Zevia PBC (ZVIA) Earnings Call Transcript & Summary

All right. We're ready to get started with our next presentation, which is our next fireside, which is with Zevia. And I'm really pleased today to have Amy Taylor with us along with Denise Beckles. A lot of exciting things going on at Zevia and...

Right now.

Right now. So maybe, Amy, to lead off, can you just give us a little bit of the elevator pitch, what [ drew you ] the company, a little bit of history, but maybe just a starting point, just orientate us to kind of what led you to Zevia.

Yes, I will do exactly that and then maybe pitch it to Denise to get her perspective on what drew her as well, which has been really central to our success in the early going. But -- so Zevia, zero sugar, zero calorie product. It's made of plant-based ingredients in other words, is naturally sweetened and really simple product with simple ingredients. And in my opinion, and 1 thing that I noted when I first met the crew that was behind it, is it's a product platform that's really just right on time for the consumer of today and tomorrow. When you think about what the millennial and Gen Z consumer is looking for. I think what's really noteworthy as well, this product platform so it's a what we're famous for is sodas, but we have an amazing tea lineup with incredible flavors. We have a nascent energy drink business with a lot of potential and then some kids drinks and mixers. And I think of things most noteworthy for those that know us and the consumers that know this is that it tastes amazing. And at the end of the day, beverage is about taste. So what we've learned is you kind of don't have to make trade-offs, you can have health and taste. And for those that have discovered that, Zevia has really thrived. So Zevia the #1 carbonated soft drink in the natural channel, actually #1 carbonated soft drink on the world's biggest e-commerce operator, so Amazon. And that's sort of where we picked up. When I learned about this brand and I saw sort of low household penetration, very high repeat rates, strong loyalty rates amongst those that had discovered the brand, I thought that's just kind of nascent opportunity, right? So for me, to be in a mission-based environment where we're seeking to remove sugar from the diet of the communities that we serve -- to do so with responsible production and consumption in mind. So never using plastic, never having sold a plastic bottle and hoping to make it socially unacceptable to 2 so over time. And then the opportunity to scale a business with a focus on brand and marketing, which we'll talk about here in a bit, was kind of the perfect storm. And as you know, I was at Red Bull for 20 years. I started there in the late '90s. And in the late '90s, that brand was really right on time for GenX and I really think that Zevia is just right on time for this in the next generation. So that's just sort of a snapshot of maybe the backdrop of the brand and the product and our opportunity and why I joined. And happy to detail some of the rest of that. But maybe Denise could talk a little bit about why she joined the organization.

Sure. So I tend to be drawn to very premium brands. What I also liked about this brand is just its potential. I saw the potential for -- to build a brand that is timeless -- especially with the shift in consumer behaviors, focusing on health and health and wellness being such an important part to living these days. And I think that will become even more the norm. And I thought it was just in the right space at the right time and have so much potential to grow I also saw Amy's vision to take what I would still call a small brand and turn it into something that becomes just an everyday brand that we use in our lives. And so the potential and what I believe she could do with the brand, with our team, what are the things that excited me about joining the brand.

So for this audience, especially, the beverage industry has been very [ fertile ], right, in terms of generating returns, creating [ wealth ], right? You mentioned Red Bull, and we could go through whether it's Vitamin Water, I mean, there's just a long list, right? So if you were to kind of take Zevia and kind of look at the potential for that kind of value creation path, just for each of you, just what are some of the core kind of the building blocks to really creating a lot of value.

