All right. It's my pleasure to introduce Zevia for our next discussion. Zevia's a producer of zero calorie, naturally sweetened, plant-based beverages. The company's executing on a robust long-term growth strategy focused on enhanced distribution, increased velocities, and improving brand awareness. Zevia's initiatives are expected to drive an acceleration in 2026 sales growth and pair with the material improvement in its margin structure over the last several years, driven by disciplined cost management and efficiencies. We're joined by Zevia CEO, Amy Taylor, and CFO, Girish Satya, to discuss Zevia's strategies and outlook. Thank you both for being here.
Yeah, thanks for having us.
I guess I wanted to start on the, on the recent results. The company just reported very nice first quarter. Can you maybe talk a little bit about the results, the key drivers, and what was better than you had anticipated?
Yeah, sure. You know, we had really the company's best ever quarter since our inception, so we're excited about the momentum. The key drivers, I mean, the simplest thing to say is it's really the base business, which is nice to see, versus some timing variance or something. A couple examples of that is that we did back off on promo investments in Q1.
in order to prioritize the summer, in line with the rollout of our new packaging, a great new base taste improvement innovation, and some heavy up in marketing, which I'm sure we'll talk about. We backed off on promo, and yet retail sales still accelerated beyond our expectations. That's kind of the base business point. That's one thing. We did enjoy some growth in Q1, above expectations from new distribution, inclusive of a national rotation at Costco. We did get to see some acceleration of velocity, which would go hand-in-hand with, you know, my first point, so there's a good indicator of demand for us. Finally, we took a price increase, which we didn't take price prior year.
We had a little bit of a fast follower or a follower on price, and we got more out of the price increase, so got more of it through and realized it faster than we had planned. Those were some of the drivers of just exceeding expectations.
Okay, that was helpful. Especially coming off the price increase, I guess I'm curious what you're seeing in terms of the current operating environment and the consumer, especially as we've seen higher gas prices. Are you seeing elasticities are changing at all? Is that having any impact?
Yep. Not yet. Of course, we're cautious looking at the rest of the year. We're thoughtful about the rest of the year, given the macro. Maybe just to ground us in this, remember that we're a better for you product. We're a clean label product. We're a couple cents per fluid ounce more than mainstream soda, and the consumer is paying for that clean label. Zero sugar, clean label, and still a great taste, we are far less expensive than the products that we sit next to on the shelf. What's starting to be referred to as modern soda, oftentimes half as much. While we took price, we still have a long way to go, and there could be, you know, more pricing action in the future. Not necessarily in this year.
We are aware that obviously there's macroeconomic headwinds. One thing that we've realized over the last several years is that while we're not immune to the macro, we are a home stocking brand. We're a trusted brand that's been around for a little bit for our heavy user, and we're pretty resilient in the midst of sort of pressure on discretionary income, 'cause people still choose to provide better for you products for their family. We're not quite as discretionary as one might think that a treat like a soda would normally be. We are a bit of a habitual consumption product rather than an occasional one. As the multi-pack brand within the set that's better for you, that has a strong reputation, we kind of continue those purchase cycles with our heavy users, even in the midst of macro fluctuations.
It does seem though like across food and beverage, you're seeing a little bit of a more promotional environment. Maybe it lends itself, the answer to this question lends itself to some of the things you just discussed, How is your brand positioned for a more promotional environment? Are there things that position you better or worse than maybe some of the competitive set?
I mean, First of all, today, we sit in the modern soda category or better for you soda category. This is a category that is commonly kind of scattered throughout the store before it really had the definition that it has today. Excuse me. Walmart took modern soda nationwide. Albertsons followed quickly thereafter. Now additional retailers are starting to house all of these better for you sodas, some of which are functional and occasional and more expensive, and some are more accessible, like us, into one set. In that environment, we really are a unique player. We're sort of a one of one within the category in the sense that we have that accessible price point that we talked about.
We have classic soda flavors, so Cola, Creamy Root Beer, Cream Soda, Ginger Ale, and we have a lot of these new and on-trend fruity and fruity creamy flavors, so that's unique to us. The rest of the players are mostly just in that trendy flavor set. We come in multi-packs, so we're, as we said before, often a home stocking brand. All of that sets us up to play a unique role within the category. Going into the summer, we have a lot of tailwinds just from our initiatives. We're investing more in marketing. We have this improved flavor taste profile. We have a lot of innovation coming post-spring resets.
