Zevia PBC (ZVIA) Earnings Call Transcript & Summary

All right. Well, thanks again for attending both for people virtual and live. Happy to have the Zevia management team here today. We've got Paddy Spence, Chairman and CEO. We also have Amy Taylor, who's President and looking forward to having this conversation.

And maybe, Paddy, maybe just to start, just to the extent that people don't know the story, you can give us a little bit of just a thumbnail of Zevia? How you got to Zevia and your passion for it?

Absolutely. Well, I think the -- I've spent my whole career in the health and wellness space. And about 20 years ago, actually stopped consuming sugar and started using the plant-based sweetener stevia every day. So that led to my discovering Zevia. And what we're on is a journey that is quite exciting, we're addressing a $770 billion global market across soda, energy drinks, ready-to-drink tea, kids drinks and mixers. And it's one of those markets that we think is really ripe for disruption. In the United States, 99% of American households purchase our categories. And today, the average American still drinks almost 40 gallons of soda, but so many folks are looking for the bubble sweetness and enjoyment that the category offers yet with simple plant-based ingredients and zero sugar. And so we've created a brand platform to address that opportunity across soda energy, tea, kids and mixers. And we really have a solution for every member of the family, every time of day from the moment you wake up until the time you go to sleep. From a financial perspective, beverages are a high-margin category. We've got an asset-light business, and we've grown over an 11-year period at a 31% CAGR on the net sales growth -- on the net sales line. So strong historical growth, strong margins, platform brand with a massive global TAM. So we think it's an exciting opportunity.

Amy, you came over to Zevia last year and you've had a lot of success at your previous employer. I'm sure there were a lot of opportunities and options and other than Paddy, which I'm sure was a strong, strong sort of draw. Just what rooted Zevia?

Sure. Part of it for me out of the gates, I mean, you mentioned the people factor and it was indeed the organization. So it's a values-based organization, and they walk the talk, right? We're an ESG organization. We are B-Corp, DE&I at the forefront and all of those things from the outset. I was a member of the Board and newly so. And those are some of the things that drew me to getting evolved. But when I got closer to it and considered coming over to the operating side, it was a combination of a couple of things. One is the product platform and this whole proposition of zero sugar, zero calorie and simple plant-based ingredients is just right on time for today's consumer and the consumer of tomorrow. So I felt really good about the whole product platform. And if with that, you build a brand that is a brand that is trusted, it becomes an umbrella under which consumers could come through all different doorways right, to all these different categories and continue to grow this platform. So this notion of being able to build something to build a brand on the platform of a really strong set of products is exciting. And then when I looked at the math of it all, it became very clear, which is a small, very loyal consumer base, the drinks that Zevia likes to talk about it with relatively low awareness, relatively low household penetration and really steady growth rates on the back of, again, this fairly low household penetration. So what that says to me is just opportunity. My career is mostly in marketing. So I'm a brand builder, and I saw the opportunity to come and build something that had such a healthy foundation. So from a values-based organization that walks talk, a right on time product platform that's in lockstep with where the consumer of today and tomorrow are going and then just all the numbers that line up, the insights really support this hypothesis that this low user base becomes a really mainstreamed opportunity. The growth trajectory is clear both through building awareness, driving household penetration and simply building out distribution, both by channel and geography. So that became pretty attractive to move over as an operator as well.

As we've got -- as I got to know Zevia, the company over the last year, I guess, one of the things that I was impressed -- pressed on me was that the product has been around for a long time. Stevia as a sweetener system has been around for a long time. But it seems like there's more energy in your organization now to start building upon that platform. And whether that's adjacent categories, really building awareness. So can you talk a little bit about that evolution kind of where you were and where you are today and how you kind of approach that?