Sure. I mean I think what some of the brands that we've mentioned have in common is they've solved a problem for the consumer. So they found a white space and went in and owned it. And so did we know that we needed energy drinks 30 years ago, we're pretty happy with coffee soda, right? So I would ask now did we know that we didn't have to pick between sugar and artificial ingredients and chemicals like actually, no, we sort of didn't really consider that, right? You don't have to pay you can have a solution without any trade-offs. So I think among the brands, we've kind of [ run a lot ]. They've brought a solution forward that was a problem that the consumer had or maybe a problem that the consumer didn't realize they had or a solution they didn't realize they had access to. And then among those that thrive because we can also think about a lot of brands that create value then sort of faded into the sort of relevance map, if you will, among those that thrive are those that really invested in brand and built a special distinctive brand that the consumer aspired to be associated with, beverage is very competitive, very branded and thus very emotional. So consumers make decisions with their heart and justify them with their head. So what I think about the upside and our opportunity as a brand that has just 6.4% household penetration by the way, grew that household penetration 28% over the last 12 months, like massive upside. The key for us, we already know we have a product platform that builds the need for the consumer and just cracks open opportunity for no trade-offs. Now we need to go and build brand. And as we sit here with the brand refresh and have created visual assets and a visual identity and soon to come kind of a tone of voice and attitude we can really invest into and embed into consumer memory structures, that's when you start to build a brand that can last. And so we're really thoughtful about doing things right, not necessarily fast I can talk about when we think about that commercially as well. But that's why we're excited is we just think there's so much rich opportunity in the brand to connect with the consumer at the end of the consumer's boss and deliver to them a solution across all usage occasions and really all family members. I mean, we have kids products and we have mixers. Those are for 2 different segments of the household by the way. And then a tea that's almost universal and soda that has the same household penetration is toothpaste or toilet paper. So it's just such a broad opportunity. And our job is now to go build a resonant brand that, as Denise said, it's timeless.

Yes. I would say some of the big pillars we'll also focus on is, so in terms of what we look at next in terms of innovation. We've been very innovative, but I think we'll get even stronger at that because I think some of our growth is going to come from that. I think we're going to focus not only on the categories we've already entered, but what other [indiscernible] mix makes sense for us. but also focus on core soda within our portfolio continue to expand that. And then, of course, distribution being a big piece of that growth driver. I think for us, those are going to be 2 significant pieces of our strategy going forward.

So you to have been in the saddle for a little while now, right, and made some changes like enhanced capabilities. Could you just talk a little bit about just some of the some of the changes that you've made to the organization and some of the enhancements you've made?

Sure. Time does go by fast because our new leadership team has been intact really just over 6 months, so for context for everyone else. I took on the role of CEO on August 1. I had been President for about a year prior to that. Denise joined us as CFO in last May, we brought in a new Chief Operating Officer, with a long history in beverage. We brought in a Chief Commercial Officer with a history in beverage and working with premium brands with strong margins. And that became kind of the core of our leadership team last summer that started to crack really an inflection point in our strategy. And then we had a number of support roles underneath that, that brought capability, really industry-centric capability to help fast track our progress, especially with a focus on key accounts and national accounts and sort of a more sophisticated selling approach.

Yes. I would say 2 areas of focus that we worked a lot on improving. And we kept some of the things that were already there, and we are leveraging them further. But I'll tell you more about that in a second. But we certainly upweighted the finance organization to have really a forward-looking focus, really growth mindset. And also profitability mindset. So really working to generate, working with the teams to generate cash flows from operations. So we did widen that team with a strong focus on [ SG&A ]. From an operations perspective, we then focused on really building the next levels out to go after any optimization opportunities we had. Our supply chain for us, we work primarily with co-manufacturers, and we don't make our products on our own, but we saw the ability to get synergies and to really tighten the network so that we could then reinvest in the brand. And so that was a really key area for us to focus on. So that's an opportunity. But we kept things that were really important. For example, human resources team super strong team, lean team, but really [ great at ] resourcing our organization and focusing company-wide. We work on making sure that was stable and is improving and growing with the organization. Same thing I would say, for some of the core finance responsibilities on the control ship side or the chief accounting side, that area also making that -- having everyone step up, but really leveraging the key resources. So we balanced a bit of what was new and what was already there to see efficiencies in process.

Right. [indiscernible] want to -- like undersell just how much has happened so quickly. But is it fair to characterize the changes you've made is also like the business is really going to scale and grow. You want to -- you need the foundations in place to be able to do that and maybe that needed to be done first before [indiscernible] is that accurate.