Yes, we're gonna lean in promotionally as well, but not just to get to a softer price point on shelf, but to drive activity in store, like you were talking about with your last guest, right? Like getting into promotions periodically in order to infuse display in the perimeter of store versus just staying on shelf is the objective there. I think we will fare well through this promotional environment, largely because we're positioned advantageously from a price perspective versus the rest of the category. The macro trends for the consumer in terms of consumer choice are away from sugar and away from artificial ingredients, so we're right there and accessible in this moment, despite, you know, all of the concerns about discretionary income.
I do wanna talk about some of those more proactive things that you guys are doing to grow. Before we do that, though, you talked about the recent results being as strong as they were. A couple years ago, there were some execution-related dynamics that had impacted performance. You made some changes internally, made some hires. I guess, how is the organization executing today? How have some of those changes impacted the business?
Yeah, I mean, I hope this is an interesting case study in the future, but thank you for teeing the question up that way. We have really been through a fundamental transformation as an organization, and the guy sitting to my left, not to give him a big head, but was a big part of that. Girish joined us just over two years ago as our CFO and drove a fundamental transformation, not just a cost out effort in the business, but a fundamental transformation of our organization, of our supply chain, and yielded, you know, massive improvement in the fundamentals like unit economics and cost of go-to-market, you know, throughout the supply chain. He can certainly talk more about that.
We've been able to do things in parallel that are normally in conflict with one another, improve cash while significantly reducing inventory and maintaining a 95%-98% fill rate. We're at a company all-time high fulfillment levels with half the inventory on the books that we used to have, and thus the cash flow improvement. We've also been able to improve unit economics while continuing to invest more in marketing, not less, right? Through working on cost of goods and taking kind of like the non-working dollars out of the system and put them into the front of house, if you will. We're standing on really stable footing now.
We delivered a profitable quarter, but structurally you can see in the business that it's built for profitability and really the top line is our focus from here forward because of the stability that we have now.
Anything from your perspective that you would add?
No, I mean, I think Amy kind of covered it. Like, it was a fundamental sort of shift in the business, you know, I think a lot of times in these situations, companies will either try to cut their way to, you know, success, or they'll just wildly invest to drive the top line. In some ways we kind of did both simultaneously, which is a little bit of a different playbook. You know, I think in the first quarter you're seeing, you know, how that playbook can actually work, right? Where we've continually improved profitability while also investing in the brand and obviously with a lot of proactive initiatives, we're seeing the, you know, fruits of that. We're excited about the long-term prospects for the business now that we're kind of fundamentally have shifted it.
Great. Shifting gears to some of those opportunities, there are many. First one I wanted to talk about was the marketing side and building brand awareness. You recently announced a partnership with Cardi B as a brand ambassador. Can you walk us through how that came about? What are the plans to leverage that relationship? Feels bigger than what we've seen you do in the past.
Yeah.
So
It's definitely bigger than what we've done in the past. We're really excited about it. I'm smiling just 'cause I know she can be a little bit of a polarizing personality, so it's always fun to talk about her. You know, first of all, we have some learnings from last year. Second of all, I'll tell you the journey of how we got there and what we're gonna do together. Learnings from last year, I would say, is we did a campaign and, you know, with limited resources, like, let's say a year ago with Jelly Roll, and I would say what we learned about that campaign is that it really helped to personify our brand. Like, okay, now I see what you mean by the radically real people's champion.
Now that we can start thinking about, okay, based on the learnings of that affordable campaign, frankly, because we did invest in advertising, but it really went viral such that we got far more out of it from social and editorial than we had to pay for in advertising. We took those two learnings. Personifying the brand is helpful, and then when you make great creative in advertising, it's gonna go a lot further through editorial and social. With those two learnings, we looked at just sort of a patchwork of other brand ambassadors, folks that love the brand. We get a lot of inbounds of celebrities that have been drinking Zevia for years and years and years, or it's on their rider, you know.
