Zevia, a maker of stevia-sweetened zero calorie beverages, announced today it has closed a $200 million minority investment by Canadian firm Caisse de dépôt et placement du Québec (CDPQ).
According to Zevia CEO and chairman Paddy Spence, the new financing will support a global expansion strategy in the coming year. Currently sold in over 35,000 retail locations in the U.S. and Canada, Zevia will now aim to go wide and far, with Spence mentioning diverse markets such as the U.K., Malaysia, Australia, Argentina, New Zealand, Poland and Mexico as eventual targets, though he did not give a timeline or trajectory for which nations the company will target first.
The rise of sugar taxes across the world, he noted, have led international consumers to adopt better-for-you beverages.
“I think we’re seeing through a combination of consumer demand and regulatory policies that there’s a real desire to transform the beverage landscape and offer clean ingredients, zero sugar products,” Spence said.
The company will also continue to focus on growing market share in North America and plans to increase its marketing and retail footprint, Spence said. As well, Zevia is developing new innovations to be announced in the near future.
Founded in 2007, Zevia produces a number of zero calorie beverages including sodas, energy drinks, teas, cocktail mixers, kids drinks and sweetened sparkling waters. All products are made with stevia and contain no artificial ingredients.
CDPQ will gain multiple seats on Zevia’s board of directors. The institutional investor manages public pension plans and insurance programs in the province of Quebec and has access to an international network that Spence said will allow the company to rapidly begin its global expansion.
Goldman Sachs acted as financial advisor to CDPQ, and Bank of America Securities acted as exclusive placement agent. Wellvest Capital served as financial advisor to Zevia.
“Zevia has enjoyed significant and consistent growth in recent years, firmly taking its place as an industry leader in North America,” said Martin Laguerre, EVP and head of private equity & capital solutions at CDPQ, in a press release. “The company has an accomplished management team, which has fostered a culture of innovation and developed a loyal client base.”
Zevia’s net revenue is in “the hundreds of millions” and over the past 10 years has grown an average of about 35% annually, Spence said. He noted that despite operational challenges amid the pandemic, the company has seen sales increases as consumer trends towards healthy and better-for-you beverages have been expedited by COVID-19, as well as growth in at home consumption.
Spence said he now sees an opportunity to make Zevia a global competitor tackling conglomerates like The Coca-Cola Company and PepsiCo head-on. He noted that recent SKU rationalizations have seen category leaders such as Coke reduce portfolio variety, giving Zevia an opportunity to outperform them on key SKUs like Grape and Cream soda.
Though long term plans are subject to change, one option Spence said is for Zevia to remain independent and eventually go public — a move he said CDPQ supports and endorses.
“As an operator, there’s nothing more exciting than to have an investor that says ‘We see that you could be the next Monster Energy, you could be a $40 or $50 billion independent public company, and we support that and we’re going to help guide you and help you get there,’” Spence said.