penetration growth.
Speaker Change: And in the meantime, we measure consumer sentiment around the brand through surveys to seek out leading indicators and kind of pressure tests, collective marketing effectiveness. So you think about something like a brand health tracker in the market on a regular basis, to give us some guideposts on how the consumer is receiving our broader brand building messages.
So that's the long-term, that's brand building [inaudible]
Speaker Change: More near in, we can measure the impact of velocity driving investments through what I'll call a closed loop attribution model and think about that on a retailer by retailer basis.
So here we can flex investments across channel.
Speaker Change: and a club across retail, black ones, and we get lean in and learn as store conditions change as our priorities evolve.
Speaker Change: So in the current environment, we may reflect where we've been, you know, based on our learning, based on the macro here and there, but awareness and trial remain a priority and we'll continue to invest in brand in balance, in balance with, you know, investing in the velocity driver. So we think about this very much for the long term, but we're also leaning in and driving it for the short term with velocity support and retail and in e-commerce. [inaudible]
Speaker Change: Okay, great. That's super helpful. And my other question, I know you're only providing the 2Q and the annual guidance, but kind of as I think about the back half of the year, last year was a little bit abnormal. You talked about which are your typical bigger quarters. Is there anything else to keep in mind as we kind of think about the phasing of the growth through the back half of?
Speaker Change: The years, the fair to think, 3K is going to be a bit more elevated. We take a step back in 4Q or just anything else to keep in mind about the back half.
Speaker Change: Yeah, I think directionally, thanks Andrew. I think directionally you're correct. I mean, from a revenue standpoint, Q2 and Q3 remain the peak quarters for the year.
Uh...
Speaker Change: Sorry, there's some background noise here, and Q4 will be lapping the pipeline fill for Walmart.
Speaker Change: and then just from an EBITDA perspective, Q1, as you've seen in Q3, will be the elevated marketing spend for the year. And so, from a modeling standpoint, you can factor that in I do think about the quarterly cadence.
Great. Thank you very much.
[inaudible]
Speaker Change: Our next question comes from Sarang Vora with Kelsey Advisory Group. Please proceed with your question.
Great, thank you so much.
Sarandh Boro: You know, question is on the distribution. So, you know, you want, you did gain a lot of distribution Albertsons, Walgreens. Can you share how this rolls out over the year? You know, for example, Walgreens, you have 8,000 stores. Will it be like second quarter, third quarter is like a whole annual rollout.
Sarandh Boro: and then just staying on the topic of distribution. Are we done with lapping the club and the lot of mass customers if you had in retail at this point?
Speaker Change: Yeah, thanks, Sarang. So two points on the law green specifically and the expansion of Albertson. Law green will primarily be an impact in the second and third quarter of this year. The expansion of Albertson is obviously rolling out, I don't know, obviously, but is rolling out now and will be impacted into our two cute guidance.
Um, um,
as you think about the
Thank you for joining us. Thank you.
It works very well.
Speaker Change: Yeah, so timing, you were asking a back-up timing grant. Oh, and then it's the laughing of the club and Matt Taylor, so that was primarily in Q1 to a lesser degree. You'll still have that in Q2, but Q3, 4, it'll be fairly clean behind us, yeah.
I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: That's great. You know, I just had a quick question on the pricing strategy, you know, tariffs have come in, you talked about it, and then on the flip side productivity is improving, but then you are also stepping up some marketing over here.
Speaker Change: Can you share your broader thought on pricing? Do you think you need to take pricing in the back of the year, given these changes, or you feel more comfortable where you are right now?
Girish Satya: You know, I think let Girish speak to that sort of broader pricing he definitely owns that, but we see two things happen in the same time, and I'm sure it's increasing costs.
Speaker Change: and then headwind from a consumer perspective. And so we believe that there is room for price and we have work to do on our pack price architecture immediately and over time, but we haven't communicated anything specifically on price. Is there anything you'd clarify? No, I think that's...
Speaker Change: That's great. I mean, again, I would just reiterate, I think we continue to find opportunities to drive productivity and drive efficiencies in the supply chain. That being said, we also see ample opportunity in the short and medium term to really improve our price back architecture, so we'll be.
Speaker Change: toggling between the two for over the next several quarters as we try to dial that in.
[inaudible]
Okay, thank you.
Andrew.
Speaker Change: Our next question comes from Eric Dizzler with Craig Hallam. Please proceed with your question.
[inaudible]
Eric Dizzlers: Great. Thank you for taking my question. Just one high level question for me.
Eric Dizzlers: So in light of the macro uncertainty, are you seeing any
Reece and Changes from a consumer behavior standpoint in the-
Eric Dizzlers: better for you beverage category as a whole and then at the everyday price point where you operate.
Eric Dizzlers: I guess I'm wondering if you see consumers kind of trading out of the category or trading down to your everyday price point. I mean, maybe growth is kind of too strong in this newer category to notice these subtleties, but just kind of broadly, wondering if you see a market share opportunity as consumers get more price conscious.
Thanks
Speaker Change: Eric, I think the points that you're making kind of through your question are exactly right. So first of all, to literally answer your question, it is too early to say, we're not seeing movement right now, you know, if we read what we believe is coming in the macroeconomic environment, we're not yet seeing that in consumer behavior, but...
Speaker Change: What's our opportunity? Our opportunity is that we are the affordable option among great tasting [inaudible]
Speaker Change: You know, that's something that we've found has been an advantage to us over time and maybe even more now in this new era where we sit next to higher price and often functional option.
Speaker Change: So while it's too early to say, we do think we are well positioned to be resilient and maybe from a market share perspective advantage
Speaker Change: when we continue to be worth the dollar from a value perspective because there's no compromise and taste.
Speaker Change: We're a great tasting and clean label option, and then we're significantly more competitively priced. It's a soda priced like a soda.
Speaker Change: versus a new kind of price point from a functional beverage standpoint. So I think your observations are probably directionally astute, although it's not yet showing up in consumer purchase
Speaker Change: Alright, that's very helpful. I appreciate that color. Thank you.
Thanks, sir.
I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: There are no further questions at this time. I would now like to turn the floor back over to Amy Taylor for closing comments.
Amy Taylor: Yeah, thanks for your attention today, everyone. We are really pleased with the strong execution by our team, delivered in Q1 and the continued commitment that I'm seeing from them to execute against our key strategic growth pillars. And again, those are distinctive and engaging marketing.
Amy Taylor: Strong flavor and pack innovation, and then our efforts against distribution. So there's strong tailwinds in our category. There's exciting green shoots in our business.
Amy Taylor: and we have a clear position for our brand, given our tastes, clean label, zero sugar, affordable positioning. So despite the conversation around a muted macro, we're confident in and focused on a bright future for Zevia. Thanks for joining us today.
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Speaker Change: This includes today's teleconference. You may disconnect your lines at this time. Thank you for your participation
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