And that ranges from, like, Gen X rock and roll folks like Alanis Morissette to like, you know, people sort of the pop culture moment like, Nikki Glaser or, Justin Bieber. A lot of really interesting folks that have just been drinking Zevia for their health as early adopters. We got in a conversation with Cardi B, who works so hard as a working mom and shows up really authentically in social media and drinks Zevia. We started a conversation with her about what would a partnership look like that could be mutually beneficial. It's a multi-year partnership, you know, that is both cash and some equity, so she's invested in the brand and motivated to do more than the minimums of the contract, and she's really kind of always on for us.
We're excited about this year, kind of rolling out an actual campaign around her this summer, but so far we've just done more of the organic social on her side and our side. She did do her first ever arena tour this year, and we were a sponsor of the tour, so showed up on stage as well as activating in and around in the market at each stop. We're excited about the future with Cardi B, who's as radically real as Zevia is.
You said we'll start to see that kind of in full this summer. Where will we How will we see that?
Yeah. We have a, I mean, really a classic television advertising campaign in July with Cardi B that will also be activated 360 and show up in digital, et cetera. That will be by far our furthest reaching 360 marketing campaign that we've ever had as a brand. The goal, as you mentioned at the outset, is reach, right? It's awareness for the brand. She has 280 million social followers. I mean, it's like almost the population of the U.S., and she has the 25th most followed handle on Instagram, so she's way bigger than her music, right? She's just a kind of a pop culture icon and is very engaged in social. 20 times the followership of Jelly Roll and really Engaged.
Just holistically, long term, I guess, how do you think about the strategies to grow brand awareness, increase household penetration over time, and how will we see that continue to evolve?
Sure. Well, you know, as is often the case in beverage, the number one driver awareness is actually in store. The blocking and tackling of distribution expansion and improving sets in store, getting to eye level, getting a vertical brand block, and then penetrating other parts of the store is part of long-term brand awareness and household penetration building. The other thing that we're really focused on now that we're approaching profitability is investing back into marketing. Just getting up to minimum viable levels of reach and frequency, which at this brand has not enjoyed so far. We've had a great product platform without really enough support on the, what we'll call top-of-funnel marketing.
Long term, you know, we're at 5% household penetration right now, with a product that really solves the entire problem of 1 of the largest categories in the world, enjoying 90-plus% household penetration, which is carbonated soft drinks. The problem in that category is the tension between health and taste, for the first time you actually don't have to pick 1 because Zevia tastes great, and it tastes like a soda, and there's no reason not to drink it from a health perspective. It has the same health profile as, like, a sparkling water. With that proposition, we have a lot of work to do just to drive trial.
We'll be investing in marketing through 360 advertising and digital campaigns, sampling, grassroots marketing, ambassadors like Cardi B and others, and bringing the brand to life to ensure that we're getting more kind of liquid to lips and driving more trial.
I mean, you talked about investing in brand building and marketing, you talked about approaching profitability as well. What's the framework through which you're thinking about the right levels of marketing spend?
Yeah
growing marketing spend?
Yeah, let's get your perspective.
You know, it's a constant trade-off, right? As we're trying to do both accelerate top-line growth while also maintain profitability. I think as we continue to, you know, drive efficiencies and as we continue to drive revenue growth, we're gonna be able to reinvest into the business. I think importantly to note, you know, over the last 2 years, we've really right-sized our promotional levels of investment. We've brought those up significantly over the last 2 years. Marketing as a % of revenue is around 13%, we're starting to approach the levels of, you know, what I would say are appropriate for a brand of this size.
You know, I think we'll continue to invest in marketing, continue to invest where we see, you know, where we see efficacy there, and again, be able to get to profitability because the underlying unit economics are so much more healthy than they were, that incremental growth is gonna drive profitability irrespective of some of the, you know, headwinds that we're seeing.
As we think over, I don't know, the next couple years, obviously you've guided for this year, but the next couple years, that 13-ish% plus or minus is generally speaking a decent way to think about.
It's generally a decent way to think about it. I mean, as we think about the margin structure, you know, long run our gross margins should be in the mid-50s. You know, we likely would've been very close to that sans, you know, the impact of aluminum and fuel this year. You know, again, the margin structure is fundamentally different. I think we've really set it up for, you know, for long-term success. It should, again, when some of these cost pressures sort of subside, you know, we should be able to see that come through, again, create more capacity to invest.