Absolutely. Yes. And I can talk about it kind of from a company philosophical standpoint and then maybe Amy can talk about the brand building opportunity. But when you look at our company, Bryan, we're all about continuous improvement. And stevia has been an accepted sweetener in the United States, but only since 2008. So we're 14 years old in terms of stevia development and acceptance by the consumer. And so from moment one, we've really been on a continuous improvement journey. And it's about testing and learning with data-driven insights and really continuing to understand how this opportunity can scale. And so from a product standpoint, what I can tell you is we've reformulated our product a number of times over the years and continue to simplify the ingredients and continue to improve the taste. From a branding and product portfolio standpoint, we've continued to build out that portfolio, to your point, we now have over 35 flavors across those 5 platforms. So we really have a broad set of consumer offerings. And in terms of distribution, it's all been about continuing to evolve that distribution from a deliberate test-and-learn perspective. So we enter a channel. We test. We understand route to market. We understand pricing and how the consumer is responding. We take those learnings and then scale the business. And so that's an entrepreneurial approach. Now that we're a public company, we have additional resources. We've been able to bring in beverage experts like Amy to supplement the existing entrepreneurial talent in the business. So from a philosophical standpoint, we're all about this iterative opportunity. And if you think about kind of what soft drinks has been, it has often been about that secret formula, locked in a vault, we have a very different approach. To us, the world is changing every single day, and we are continuing to evolve and iterate to address the opportunity. From a brand-building standpoint, I mean, Amy, you can comment, but we're really just getting started there.

Yes. I mean at the end of the day, beverage is a heavily branded, and therefore, heavily emotional category. That's why margins are strong because it's a brand play. And so Zevia's reasons to believe are really clear. There's zero sugar, there's zero calories, they're simple plant-based ingredients. There's really no reasons to meter your consumption. You could grab one in any day part. We have a category to satisfy any usage occasion. So from a rational perspective, there's every reason to grab Zevia. But what we really need to build out is the emotional reason why and it's the brand. And so what we want to do is put a can in every potential consumer's hand and drive trial and drive brand love. And what we lean in on is actually [ SLR ]. So as much as we list all these reasons to believe that are rational ones. At the end, it comes down to be emotional one which just tastes great at all different day parts. So we have an opportunity out ahead to build awareness, which comes from building out distribution and visibility but also through driving trial through marketing -- really simple marketing tactics. So we're excited about cold can of Zevia in people's hands at the right usage occasions because it is about the flavor and experience first.

Flavors is an interesting point because for years, cola was category, right? And flavors were kind of plate on the periphery. That's changed quite a bit, right, when you look across whether it's Ginger ales or Orange or Grape or Root Beer, like flavors are really starting to drive the category. So could you talk a little bit about 2 things. One, that has an opportunity because you've got a good range of flavors. But also, what does that say about how the consumer is changing their approach to the category? Meaning, will the cola dominated? Or is that me and my dad, maybe well?

It's -- the category is certainly changing. And if I can mention one way in which it is changing outside of flavor and then we can talk about flavor. What are the major ways that it's changing is what's driving growth across the board is zero calorie. And it's not just us either. So in the category leaders, zero calorie continues to carry the bag and drive the growth and category leaders are bringing the shoppers that are, let's say, boomers and Gen X. And then Zevia is bringing the shoppers that are millennials, Gen Y and Gen Z, excuse me, oftentimes, it's the urban and [ athlete ] shopper the shopper that you want. We're bringing young shoppers to the category. Now to your point, they are changing flavor preferences as well. Now cola when you think about the decision tree, the decision still breaks at, first of all, do I want zero calorie, zero sugar or sugar. And increasingly, the answer is less sugar. And then once the consumer makes that decision as, do I want a cola or do I want all other, right? So cola is still very important. And we continue, as Paddy says, to iterate on the taste profile of our cola product that's important. But then we have a variety of options beyond that that's super important to our portfolio. For example, we have the #1 great soda and all of zero calorie products in the U.S. and we have leading products in Root beer and in our Ginger ale and several other leading products in zero calorie, but we can also play with some of the more nostalgic or new flavors to bring in new users. And one of the biggest learnings of the last year is when we bring a new flavor. So for example, like Creamy Root Beer, it brings true incrementi, and that shopper stays within our franchise and tries multiple different Zevias. And eventually, what we learn is there's really a Zevia flavor for everyone. So we're not a fan of SKU proliferation and numbers of flavors for the sake of more innovation, more is not always more, but thoughtful innovation with the right consumer in mind at the right time always driving category mindset and insights based innovation. So we are indeed a variety brand.