Yes, I think maybe to get literal on that for a minute. We have not changed our route to market. We have not launched into convenience yet, for example. So there's a lot of milestones that are forthcoming. But to your point, first, the foundation, right? So organizational capability, strong unit economics, price increases in keeping with the market, right, and competitive. The brand refresh which then helps to justify the price and reinforce our positioning as premium but accessible, again, in an emotional and heavily branded category, package price positioning all sit quite strongly together to build on the unit economics and end up giving us the margin points and the economic power to then evolve points like route to market. But I think some of the most visible changes are yet to come. building on the foundation that you've referenced here within the organization from a capabilities lines.

Right. Yes. I mean this becomes more complex -- you have to be able to deal with that complexity.

Absolutely.

Yes. There's also some areas that I would say it can become simpler, though. Because as an entrepreneurial organization grows, for example, in supply chain, it kind of just bolts on solutions as needed, there are inefficiencies that grow into that system. And so if you're a basketball fan, it's time to at least do a 20 second time out, if not a full time out and look back into the supply chain and say how can we optimize what we're doing today to set -- to bring costs down to become more efficient to get closer to the customer to reduce [ freight ] to materially reduce transfer freight to reduce the warehouses out of which we are shipping to reduce complexity and forecasting. And then ultimately to set us up to scale further because we have so many benefits of scale yet to realize sort of in comparison to some of our beverage peers that have been established for quite some time. So you'll see that manifest over time in the P&L, well, in the form of cost reduction and improved unit economics.

Maybe we talk a little bit about the brand refresh -- bit fresh. I know you were at Expo West, unveiled it. I'm assuming you've spoken to some of your customers about it. So maybe just start with before we get into the response, but just kind of what led to the refresh, what were some of the insights you learned about the brand first, and then we can talk about the response.

So the Zevia consumer loves Zevia, so to think that you would change that look and feel of that brand for a very loyal base of [indiscernible]. So first, we took this attitude like they do in the [ metal ] community when you say, like, first do no harm. We wanted to do no harm, right? So we wanted to take the DNA of the brand and evolve that into a modern and here's the brief, right? modern, clean, premium but accessible aspirational look that also looks like it belongs on the mainstream shelf and not just in the niche and the natural we looked for visual cues to communicate what's special about the product, that it looks better for you. There's a leafiness to our logo and a leafiness and a [ flow ] design when you look at the full brand block on shelf. We looked to communicate clearly zero sugar soda. The old branding said zero calorie, we're really focused now on sugar, which is more central to health. And we wanted it to be bright and appealing. I mean, as we keep saying brand is everything. So when you see -- the reason I brought the multipacks up here with us, not just the cans, we are moving from a 6 pack that sits on shelf with plastic rings, which ends up on shelf looking like individual cans to this brand blocked cardboard wrap, which is also usually a recycled and recyclable materials. And so on shelf, there's really tremendously strong architecture using kind of color theory to move the eye from the colas section to the citrus section to our root beer collection, et cetera. So with that brief, we're really pleased with what a world-class agency brought to life from a brand mark perspective and then what our internal scrap little design team brought to life from a standpoint of multiple visual assets that -- we think it will be a very strong logo sort of at point of sale to create a brand block on shelf, a dynamic can and then digitally, right, to be animated into brought to life on social. So reaction at Expo West was super positive. I mean, qualitatively, just a ton of positive feedback, a lot of excitement, a lot of cell phones up, a lot of photos and videos taken and a lot of buzz around our booth. But commercially, I think almost more importantly, it helped us to move a lot of conversation forward with retailers about increased space. And it also brought new energy, no pun intended, to categories that sort of hadn't been acknowledged, I think, from a buyer in the past from Zevia, we're famous for a soda, but they saw the pack design on energy, and they said, tell me about energy. Really as if it was new because kind of from a design perspective, it is. So our hope is that with the consumer, this is a new energy drink in the marketplace. It's clean, clear, it's kind of the pure energy. We think there's a need for that in the category, the venn diagram between sort of consumers that care about what they put in their body and consumers that drink energy drinks has actually started to overlap, right? And so there's an entry way there brought by some of the new entrants into fitness energy. Now for sort of a pure, clean, better-for-you product in the space and the brand design gives tremendous momentum as a jumping off point for what we kind of feel like as a launch into a new category.