Sure. Distribution, obviously another big opportunity. You talked about the resets. How much do you think distribution can contribute to volume growth this year? If you look across channels, kind of where are you seeing the most momentum and the most opportunity?
Yeah, sure. This year we'll grow from a mix of velocity and distribution.
Sure
which I think is a good healthy thing. Last year we had a true step change in distribution, so distribution drove most of the growth, because last year we went national in Walmart to 4,800 Walmarts. That was really a step change. This year we'll see continued distribution gains in grocery, so I don't wanna forget about our larger and developed channels, 'cause there's still a lot of work to do to expand same-store distribution there. We gained space, I mentioned in prepared remarks at Kroger, and some of the big regional guys like H-E-B and Publix, and there are others as well. We also improved our presence at Whole Foods, where we've been since the very beginning. That will drive growth from a source of distribution.
Upside for us includes Club, because we're in multiple regions, for example, of Costco. The great thing about that is that we then introduced ourselves into new regions that previously hadn't been exposed to Zevia, and some of them delivered quite surprisingly positive velocity, such that we got repeat orders, which means either we're gonna continue rotations in those new regions or gain permanent item status there. That would be an example of distribution upside on the year. Looking a little bit more long term, we still have a massive singles business to grow. Most beverage companies start out by driving singles and driving trial. Then you upsell the consumer to multi-packs. We've done the opposite. We are a multi-pack brand from the beginning for various reasons.
Now what an amazing opportunity to really step change the Household penetration with a focus on singles. This has been a little bit slow going, but now that we've done a brand refresh, the package speaks for itself and really communicates why Zevia on the can. We're doing an entire company-wide focus on rolling out singles through display this summer at the same time as the Cardi B campaign and some of the other stuff we talked about. The reason I bring that up is in the long run, singles yield distribution opportunities in channels like food service and convenience. They may not be major contributors to growth this year, but over time it just signals another avenue of increased-Household penetration.
Sure. You just mentioned the step up last year from Walmart. Obviously they've kind of repositioned the category, right?
Modern soda, as you mentioned, been a nice tailwind. We're in year 2 of that now. How has it performed? How does that continue to grow from here?
The modern soda set at Walmart started out as just four brands, super clean set. We were somewhat of an anchor brand, as I mentioned before, playing a unique role within the set. It's evolved now to be a little bit fragmented regionally, such that they're testing a number of better for you brands and sort of figuring out what is the definition of modern soda. For us, we've had really good velocity, evolution in the chain over time, we're really bullish on growing with them over time. It will take time. Right now, that it's a fairly small set, I think they could double or triple the size of that set given the number of new entrants, the necessity of holding sufficient assortment for Zevia. That will take time.
In the meantime, we're pleased with the results just from a pure velocity sort of sales per unit, at Walmart. It's just a great story for us to take, you know, that retailer A is performing as it is performing to many other retailers that are maybe under-spacing the category today.
Yeah. Are you seeing any of that carry over to other retailers yet? I mean, as you see this repositioning, I mean, it feels like a bit of a fundamental shift in approach. From the retail side, I guess, how are you seeing others respond, similarly or not?
Yeah. I think, first of all, I'll talk about just one headwind based on this dynamic, and then let's talk about all the positive evolutions. The headwind is there is obviously a shift, channel-wise from a macroeconomic perspective toward value. Shoppers are, you know, heavying up at Walmart and at, you know, on e-commerce and club. That's at the detriment of, you know, maybe more premium price, shoppers' experience at, like, a natural channel. There is some channel shifting.
Far more additive than that is the precedent that Walmart has set with this set is now contagious among mainstream grocery, right? We increased our space by 30% at Albertsons, as an example, last year, this year versus last year. In 2025, we increased our space by 30%. This year, we'll see another mid-single digits increase in space. We're growing from velocity perspective, but we're also getting more space. This is, again, another great story to take to other retailers that are following on. Part of the reason the category is a little bit difficult to predict right now is because these are all moving parts as retailers figure it out. Where should this category sit? Should it sit next to conventional soda?
