Zero-calorie soda brand Zevia, which has long relied on direct warehouse distribution to its grocery customers, recently partnered with a handful of DSD operators to extend its presence in a range of other retail channels, including foodservice and convenience stores. Following its partnership with a small contingent of Anheuser-Busch-aligned beer distributors in Minnesota and western Wisconsin, Zevia last month formalized a deal with Haralambos, the largest independent distributor of non-alcoholic beverages in Southern California.
“We view [DSD] as complementary,” said Paddy Spence. “We can leverage the efficiency of that warehouse direct business and get great pricing for the consumer, and then use DSD to supplement that and expand distribution to a range of primarily single-serve venues where that consumer has access to our product.”
Noting that carbonated soft drinks have a broad range of placement opportunities, and calling Haralambos a distributor that goes “everywhere,” Spence sees significant upside for development of Zevia in new retail channels. As such, Zevia’s team will look to places where the zero-calorie soda is growing in demand, including fine- and fast casual-dining restaurants, universities, hospitals and other retail locations, particularly those where the brand is known among consumers.
Spence said that Zevia is currently in discussions with a number of national and regional restaurant chains for placement of its soda products, which recently gained non-GMO certification. Spence noted that while fountain-poured beverages are common at fast-casual restaurants, he believes that consumers increasingly associate the drinks with big soda brands and unhealthy consumption. As a result, there is greater opportunity for packaged beverages — especially health-focused versions — at on-premise retailers.
“I think the fountain is inextricably identified by consumers with commodity soda,” Spence said. “The reality is, you go into a restaurant and see a fountain dispenser and that reminds you of McDonald’s and that reminds you of Diet Coke. What I think shoppers recognize is that packaged beverages denote upscale and better-for-you.”
As an example, Spence pointed to Chipotle, which he believes is a fast casual restaurant chain that has enhanced its reputation via the addition of premium and packaged beverages. Along the same lines, if consumers continue to identify fountain drinks as unhealthy, Spence believes that “20 years in the future, fountain drinks will not be a material part of the category.”
Beyond foodservice, Spence said that DSD will help the brand gain a deeper presence in convenience stores, which, like on-premise retailers, is seeing a shift in merchandising and product assortment of beverages. Aiming to take advantage of that evolution, Zevia recently signed a deal with Holiday Station, which operates convenience stores in the Midwest and Pacific Northwest, for retail placement of its beverages. Zevia is leaning on its partnership with DSD distributors in Minnesota and western Wisconsin, including Capital Beverage, Thorpe Distributing, Bills Distributing, to service Holiday Stations stores in those two states.