Well, right now I was just going to say one of the things we're seeing in the broader beverage landscape over the last decade is the blurring of these lines between beverage categories, right? And so the idea of a better-for-you energy drink was almost unthinkable a decade ago. And now fitness energy is a segment, sparkling water is another segment. And so as those lines blur, what does sparkling water represent to the consumer taste but clean ingredients. Well, gosh, we've got taste with bubbles and sweetness and clean ingredients. And so we source volume from adjacent categories like sparkling water. So that flavor proliferation allows us to source classic soda consumers in those flavors but also consumers from ancillary categories like sparkling water, other sugary beverage categories, isotonics, energy, et cetera.

Maybe we talked a little bit about your 30% growth target -- sales growth target and it's roughly half from velocity, half from distribution is kind of the way we think about it. Can you give us a sense, I guess, first of just where you stand today in distribution? So just some math around what the distribution white spaces?

Absolutely. So just from a channel perspective, our existing channels are really natural food, drug, mass and e-commerce, all of which are at-home consumption channels. So across that landscape and let's exclude e-commerce, 31,000 stores approximately. The white space or incremental channels for us start with the at-home consumption channel of warehouse club, food service, convenience and then, of course, the global market. And so when we think about numbers of stores and numbers of outlets, we're still in early days being in 31,000 stores across North America, that convenience and food service door count is significant. Warehouse Club, we just began entering in Q4 and are seeing good success there. And then the global opportunity, our categories are approximately 4x outside the size outside the U.S. as they are in the U.S. So tremendous white space in terms of incremental opportunity. And when you think about that 31,000 store base, going into a channel like convenience with north of 100,000 stores, I think it's the 15% growth assumption from that incremental channel is a pretty modest one.

Right. Yes. I was just -- so that's basically what's underneath the question. Like what's the upside to the algorithm? And is it more velocity or distribution?

I think it's distribution and especially when you look at the global opportunity, category size to start with, but also the fact that there are 50 jurisdictions around the world that have either sugar, sugary beverage or soda taxes. And so we've spoken in the S-1 and in the past about Australia, New Zealand, The U.K. and Mexico being especially high potential markets, but there are 100 countries out there that are clamoring for a clean label zero sugar product like Zevia.

As we think about the distribution in your current doors and I guess, thinking about it more horizontal so basically more shelf space or getting involved in more display, can you take us through a little bit where you were, I don't know, a 1 year or 2 ago, where you are today? And just what are the drivers of the levers you'll be able to pull to get more of that horizontal distribution within this -- with the current doors?