Does it sort of bring new foot traffic into, you know, next to sparkling waters or teas? They're still figuring it out, so it's difficult to predict.
On the club business, you mentioned the rotation at Costco, it can be a bit of an inconsistent channel, I suppose. How do you think about club as an opportunity for the brand over time? Maybe what's your perspective?
Sure. You know, the goal is never to grow club to some massive mix of business, right? It has a role to play. It used to be that it played the role of really just volume and scale. Now it's really a sort of a treasure hunt experience for the for club members across all operators. It's a great place to drive trial. It is important for us. Today, we have everyday item status in a number of regions within Costco. We have upside in, you know, 2 to 3 times that within that chain alone in terms of gaining everyday item status in more regions or executing more national rotations similar to what we did in January. That would be, like, upside to 2026, as well as big growth opportunity in the long run.
We're today not in Sam's, and we have, you know, small test business in BJ's, and so that's a upside opportunity as well. Finally, Restaurant Depot, Jetro. Still a lot of the club universe for us to tackle to drive trial, especially on the East Coast.
Got it. Okay. Can you give us an update on the DSD expansion and the singles business, which obviously you talked about kind of as we get into the summer, you're gonna see a big push. Where is that today, and how are we thinking about kind of the path?
We have today and probably always will have a hybrid route to market. We're not full DSD. We're direct. We have other partners like UNFI and KeHE that get us to a number of channels. We have a few regions where we have what I would call pilots with DSD. Today, unlike the energy drinks business, today the vast majority of our business is in larger format stores, so grocery, natural, and mass.
The category itself is very underdeveloped in convenience, and I would say is going slower than many would have expected, and it's just a matter of who's the shopper in convenience versus who's the shopper at, you know, Target, Walmart, and grocery. DSD and convenience are a long-term play for us, but we don't expect that that will go a whole lot faster in this moment. Therefore, I don't expect to continue to grow DSD for now until we see more sort of acceleration within that channel.
Okay. How much of the business is it today?
Of DSD?
Yeah.
It's a very small percentage.
Okay.
Yeah. It's very, it's two regions in the country.
Yeah
Northwest and Southwest.
Got it.
They only handle certain channels for us even in that footprint.
Right.
It ends up being in the single digits.
There was discussion in recent quarters around the formulation, improved taste profile, some of the changes that you guys were making around that. Where does that stand now, and has it had any impact on feedback, performance? Kind of how, what are you seeing from that front?
It's super early going. Some of our innovation carries the formula that we're referring to as a more sugar-like taste experience. Some of the innovation is already demonstrating strength versus our average velocities, which gives us confidence both that it's the right flavor, but also the taste improvement is meaningful. The taste improvement around 10 or so other flavors, so somewhere in around like half of our core portfolio, is rolling out now with this new packaging and sort of in advance of this marketing push that we talked about. More to come on that, but early indicators are that we've really solved for a couple things that were opportunities for us, a richer flavor profile, like really a rich experience with each flavor, as well as just no aftertaste.
I think sometimes that's a perception around stevia, which is our sweetener, is that it would deliver an aftertaste. People are really surprised to find that that's not within the product in the vast majority of our flavors. For those that are in the room today, you know, there's a barrel in the back, try a, you know, a Orange Creamsicle or any one of the other new flavors. I think it's pretty surprising to people how much like sugar it tastes now.
Sure. We were just in the prior discussion talking about the portfolio approach being across different categories. You guys recently decided to discontinue the tea line. Can we talk about what was behind that decision and then go from there?
Yeah. Just briefly on tea. You know, tea is largely commoditized category, maybe not as profitable as some others, not growing as fast. What really merits our organization's attention is our soda business at 5% of household penetration. We can double, triple our household penetration with focus by simply just doing the basics on marketing and focusing on expanding distribution, accelerating velocity. We've opted to get out of our very small tea business, focus on soda, and then the upside is in energy drinks, which, you know, I think the consumer is ready now for a clean label energy drink. There was no overlap between consumers that drank energy drinks and people that cared about ingredients in the past, but that's changing. Our energy drink is really a next phase growth opportunity for us.
What is the, I guess, the plan around?
Sure. It's nearer than probably the last couple times that we've talked about this.
Yeah.