So as you're talking to customers about the refresh and the change to going to a carton instead of the rings will it move the conversation to have Zevia merchandised in the mainstream soft drink aisle versus being in the Island a misfit where you want to call it [indiscernible].

The dogs and cat specialty, exactly. That is our expectation. And that is our bold expectation for resets in the 2024 season. We've made progress with the organizational capabilities we were talking about earlier with a key account focus with insights-based selling category management approach, more strategic relationships with customers, less transactional. And so in a number of milestone moment and significant customers, we've moved off, let's say, the bottom shelf to the eye level and in a couple of instances in mainstream distribution from the specialty section to CSD. And those become tremendous case studies because it's just data from that before we can take customer A, customer B results to customer C, D, E, F, G and start to talk about moving to the highest foot traffic aisle in the store. So we have a lot of energy behind that right now. We have in some very big retailers, some specific tests, x number of stores, moving Zevia from specialty to CSD and [ testing ] to see how that does in order to scale for either this fall or next year.

And then in the mainstream section, would Zevia still be a block or will it go into the different subsets. So you go with cola, lemon lime, like how do we -- how we think about that.

Yes. Would we sit -- yes, I understand. We intend for it -- the brand to be a block and in our strongest -- in 1 of the 2 big mass retailers in America, we have a brand block sitting between the 2 category leaders and that's our best scenario so far and then the pull-through proves it as well as the increased trial because what's happening now is shoppers our best shopper is the highly engaged beverage shopper and Zevia shoppers spend more than your average shopper. They make more trips, they spend more money. They spend more on their basket and beverage. And so they are also switchers, right, as our most highly beverage engaged shoppers. And so we're enjoying a lot of trial from folks that drink full sugar mainstream soda and diet and zero. And so that's why we think that brand block gives us, especially with this new look and feel is the right way to present all the flavor options.

And then just to touch on energy for a moment. When we look at a product like yours, right, which again is clean ingredient is really expanding, I guess, the customer base in energy. Where do you see the potential to source consumers from -- so meaning, does it necessarily have to come from the energy category now in -- energy is ultimately capping, right? We're talking coffee [indiscernible] like -- it's not -- and so just like is it if you think about kind of where the potential incremental consumers are, is it really should we really be thinking about it in terms of just consumers who drink caffeine versus looking at it directly, just trying to take from energy?

The highest bar would be called the target market for an energy drink people who need to pick me up. But if we were to get a little more literal yes, than people who seek caffeine as they pick me up rather than an Apple or an energy bar in the afternoon or whatever. So if we think about people that drink caffeine, I mean this is caffeine via coffee is the most studied ingredient on the planet and been around 1,000 years, right? So there are so many different ways in which a consumer gets their caffeine today. So source of volume for a Zevia energy drink becomes coffee ready to drink or drip or at the office or otherwise as well as sodas as well as snacks. And so for us, this is an incremental proposition. When fitness energy came into the energy category, they brought with them new consumers, like new shoppers enter to the category, which is an infusion that, that category needed and hadn't had for 5 or 6 years, and we expect a similar dynamic, bringing prior category rejectors into a really exciting and profitable category.

And is there room to add other function to -- could Zevia be a platform to add other functional elements, maybe protein or...

I think anything is possible. But I will tell you, our focus is like simple and clean and clear. It's the via brand mark for those that love our brand is really a mark of trust. And so as we continue to keep it simple, and provide the consumer with just what they need in the deliverable. We think the product is in good shape. We'll continue to work on the taste profile. But from a functionality perspective, our focus is simplicity and clean and clear.

Okay. And maybe that's a good jumping point into talking about taste, right? We've talked about in the past about reformulation, the Cokes and Pepsis have actually done a lot of work evolving their zero-calorie products. And I think a lot of that was also -- they were so concerned about it tasting better than their core. I think they finally got over that.

Stop worrying about it. Yes. This is where we're going.

But can you talk about just how you're -- the work you're doing now in terms of product reformulation testing, kind of where that direction can be...