Sure. Yes. I think when we think about where we come from, we come from the natural channel, and we're very well built out there. And yet we still have opportunity in natural to drive display off-shelf to drive cold availability for Energy and tea and now newly our single-serve soda for the first time, introducing the ability to get a zero calorie, zero sugar plant-based soda for $2 in a single-serve format in the natural channel. So we still have opportunity to drive velocity through incremental presence even in our channel of margin if you will. Next up, we can talk about food, right? So massive opportunity within grocery. We are sold in almost every grocery store in America. There's a few fill in distribution opportunities to go ahead and build out a conventional grocery to full distribution. But most importantly, we're focused on increasing our shelf space. So I level look of a leader ensuring that the full portfolio is represented, and we're taking more and more of a category management approach to selling as we professionalize and evolve as an organization. So that represents an opportunity. But sodas getting warm displays around the store and specifically in the perimeter store. And as a new public company now having resources to make investments in equipment, we're able to put that through staff and incremental merchandising investments to make sure that we're interrupting a new shopper around the perimeter and the warm shelf with our multi packs. But then again, we also have the opportunity with cold availability in the grocery channel. We talked a little bit about club. There's tremendous upside in club. We are national in Costco in Canada. We are national in Sam's Club in the U.S., but we have the opportunity to build out each customer in the rest of those remaining geographies, and we're just started by selling them selected variety packs with selected sodas. We still have additional sodas to be repacked into exciting packages in club in the future as well as tea, energy, kids, et cetera. And the other one that we talked about on the last earnings call that I think is a real step change in the upcoming quarter and then forthcoming is in mass environment. So obviously the 2 major mass operators, we've taken big steps forward. I'll use 1 example. We've gone from 5 flavors in one of those operators to 12, and we've gone from 6 packs to now selling 8 packs and thus, in total, increasing our space by 50%. That starts to give you a feel for what does it look like when you're growing from within an existing footprint where you're already distributed today. And then both of those operators, we are now selling multiple flavors of our kids product, which then brings us to a new part of the store, typically on the juice or the kids aisle and gives us the opportunity to do back-to-school programming and activity that we have will be incremental activity we've done in the past and reach a new shopper. And then as Paddy mentioned before, the next greenfield, if you will, is convenience. And ultimately, when we think about immediate consumption, we think about the convenience channel and ultimately food service. If not quick-serve restaurant, which is typically fountain and heavily contracted, we do think about education, places of work, health care, all of these become an opportunity for us to sell single-serve once we have proof points in terms of packaging, pricing and merchandising for this product and also for energy and tea.

So with club, we're deliberate, right, in terms of how you and when you chose to enter club. Can you talk a little bit about how you see club as a platform maybe to expand awareness to -- it's a great place to prove concept basically. And just kind of how you're thinking about that and why the time is right to do it?

Yes, absolutely. So why the time is right is because we've really kind of set the table in conventional retail. So club can be disruptive from a pricing perspective. And so we've got strong retail distribution, so club is additive to that. Going back to kind of something we started with, Bryan, we're a variety and a flavor brand, right? And so what's so neat about this brand is mommy love cola, dad loves Ginger ale and the Kids Drink Grape and Orange. This is a brand that's got something for every family member. And so the club format is perfect for that. What we're merchandising in the club channel is variety packs. And so those variety packs are a fantastic trial opportunity. The consumer then says, "Gosh, I really love that one and that one goes and buy 6 packs, 8 packs or multipacks of their favorite flavors." And so that is very similar to the dynamic that we've seen in e-commerce. So in e-commerce, we're the #1 brand on Amazon with the #1 item in soft drinks, and that's the Zevia rainbow pack. It's literally 12 flavors, 2 cans a piece. And what we found on e-commerce is that literally 50% of our purchasers on e-commerce also buy the Zevia brand in brick-and-mortar. On average, those folks spend 3x what average brick-and-mortar buyer spends. So in e-commerce, we've seen that trial opportunity translate into really elevated brick-and-mortar loyalty. We're seeing the same thing in terms of club. And so we noted in our Q3 conference call that 58% of our club sales were incremental to the Zevia brand, meaning folks were buying the brand for the first time in the channel. Now that's actually increased to 65%. So it's really a highly incremental opportunity for us. What's fascinating is, at the same time, 75% of our shoppers are making the first soft drink purchase they've made in the club channel. So very incremental for our brand. But for the retailer, we are bringing 75% incremental dollars to soft drinks. So when we think about future conversations about expansion, I think that's an incredible metric in terms of bringing shoppers to the category in a channel. So we're very excited about club. And again, it's that variety pack opportunity, try this brand. And once you try it, common ingredients, all trusted ingredients, that consumer is open to trying more flavors and purchasing those flavors.

And the club pack is a 12 pack or 24? How many?

