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Monday, May 20, 2024


Zevia, an Encino-based natural beverage company, has emerged from its quiet period after going public on the New York Stock Exchange with hopes to leverage its expanding product lines, new leadership team and partnership with Walt Disney Co. to become a household name in the sugar-free drink sector.

The company has some hurdles to overcome to achieve profitability, according to its filings with the Securities and Exchange Commission, but its leadership team remains confident in its plant-based offerings.

The company raised about $150 million with its initial public offering on July 21. Shares started trading at $14 and closed on Oct. 6 at $13.35.

“We’ve only been a public company for about six weeks, but it has been a very exciting and fast-paced six weeks,” Paddy Spence, chief executive of Zevia, said. “Now it’s really about taking the resources from this transaction, taking this collection of new team members we’ve added to the business, and really furthering our mission of making the world a better place by reducing sugar, eliminating single-use plastic beverage packaging, and creating beverages that are affordable.”

Spence, a triathlete living a sugar-free lifestyle for nearly 20 years, acquired Zevia in 2010 shortly after its founding and has served as its chief executive and member of its board since it was an LLC. Since then, the beverage company has grown to include six product lines and 37 flavors that are distributed across the U.S. and Canada. 

All Zevia products, including its sodas, energy drinks, teas, kids beverages, mixers and sparkling waters are sweetened with stevia, a plant-based sugar substitute, and have zero calories. They are also gluten-free, vegan, kosher, and certified by the Non-GMO Project, a nonprofit which aims to label and offer alternatives to lab-modified organisms in food. 

According to the summary of risks in its IPO filing, product safety concerns relating to Zevia’s plant-based sweetening system, could negatively affect the business “by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings.” The filing also noted the company also has a history of losses and may be unable to achieve profitability or compete in its “intensely competitive category” of sugar-free beverages. 

“Our business, like any, entails risk,” an email statement from the company said of the listed risks. “We are very focused as an organization on continuing to mitigate those risks as we scale, and it’s the amazing team of Zevia employees that gives us confidence in our ability to continue to manage risk as we grow the Zevia business.”

Despite the risks and financial uncertainty facing the business, Spence said Zevia offers an opportunity to disrupt the traditional soda market and promote the company’s mission of health with affordable, environmentally friendly products. 

“The average American, even today, still drinks almost 40 gallons of soda per year. So that really is the definition of a disruptive opportunity,” Spence said. “And if you ask soda lovers, ‘What do you love about the product?’ It’s really clear – bubbles, sweetness, enjoyment and amazing nostalgia. … What do they not love and maybe not even trust? It’s the ingredients. It’s caramel color, which California tells us is linked to cancer. It’s either high fructose corn syrup or artificial sweeteners made in a lab. It’s GMOs. It’s artificial preservatives, artificial flavors. So there are so many ingredients in conventional soda that people just don’t feel good about, even though they love the bubbles, sweetness and enjoyment. And really, that’s the definition of our disruptive opportunity. It’s just everybody drinks soda and it’s the product that we hate to love.”

Bottling giants

Entering into a mature market, where major competitors include Coca-Cola Co. and PepsiCo, Zevia faces an uphill battle to make itself known to the broader market. 

“Zevia and their sugar-free beverage is meeting the needs of the consumer where they are. Healthier beverage brands like Olipop and Spindrift are doing really well, plus the majority of consumers are looking to reduce sugar. Zevia is a beverage that is exactly on-trend: it’s natural, better-for-you and sugar free,” Christie Lee, founder and brand marketing consultant at Nourishing Food Marketing said. “From a marketing perspective, this product needs to educate consumers that it meets their health needs and tastes good. Sodas are all about nostalgia, taste and happiness. If a healthier soda doesn’t taste good, consumers won’t drink it. Zevia’s biggest marketing challenge is communicating ‘Hey, we are meeting your health goals and we taste delicious.’”

Zevia products have become popular on Amazon.com Inc. – the number one brand in its niche, according to Spence – and the company garnered a $200 million investment from Caisse de dépôt et placement du Québec (CDPQ) prior to going public. 

“Certain industries, especially ones that are not prone to significant science and technology innovation, and where the companies are already established, you tend to have more known valuations,” Joel Arberman, managing member of Public Financial Services, a firm which advises companies as they go public, said. “Talking about beverages, there’s really no chance that, in a year, people are going to drink three times as much beverages, as a category, as they did this year. You’d find statistics about what a typical increase would be so you kind of have an idea there, what the market growth is, the market size and you kind of have a better frame of mind as to where the growth will be.”

To build the brand’s developing reputation, Zevia plans to leverage its partnership with Disney in Burbank, which allows the company to use branded characters on kid’s drinks. 

“Our licensing relationship with the Walt Disney Company began a couple of years ago, with an alignment on values: both the Disney and Zevia brands are about fun and positivity, appealing to but not pandering to kids, and focusing on products with better-for-you ingredients that support family health,” an email statement from the company said. “We are proud to be the only carbonated beverage to receive the coveted Disney ‘health check,’ and to be the only soda in North America featuring Disney’s iconic Mickey & Friends characters.”

Zevia also plans to develop its leadership team to promote growth in the health drink market. Zevia recently restructured its leadership to form a 10-person board of directors, including long-time employees Bill Beech as chief financial officer and Hank Margolis as the chief operating officer.

Amy Taylor, a former executive of Red Bull, took on the role of president of Zevia three weeks before going public. She plans to monitor changing consumer habits, which are shifting more and more to online-browsing and shopping, and utilize her experience in a large beverage company to streamline Zevia’s procedures and expand its consumer base.

“If we want to impact global health; we have to reach a lot more consumers. … building organizational capability for expansion, by channel and intentionally, at the right time, is a priority for us in the business,” Taylor said. “We talked about future opportunities for expansion to other channels such as convenience and food service. … But our immediate need is to build organizational capability, address expansion of distribution both within the store, to multiple points of interruption within grocery, as well as into new stores, filling out distribution within the mass channel which was largely Target (Corp.) and Walmart (Inc.), and then starting to expand our efforts into warehouse clubs.”


Katherine Tangalakis-Lippert
Katherine Tangalakis-Lippert
Katherine Tangalakis-Lippert is a Los Angeles-based reporter covering retail, hospitality and philanthropy for the San Fernando Valley Business Journal. In addition to her current beat, she is particularly interested in criminal justice topics, health and science stories and investigative journalism. She received her AA in Humanities from Moorpark College in 2016, her BA in Communication from Cal Lutheran University in 2019 and followed it up with a MA in Specialized Journalism from USC in the summer of 2020. Through her work, Katherine aspires to help strengthen the fragile trust between members of the media and the public.

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