Yes. I think the most important indicator of our commitment to constant improvement is that each product that we've brought to market has been the strongest performing relative to the past in terms of rate of growth. So our fastest-growing flavor is Creamy Root Beer and when people drink our root beer they're kind of can't believe there's no sugar in it. And that's exactly what we're aiming for is like the sip and then wait a minute, there's not sugar in this, it's really smooth, it's really tasty. And that's sort of the benchmark as anything we bring to the market is that much better than everything we've done before. And then quietly, we go back and work on the core. So last year, we introduced taste profile improvement to all the citrus portfolio, so orange, lemon lime, twist and mountain Zevia. This year, we're bringing vanilla cola to the market, which similar to Premium [indiscernible] amazingly smooth and kind of nostalgic taste. 2 new energy drink flavors, this is qualitative, but I would argue are the best 2. And every single tea is amazing, and the new tropical pineapple is even more so. So it is a culture of constant improvement. You're probably not going to see starburst saying new it improved any time soon because it is like an iterative process. If there is a moment at which we think our cola, which is our #1 SKU, taste materially better than it has historically, we'll probably communicate that to the consumer that everything else is really just a constant work of cost and improvement.

Of just iterations.

Yes. I mean, Zevia and beverage is only about 15 to 20 years old. Like there is -- we have come so far in using this powerful little plant in the right way as a blend in beverages, and we will come that much further in the next 5 to 10 to 15 years.

Maybe we talk a little bit about single-serve and expanding into convenience stores. Can you give us a little perspective on just how big is that portion of the business now are kind of what's the past.

Yes. It's quite small. So we've built our business really on the back of multi-packs and right now, we sell singles in energy and tea. And only recently did we start to sell in tall, sleek can soda, single and cold. And so it's growing like gangbusters where we've got distribution, which is mostly in the natural channel. And 1 of the 2 major natural players that sold in the [ deli ] and it's up 75% versus prior year compared to when the stubby cans were sold in a single. And then the other major natural player or soda energy drinks and tea are all now sold at the register in [ cold ] availability, which is like great for impulsive trial. So on that foundation, we're taking that selling story out to a broader distribution set, and we expect to continue to pick up chains and stores through the year and then a bigger step change in potentially channel expansion into next year.

So maybe, Denise, be, you've got a long-term growth -- revenue growth target of 30%. And can you just remind us what the construct of that is? So how much of it is distribution, how much is velocity, just how you build to that 30%?

Yes. So what I would say is that I would say that construct one I think that there was messaging, and Amy, probably you can talk a bit about this around this 30% algorithm that was discussed previously. I think for us, first, it's really about growing double-digit growth, making sure that 1 where we have our current consumers that the velocity rate continues to accelerate. But for us, we know that distribution is still a huge part of that. That's plus convenience or without convenience. So for example, today, we're not in many of the Walmarts we're not in. Several other big retailers where we still have potential to expand our distribution in our footprint. We also know if we are able to get off the bottom shelf to [ eye ] level that it also changes the discussion about how many stores we're in with 1 particular retail to another. So there's still massive upside for us to look at there. I would say for us, distribution should contribute at least another 30% of growth when you look over, say, a 3-year period. But I also think that when you look at innovation. So for example, I think of this is even though we've -- this is a brand refresh, we are going to put a lot more focus on energy and tea. And today, they get very little focus. So we're going to invest in these opportunities where they play. We believe that there's much more growth potential here. So if I look at this, even though soda is still going to be our core focus, we do think that there's an opportunity to scale and develop. When you look at innovation around energy and where the energy portfolio can actually play, that's going to also be really important for us. And then with Soda, it's really about expanding in terms of just the products we offer. I think that, that's the other big opportunity. So for me, in that sense that we have just a lot more distribution opportunity in terms of velocity or what I would call organic growth, I think organic growth should be healthy anywhere between 10% to 15% of our business. But we still have significant upside when it comes to distribution, sort of about a 30% clip over the next 3 years if you look at the numbers and do the math.

And what didn't exist before, right, at least as [ you ] became public was most of the -- what was sort of built into that growth algorithm was really just the core sort of business and distribution in velocity, right? It means you're putting more lines in the water [ basic ].