We have different configurations. Some are 18 packs. So we actually have 30 pack in club. So it really is that we're doing some experimentation there. Test and learn some 3 flavor packs and then some 5 flavor packs. And so which one really resonates and we're getting some really fascinating feedback.

Maybe if we could talk a little bit about small format stores and like what is the path to build into convenience and gas in small format? Is it first proving a velocity case? Is it just what -- how do you build that case for the retailer?

I think the good news is we're not too far as we speak from having single-serve soda sold for the first time in grocery and the kind of cold grab-and-go pretty similar convenience setup with a lot of factors not too different from what you'll see in the future in a small format. So that will give us a chance to experiment with right product, right pack, right price and right merchandising strategy. A few months' worth of data there, and that gives us the opportunity to go to some regional players to set up different look and feel for a soda line and energy line and tea line, thinking about how to merchandise that within the cold box. And for the right operator potentially with some complementary warm shelf, multipack in store as well. And so we can test and learn on a regional basis and start to shape the optimal look and feel for us for small format from a national basis. And then of course, last factor for that particular environment is route to market. So that as we learn from our pricing, our packaging, our merchandising strategies for convenience on a regional basis and build the national plan in parallel, we'll be shaping our route to market for that same launch.

And in pre-IPO, we spent a lot of time talking to, Paddy, about DSD and I think you got to stick a bit after a while, frankly. But the -- just -- I was thinking about this last night, with fuel prices going where they're going, DSD operators are really needing the scale on the full drop sizes. It seems like maybe there's an opportunity to have more of those discussions to start to get -- take that route to market just because there's probably a greater need amongst DSD operators to fill trucks. So is that a way to think about it?

There's no question we're attractive right, in terms of -- you talk about drop sizes, and that is the name of the game. So we play in multiple categories. We have strong margins. We have singles and multipacks. We have multiple flavors. So there's no question there.

We've got a proven consumer for this brand. This is not a speculative proposition marketplace.

Strong consumer base with strong loyalty, and we haven't entered the convenience channel yet. So everything, all of these proof points exist without touching into that footprint. So certainly an attractive partner. When I look -- think about the future for us, we know that our route to market will need to be a hybrid one. And so I think those 2 convergent factors will make for interesting conversations through the year to make sure that we get set up, get the right type of attention and focus to guarantee excellence in execution, but then also to make sure that we put together partnerships that make sense on the round.

Right. But do you think that this environment changes like is just opening of a DSD operator today to try to bring more things on to the truck because they've got to cover their costs or is that...

Yes, I would imagine that this -- it has always been a need. I mean, efficiency is always part of the goal. And folks would always be racing to get the strongest brands, especially if a strong established brand is now thinking, hey, I can be national and convenience. That's an attractive proposition. But certainly, rising costs could open or change the discussion. I wouldn't say we have enough history yet.

The rising costs are a new phenomenon that we're all working.

Yes. Yes. Yes, for sure. I mean it's just -- you can sense as we talk to people who are operating trucks, who are operating fleets, it's -- it was a challenge before a few weeks ago, and it's even a greater challenge now. I guess if we -- you touched, Amy, a little bit before on the brand positioning and the attributes that Zevia has, which are right for the time. Can you just maybe talk about how -- what the process is or how you're thinking about the positioning of the brand? Is there a potential to change it, reposition something that maybe make it more current with the times? Or is there not...

Sure. No, I appreciate the question. I think that we talked earlier about the reasons to believe. So the core reasons to believe remain the same, and I would imagine always will. When we talk about zero calorie and zero sugar and simple plant-based ingredients, I think consumer today also cares about the fact that we've never made a plastic bottle and never will. And I think they care about the fact that we're a transparent ESG operator, whether they're interested in reading paragraphs about that or just understanding top line that we want to talk. So those are more rational. But what I'm excited about, I think, to your question is really building the brand from an emotional perspective. And what's the most tangible, visible broad reaching way to do that and frankly, since we are talking about business the most cost effective, it's a brand refresh, which is all about design. So how this brand shows up at retail in the form of its pack design on can and on pack is our loudest megaphone. It is the best way to present or represent ourselves to the consumer and to strengthen our look of a leader on shelf and frankly our visibility and our likelihood of purchase to a new consumer. So we definitely -- I've talked about this on previous calls. We are definitely excited about what I'll call a full end-to-end brand refresh. And with that, we have tremendous new assets, visual assets to represent the positioning that we're speaking about. So the rational reasons to believe remain the same, but the sizzle behind the brand, which is rooted in a design that is aspirational premium kind of more on point to current and future generations is really an opportunity for Zevia.