It's always been this like nascent little, you know, profitable, nicely growing energy drink in natural channel and in e-commerce. Because we have the stability that we talked about within the organization and the P&L, and as we start to see the flywheel working for soda, we turn our attention to energy drinks, and so there'll be more to talk about going into 2027 with energy.
Great. Turning to margins and the costs, and you've done a fantastic job on productivity in recent years. Can you talk about how much of that is still to go in 2026 and where you're continuing to see that productivity come from?
Yeah. As a reminder, you know, we've taken about $20 million out of the cost structure, let's call that 12%-13% of revenue on a trailing 12-month basis. The last $2.5 million, or really the last $5 million of that, is happening in this quarter, so Q2. At that point, the initial $20 million tranche will be done. We have identified an incremental $3 million-$5 million that will largely as a result of, you know, the cost pressures that we're seeing from fuel and aluminum that we've started sort of working on, and you'll see that likely end of Q4, but more realistically in the beginning of Q1 of 2027.
You know, we continue to find opportunities in COGS and selling expenses really continuing to prune and optimize our portfolio and continuing to sort of prune and optimize the supply chain. I think we're sort of nearing the, like I, you know, I've told the team the $20 million was the easy part. The $3 million-$5 million is actually gonna be a lot harder 'cause that, you know, we're past all sort of the easy stuff. But I think generally speaking, we'll probably at the last stage of like real cost out at that point. You know, it'll be minor improvements over time, but those are the big levers.
What is that incremental piece that to offset some of the more recent headwinds?
Yeah. I mean, it's very in the weeds around, you know, just from a product sourcing perspective, then just some incremental changes we can make regarding, you know, freight and transfer and some of where our warehouses are and things like that.
Got it. Can you maybe talk about how tariffs, kind of the oil-related price inflation, how that is impacting the business, where the exposure is, and how much of the guidance revision on the EBITDA side was from aluminum versus other inflation?
Yeah. Coming into the year, we had identified about a $5 million headwind from aluminum tariffs. We knew that coming in, so our fiscal year, our initial guidance for the year included that. Because of the war in Iran and sort of the incremental increase in fuel prices, we've identified an incremental $6 million headwind. Two-thirds of that is fuel-related, so that'll hit the selling, you know, and freight lines. The other third of that is basically incremental pressure on aluminum costs. If you add all that up, that's $11 million, right? If you had taken that, sort of if you pro forma that against where our annual EBITDA guide is, I mean, you'd have a business in the mid-single digits from an EBITDA margin perspective.
As we talk about some of these, you know, incremental costs out and maybe the eventual, you know, eventually these costs subsiding, these cost pressures subsiding, I mean, I think that's what you'll see, you know, in 2027 and beyond is a business that is delivering, you know, mid-single digits and, you know, improving profitability over time. That's really where we, you know, that's really been the biggest headwind that we've seen. We knew some of that coming in to the year, but of course, the incremental stakes was the surprise.
Sure. With all the costs that you have taken out of the business, the ability to find more, you've talked about pricing opportunities over time. Has your thinking around the long-term margin potential of the business evolved at all? If not, why would that not be the case?
Yeah, I think generally speaking, you know, I always thought when I joined that this would be a double-digit EBITDA business, and I don't think that has changed, right? Yes, there's been some Maybe getting there isn't gonna be as fast as I initially thought because of some of these headwinds, but when you look at the overall opportunities, mixing further into singles, growing penetration of our energy drink, just general scale and pricing opportunities that we have, I don't see a reason why we couldn't get there. You know, although, you know, again, although there are these pressures that we didn't foresee, the reality is it hasn't changed my original thinking, and I think the pathway is still very clear, and I think the changes that we've made will eventually, you know, will eventually get us there.
Maybe I'll take a bit of a different, a more positive approach to that question. With more costs coming out, maybe some of these inflation headwinds are more transitory, temporary in nature. Is there more upside to that than maybe you originally thought?
TBD. I mean, it's hard to know. It feels like every year we've now had a macro shock. You just, it's hard to, you know, look into the future and understand what may or may not change. Generally speaking, I think I feel pretty good about what the work we've done and the progress we've made and, you know, the levers that we have remaining at our disposal to get there.