Absolutely. I also think one of the things we'd like to do is we talk about this balance between growth and profitability. Well, really, think of it as cash flow generated from operations, but it's really to do that to invest and grow faster. So we are going through this position where we're really rebalancing how we look at the business to continue to grow double digits, so make sure our top line is healthy, generate cash flow from operations to invest in things like energy to really expand the soda portfolio but also to really get strong distribution because we know we're going to have to invest to pay for that. So this is going to be super important for us to scale even faster, getting those things right. As you said earlier, it's all about getting the foundation right so you could really maximize your growth.

I don't know if there's any questions in the audience? Go ahead, Chris.

Can you guys talk about your marketing strategy for this upcoming year? Plans for marketing behind the brand refresh. And then just more broadly, you've touched on it a little bit, but how you think about marketing digitally versus traditional media spend?

Sure. Absolutely. So first of all, on our Q1 earnings call, will be able to talk a little bit more about specific tactical and probably more exciting initiatives to support the brand refresh from a creative perspective. Strategically, though, we have invested pretty limited dollars against what I'll call like awareness trial and pull tactics historically. And that has been a choice to maintain that discipline over this last year in advance of the brand refresh because it really as you can tell, if you look at prior logo and current logo, if you look at prior packaging and current, it's a pretty radical change. So to invest in embedding and consumer memory structure something that's going to go away is not necessarily smart. As a brand, it has like still 94% of households to go introduce themselves to. So now we have an opportunity to introduce ourselves to the other 94% households that don't currently stock Zevia at home. And yes, to your point, you'll see digital investments. You'll see our first national or semi-national advertising campaign. You'll see on the ground sampling, both at and around point of purchase as well as kind of where consumers live, work and play. But I will tell you still very fairly moderate investments in 2023. As Denise mentioned, we're really focused on growing our distribution, on increasing our path to profitability and ultimately generating cash from operations that then gets invested in growth. And the #1 driver of awareness for most beverage but definitely for Zevia is in-store. So there's nothing more important for us than to roll this out and get strong brand blocks at retail. It will be supported by marketing, but you'll see a more ambitious, creative and distinctive marketing campaign to follow in the back half of the year and into next year, and we'll talk about that more in the coming months.

Yes. And I can answer that from a financial perspective. We won't -- we will not cut marketing. But for us, we are going to actually invest more dollars in marketing this year to support the brand refresh, to support the positioning of energy primarily around the time of -- think of it almost as if where we're launching the brand as we put it in market, we're going to spend to support it, to reintroduce consumers to it and to engage with new consumers who we believe will be drawn to it because now we'll stand out on its own, but we want to make sure they actually try it. Amy describes it as cans in hand. So any place we can get energy in the cold box where someone will try anything around endcaps. So we're going to spend to support to get it in front of the consumer to make sure it's being pulled. So expect that in 2023.

So maybe to pick up on Christian's question, one of the things that we've observed like in the beauty category, right, is it used to be brands talk to consumers. And now it's consumers talk to consumers about brands, right? Like it's completely changed across -- so as you think about that for Zevia, whether it's soda or energy what's the path to sort of enhancing that conversation? Is it sponsorships, I know we were joking about pickleball, right?

I love it. You're tapping into our insights. Zevia [indiscernible] do things in groups and they love to be outside. You're not wrong.

So whether it's sponsorships for ambassadors, just how do you light that fire?

How do you organically light that fire. Yes. I mean it starts with an interesting brand, right? I mean you're your permission to play starts with, of course, a great product, but provided you have a great product, then it becomes about a distinctive and interesting brand. Like if you're going to affiliate or associate yourself with Zevia, what does that mean about you? How does that -- how do you describe the person that's a Zevia person. And I can tell you in my old job, that was a very distinctive proposition. And that's what you'll hear a little bit more from a Q1 earnings call and following is to talk a little bit more about what is that distinctive community that rallies around the Zevia brand. So partnerships and sponsorships, you're right, are a part of that because that's actually the in-market activity that then gives you the content to capture that becomes your social media blood is to put what is effectively advertising onto social channels, the consumer doesn't even see it anymore. It doesn't even see it. It's a social media inherently. Social media is sort of like the new version of word of mouth. And so for us to have like authentic, organic, truly organic, in some cases, user-generated in other cases, orchestrated and elevated content -- build those channels gives to your point, 2-way consumer-to-consumer dialogue. And this isn't just about paid influencers. And yes, I know that game very well. It's really more about lighting organic and communities that are immediately resonant for our brand. And so more to come on that on what those competitive spaces of play are for us, but you will see us effectively go dark on social media and then come back on with new brand look, feel, tone and personality, embedded in some of the tactics that you're describing.