So what's the time frame? When do we think we'll see?

Well, I think what's exciting about a brand refresh is that it's pound for pound, dollar for dollar, one of the most low-cost way you can infuse excitement into the retailer thus lift sales and share. And so I imagine retailers would probably be the first to see that. And I can imagine having those conversations in the course of this year and talking about resets in the next.

And I guess thinking about that and other categories like energy, mixers, the brand is an umbrella basically. How does the refresh -- how would a refresh sort of encompass all of those other categories? Or do they need to be separate brands?

So it's a super important question because we are a platform brand and that we know won't change. And what that requires is that there is a visual identity across the entire portfolio that brings that trusted brand across. So if a consumer is passing through the energy section but hadn't ever thought to enter the energy category before, but they are a trusted Zevia consumer from soda or from tea, they may pick up an energy drink for the first time why because Zevia makes one. So it's very important that we take that Zevia mark, whatever that visual queue is and carried out across all 5 categories. Now those 5 categories may have very different looks and feel, but the red thread through them will be the trusted in Zevia. So it will be our job to bring visual asset consistency across those 5 categories.

And then the brand stands for what it stands for regardless of what format?

That's right. exactly. So obviously, kids will look very different from mixers, but that the idea is the trusted brand Zevia is thread throughout the -- so the reason to believe remains the same.

The -- and I guess as we think about that in terms of changing graphics and packaging, at what point does traditional media begin to play in, like having television advertising or print ads or?

Yes, I'm a real believer in the most credible forms of communication and the purest is word of mouth, right? The purest is word of mouth. And so the next up from there becomes editorial and social, which is sort of the digital forms of word of mouth. But when we have new sets of visual assets, we can use those in more traditional forms of turnkey paid for media and our marketing in the form of media. So I think in the right order of things would be a brand refresh and then an expanded marketing mix to include some of the tactics you're referencing.

And is that more of a scale like the business has to be at a certain level of revenue before it makes sense to spend on like traditional advertising? Or is it more about just...

It's a couple of things. Potentially, yes. But I also know from past lives and from our own learnings that the #1 driver of awareness is actually in store. So the #1 job from a marketing perspective is actually a sales job, which is to drive in-store visibility. And with new brand assets that will take us a lot further. And then to answer the question about what's the trigger, at which point do you start spending on media or how do you adjust your marketing mix? We're going to need to take our learnings tactic by tactic through 2022 to help inform '23's marketing mix. And so I'm very open-minded as to how much, if at all, above-the-line advertising as a part of that mix.

I think my 12 Instagram followers are watching me.

Thank you, Bryan.

I think there's a name that you are There's value and then you got high credibility and high engagement rates.

Maybe we could talk a little bit about product innovation. And what's new for this summer? I know we've touched a little bit on packaging, but maybe what's new? And then as you were kind of looking back into the pipeline, where else we think can go in terms of innovation?