Got it. Okay. On the pricing topic, how do you think about the right level of price for the business on a, on a relative basis, maybe on an absolute basis, and the right cadence to take that pricing? If you could walk through your thinking around that'd be great.
Yeah. Girish.
Yeah. I mean, as a reminder, we took price early this year, we did not take price last year. Generally speaking, like we're in a premium category, but on a price per ounce basis, we're a slight premium to mainstream soda but at a significant discount to the rest of the sort of modern soda players. I think generally speaking, that's where we try to, that's where we try to play 'cause we're really focused on how do we deliver the most value that we can to our consumer. Especially in this environment, we think that's even more important now, you know, we're priced really well.
Not only to sort of create long-term opportunity to continue to take price, but at the same time really capitalizing on this moment where the consumer is looking for value. I think generally speaking, we're where we want to be from a pricing perspective, knowing that there is opportunity in the long run, but at the same time, being very focused on delivering as much value to the consumer as we can.
The next time you would look at that, presumably, I think you said 2027.
Yeah. It's unlikely that we'll do anything this year.
I think I ask this every year, but I'm gonna ask again. When you think about the long-term growth rate for this business, what is the right achievable level that we should think about, and how do you think about the composition of that growth across the drivers?
You talk about long-term growth.
Yeah
talk a little bit on-
Yeah. I think generally speaking, you know, this should be a business that is growing in the teens, mid-teens, you know, on a long-term, you know, basis. I think generally speaking, you started to see that, you know, in Q1 where when all of the things start to hit, that's where you can see the recipe for that type of growth. I think generally speaking, we're very bullish on all the changes we've made. You know, if you look at the guide, there's a little bit of choppiness. We're discontinuing tea.
We were shifting promotion and marketing into Q3 to coincide with the new packaging and new, you know, enhanced flavor, as well as just a heavy up in terms of top of funnel, you know, brand awareness. In the year you see a little bit of choppiness, but generally speaking, I think we're pointing towards having all of the right pieces in place to really accelerate top-line growth. That's what we're really excited about, sort of getting all of the foundational work behind us so we can really, sort of laser focus on how do we accelerate growth. As we look forward, that's really where we see, you know, the business, where the business should be.
Maybe just, you know, as a reminder, we've been around like 18 years. Zevia's around for a long time, kind of super serving a very small group of early adopters that, like, drank a ton of Diet Coke and hated themselves for it. It was invented by a couple, the wife of which who drank a ton of Diet Coke, and they created Zevia Cola to get her off of Diet Coke and convinced a few other folks to do that. Made some six-packs and sold them in Whole Foods, right? We had a product that really the consumer should have wanted but wasn't quite there yet. What's changed is now we used to be the number one in a category nobody cared about.
We're now in the top three brands of a category that everybody's talking about because now soda can be better for you. There's this tremendous category tailwind that is built upon a macro shift away from sugar and, with a younger generation, a move away from artificial ingredients, which is our superpower, that we have truly zero sugar, not just a few grams. We have the cleanest label you can really comprehend beyond water, right? We have fewer ingredients. Why do I mention that?
Just when Girish talks about kind of this flywheel and this growth expectation that we have in the teens over time, we are capitalizing on tremendous category tailwinds, and then we've rapidly improved the product to kind of meet the moment, and we really believe We had somebody say to us, "Hey, I was standing in the carbonated soft drinks aisle, and I was looking up and down." The fact that it's Coke and Pepsi and KDP that's the entire aisle, and it's one of the highest foot trafficked aisles still in the inner aisles of grocery.
He said to us, "I was picturing that in, you know, in the next generation, this is all gonna be today what we call modern soda." If you can picture the idea that, like, hey, just a couple cents per fluid ounce, you're gonna get a clean label soda that you can stock at home and drink every member of the household all throughout the day without having to think about, "Should I really be drinking this?" It's a pretty big unlock.
On that foundation, we kind of walk that back and say, "Well, how do we you know, not overspend and get over our skis or get distribution too fast, but in a disciplined manner continue to grow household penetration and distribution for what we believe could be a really big business?" We feel like we're on the precipice of some exciting things.
I think that's a great place to end it.
Okay then.
That was perfect. Thank you very much.
All right. Thanks very much for having us.