We'll see that as we get to the summer.

Yes, you'll see that in the summer, start to come to life for our brand.

You'll see some of the other things too, by the way, I know the beauty space really well. And it's impressive how a combination of what happens in digital and sampling drives all the behavior because we're -- in the beauty space, notorious for making sure consumer will try a sample, whether it's inch store or they have access to it if you're shipping to them online. So they're engaging with the product. And we're going to do some of the same things using both digital and sampling program.

It's fascinating. I mean fragrance on TikTok, right? You can't smell it. I still don't understand it, but it drives frankly, right? Denise, you touched on it a little bit earlier, but can you talk a little bit about the path to profitability and kind of what the building blocks over time are to sort of get in to both cash flows and margins.

Yes. So early on, on the few things we noticed almost immediately is, we had what I would call like bottom of the shelf, the things that were discretionary spend that made no sense, easy to drop some in terms of just that contractual obligation made no sense fixing it. So getting real efficiencies around discretionary spending, which is usually easier to attack the things around G&A. Then we looked at the supply chain and saw tons of opportunity for optimization and managing our cost -- our input cost in terms of the products we're making and our partnerships, who we work with, what's our agreement structured like, what's the long-term positioning. So we're looking at rehauling all of that. Now again, we work with co-manufacturing partners and 3PLs around the warehousing space. Those costs, we're looking at streamlining those and improving the network and the footprint so we can get to our customer ultimately faster but at a lower cost. And we're looking at efficiencies around manufacturing in terms of our volume play and working with partners. Those things are actually paying back significantly for us and will help us to get to profitability faster. And for us, this is important because if we are able to generate the cash flow from operations, we can then turn it around and invest more in marketing. So for us, we don't -- we're not going to cut our way to profit. we're going to make sure that we have enough topped up in marketing. So the brand is known. And that's the 1 drive trial, but also to drive velocity with consumers. So we have a higher level of repeat purchase and those things are going to be super important for us. I think, ultimately, when you look at the financials, we know price is a lever that we want to use in the right places at the right time. We started to do that. You saw that in August of last year. We talked a little bit about what's coming this year. But we believe that the way the brand looks today is deserving of looking at another price increase, hence the decision. But we also believe that as we invest in the brand and the brand becomes more popular, there's much more opportunity for upside as with any premium accessible brand. So these are the things that we're going to look at to get there. I think that some of the cleanup work we'll do will get us there faster, but then it gives us a faster path than reinvesting in the brand.

And then over time, the business grows is just volume leverage is there leverage -- natural leverage in the business just as you're moving more cases?

Absolutely. And to me, when you think of it, if we -- when you look at your growth, there's a level of growth that actually then commands a higher level of margin return and we know that that's going to come. So we believe that's also going to impact it. So price will definitely impact it. Volumes once we have volumes growing at the levels we'd like it to be growing that will also impact your profitability. And then it helps us to invest in growth. And as we grow faster, we can become more profitable. These things are starting to -- we're starting to put the building blocks in place for that to take place. I think if you look at the second half of last year, you see us with the cleanup work in terms of just burning cash, we burned about $20 million in first half, $5 million in the second half. And going into this year, our ambition is to cut back. So you'll continue to see that improvement so we can then reinvest. And again, not cutting marketing, making sure we're investing. This is really our focus for '23 and forward.

I think we are out of time. So Denise, Amy, thank you very much, very exciting, can't wait to have you back next year to talk about how successful this refresh.

We're excited about

Thank you so much. We appreciate it.

Thank you.

Thank you.