Yes. Maybe I can touch on just quickly what's new, and then Paddy can talk about sort of all the roads forward. So we have 2 exciting new energy drink flavors that are in the market now. They were hot favorites on zevia.com. Our community always tests everything and tells us what they like. So that was clear to be a winner and is indeed on e-commerce channels and now just showing up at retail. Also exciting is actually a refresh of a couple of flavors. We've come with a new taste profile for Lemon Lime Twist as well as our 2 other citrus, which are Mountain Zevia and Orange. And together Orange, Lemon, Lime and that Mountain citrus represent a tremendous amount of the total soda category. So this will be -- while they have represented a large percentage of our business historically, they do in soda. They help us to grow an underrepresented part of the portfolio. And then finally, this summer, we have 2 LTOs, limited time-only flavors, and those will be direct ship to customers such that they're displayed off-shelf and the objective of flavors like that are just to build excitement around the brand and to bring new users and trial, especially given that all of that volume will be off shelf and interrupt new shoppers out and around. And that will be coinciding with a brand-level campaign, which is something we haven't done a lot of in the past that will run during the 100 days of summer, if you will, but obviously very heavy beverage season. So those are just some of the areas where we're playing is optimizing taste of our existing soda portfolio, bringing exciting new soda flavors sort of on the heels of the very successful Creamy Root Beer and then continuing to bring new flavors and energy where there's tremendous potential. But Paddy has thought a lot about the trajectory of opportunity for innovation too.

Yes. Well, I think it starts with just the scale of our categories. And Amy mentioned our citrus flavors Orange soda as a flavor is bigger than the entire categories of coconut water, Kombucha and cold brew coffee combined. So tremendous opportunity with existing soda flavors. When we think about our aspirations, Bryan, we want 100% share of stomach outside of alcohol and dairy and nondairy protein. So that is a vast landscape. And so when you think about, from a product flavor standpoint, there's a lot of innovation opportunity in existing categories. There's whole categories that we don't play in today. So isotonics, ready-to-drink coffee, tremendous opportunities there. Alcohol, I think we'll save that for a separate conversation. Anyone who's ever had a Black Cherry Zevia and vodka can tell you, it is as delicious as the best Hard seltzer out there. But we're not an alcohol company. And so I think mixers is an interesting way to play in the on-premise game. But when we think about, again, that [ non-alco ] share of stomach, we want 100% and we're always looking for that next frontier in terms of innovation, how we can continue to add incremental sales to the Zevia brand and expand that share of stomach because I think that's the piece that's really important, the incrementality.

Could Zevia carry like a pre-workout other ingredients, creatine or just any other -- I mean creatine may not be a great example, but other like sort of functional ingredients that might be like pre-workout, post-workout?

Functionality is fascinating. I think there's a couple of things we think about. Number one is the functional benefit, something that we're likely to consume in a beverage format, right? And I would posit that there is not a supplement in history that is primarily consumed in beverages. When is the last time we had an ibuprofen beverage, right? And so there's -- some of that is which is it more efficient and efficacious to take a supplement versus drinking in the beverage. But part of it also is the appeal of this brand has been about the absence of negatives and great taste and ingredients you could feel good about. One of the things we've always believed is we didn't want to create a consumption ceiling, right, with no calories, no sugar, simple plant-based ingredients, you can drink 1, 2, 4 or 8 Zevias and feel great about that. We don't want to start thinking about how much of supplement should I get in a day, right? And so today, I would never say never, but I think our brand is built on great taste, clean ingredients to the consumer trust. And if we could find efficacious supplements that the consumer trusts then perhaps, but I think we've got a fantastic formula now for tremendous growth even without this kind of functional benefit piece. Is that fair, Amy?

Yes. And I think from a brand positioning perspective, at least today, we have so much to do to reach the 80-plus percent of the population hasn't had a Zevia before, right? We have so much to do to reach that population. And part of our message is actually in simplicity -- in the simplicity of the ingredients. So I think there is complexity in thinking about potential functional ingredients in the future. But I also, in the never say never can.

Yes. I mean as an emerging brand, we know we can do anything, but we can't do everything. So it's about taking those 10 great ideas and finding just the 2 or 3 really excellent executable ones and focusing on that.

If we talk a little bit about ESG, and Paddy, I mean I think the E&S are pretty well understood, but would you like to maybe expand a little bit upon governance and how that's evolving at Zevia, especially as the world is changing, right? So just how you're feel you're sort of evolving with the world and just a little bit more color on governance?

