After months of struggling sales amid supply chain disruptions, stevia-sweetened soda maker Zevia reported a return to growth in its Q4 and full year 2023 earnings report yesterday.
- Net sales in Q4 grew 6.9% to $37.8 million, ending a period of consecutive quarterly declines. Full year earnings rose 2% to $166.4 million.
- Unit sales in the quarter also improved, up 3.7% to 2.8 million equivalized cases. Volume for the full year remained down, -6.9%, at 12.7 million cases.
- The company faced a net loss of $28.3 million for the full year, but that’s an improvement from a $47.6 million net loss in 2022.
- As of December 31, Zevia had $32 million in cash and cash equivalents, no outstanding debt, and an unused credit line of $20 million.
- Q1 2024 earnings are projected to be around $38 million to $40 million.
Zevia CEO Amy Taylor opened an earnings call yesterday by stating that the brand has “growing tailwinds,” citing continuous increases in consumer spending on Zevia per household (+9%) and per trip (+7%) over the past 18 months. She credited a brand refresh, launched last year, as helping increase the brand’s presence on shelf, while the macro trend of consumers moving away from sugar and towards clean label products has helped maintain momentum.
In comparison, net sales in Q3 had fallen -2.6% year-over-year to $43.1 million, while unit volume in that quarter was down -8.2%.
Sales of the brand are up 94% in same-store sales, Taylor added, and it has expanded its footprint in the drug and foodservice channels.
“We are a home stocking brand and are relevant across all usage occasions and day bars,” Taylor said, noting that Zevia consumers spend around 39% more on beverages versus all non-alc beverage shoppers. “Zevia shoppers continue to differentiate themselves even further from average beverage shoppers’ year-over-year and versus prior period as they continue to spend more on the brand and overall.
While Taylor said Zevia is “experiencing a delay in the recovery of on-shelf stock levels at retail,” leading to some “volume softness,” the company now anticipates an increase in points of distribution throughout the first half of the year.
Zevia is also looking to add DSD to its distribution model for the first time, taking a regional approach as it works to establish the network, Taylor said, and is also working to add more convenience channel accounts this year in the U.S. and Canada. As well, Taylor projected confidence that the brand has “stabilized and strengthened” its supply chain by moving to a model where the brand only manages “finished goods” and outsourcing freight to reduce costs.
The company announced a price increase, effective May 1, between 4.5% and 5%, across its line. As well, the business is preparing to launch new marketing campaigns for the spring and summer.
“As we return to full presence on shelf, we can also return to more competitive promotional levels, promotional investments in display,” Taylor said during the alls Q&A portion. “So add that to the impact of our brand refresh, our fast-growing innovation and forthcoming investments in marketing, we look to the spring reset as being a trigger to the return to growth at more expected levels.”