Absolutely. And I can tell you, my belief is the world is evolving to catch up to us. And what does that mean? We have always focused on having a workforce, a leadership team and a Board of Directors that looks like the consumers we serve and the communities in which we operate. So what I can tell you is DE&I is an intense focus of the team starting with representation. And so we look at that on a headquarter level, in terms of the leadership team and in terms of the Board of Directors. So what I can tell you is today, we have 10 directors on the Zevia Board of whom 4 are women and 4 are either racially diverse or members of the LGBTQ community. So we're doing well there, still a little ways to go. We want to be a gender parity Board, and I think we're going to get there. But representation is the starting point, but it's also about really bringing your workforce into that conversation and creating policies that support inclusivity in the workplace. So one of the things we have that I think is pretty cool is we have a DE&I task force internally. It's rank-and-file employees who have taken it upon themselves to review policies and procedures at work. So I can tell you we had a fascinating training on unconscious bias. And we've done things like eliminated educational requirements for our applicants and other measures to seek to level the playing field, using employee feedback. And so I'm really proud of what we've done. And so much of that really is reflected in the satisfaction of our workforce. And so how do we see that extremely low turnover? We won 9 awards from the career website comparably last year for employee engagement based on employees feedback. And so we're seeing a workforce that's highly motivated. We want to change to world Canada time, DE&I policies are a component of that and are just supporting everything we do.

Does that become a good -- has it become a more powerful recruiting tool? I mean can you tell me what...

Well, yes. I mean I think everyone is talking about the great resignation. And we've had very strong retention, and we've actually had a really interesting run at recruitment and really successful one. It's a really exciting time to join Zevia. I think people can see and feel that. But we've been good closers on top talent. And what happens is when an individual gets into the organization and goes through a pretty robust interview process and sees into the culture, it comes back to what we started with this conversation with, which is about walk and talk. But -- and with the changing workforce and a focus on inclusion, we are really intently committed to ensure we can retain great and diverse talent by offering the type of flexibility that allow them to thrive. We saw women drop out of the workforce in unprecedented numbers, at least, for my generation during COVID for various specific reasons and some of it had to do with overall societal factors, coupled with inflexible workforces, right? And so are we focused on high performance? Are we good capitalists? Are we driving against results? Are we measured by KPIs? Absolutely. And can we achieve that through work this flexibility and just different ways of thinking about shaping the work of individuals and how we work in teams, we believe so. And as we start to piece that together, it's actually a really attractive for sort of future-minded team members and not just Gen Z, by the way, of really all ages and stages. And I think in order to attract, retain and maximize the contributions of a diverse workforce. These are some of the principles that we're operating with. And when you ask about governance, I like the way you framed the question because this also starts to shape the way we think about expansion. As we grow and think about different geographies, we're going to need to be flexible. We'll have some standards that will be important. They're the same all around the world because we're going to need to be an iconic and global brand, but we're also going to need to dig into different countries and understand those countries and adapt our way of working and communicating based on local culture. And so if we can learn that here in our wild and diverse country, then we can adapt as we grow. And so these are just some governing principles that have really challenged and operate differently, and they're rooted in the values of the company. And we think that new employees are finding them very attractive.

Yes. And I would just say one other thing kind of underpinning all this is the compensation strategy that recognizes that the folks who are doing the work are creating the value. So every single full-time employee in our organization has an equity interest in the business. We've got a fair wage policy. We're in Los Angeles, the minimum for our full-time employees is $50,000. So we are paying the folks who are doing the work. We're making them owners and we are driving intense passion and loyalty and team through those policies.

We've got it about a minute -- a little over a minute left. Anybody have any questions you want to ask? Okay. I think with that, we're just about out of time. Amy, Paddy, thank you very much.

Thanks, Bryan.

I appreciate it.

Thanks so much, Bryan.

Appreciate it. A good discussion. Thank you. Thanks, again.