Zevia PBC (ZVIA) Earnings Call Transcript & Summary

Hi, everyone. I hope you all enjoyed your lunch. So we're excited to welcome Zevia back to our Global Staples Conference this year. Joining us on stage today is Amy Taylor, President and CEO; and Girish Satya, CFO. So as many of you know, Zevia is an emerging nonalcoholic beverage company that went public about 4 years ago. Zevia's portfolio of products includes a variety of flavors that are zero sugar, zero calorie and naturally sweetened with stevia across soda, energy drinks and organic tea beverages. So the company, I think, is in an exciting crossroads, just recently announcing national distribution with Walmart, expanding upon their initial DSD rollout and so much more, which we're going to get into. Now Zevia also just reported very strong Q1 results that drove the stock much higher. And so we're very excited to hear more about the company's strategic initiative today. So welcome, both Amy and Girish. Thanks, everyone.

Hi, everybody.

Thank you. It's fun. I think you guys have been -- here a few years...

Yes, we're back. Thanks for having.

So thanks for joining us. So I kind of wanted to kick things off with your results last week. Your Q1 top line growth was down, but better than street expectations. And then your guidance, you maintained it for FY '25, the top line guidance of just, I guess, a modest 2% to 5% growth. So first, could you highlight for us what drove the better top line results? And then second, maybe highlight growth drivers for the rest of the year and how much contribution you expect from velocity, increased shelf space and then new distribution channels?

Sure. So you mentioned in the intro Walmart piece, we have expanded from an initial 800 Walmart stores now into 4,300 nationwide as a part of a new initiative they have taken to the market called Modern Soda. So it's an exciting location in the store that features better-for-you beverages, 4 brands and features 11 SKUs of Zevia 10 flavors and a variety pack, which is a top seller. So it's obviously not only a driver of growth for us, both from a distribution perspective, but also in reaching new households than driving trial. But Walmart decision is also indicative of where the market is going. So we've seen now Albertsons move to a new set. Albertsons has just recently reset to what they're calling next-gen beverage. That's happened just over the last few weeks. So that can inform to a degree the growth expectations that we see for the back half of the year. And I think this is sort of a bellwether for where grocery is going, moving toward better-for-you soda, starting to define it as a set, driving distribution. And so we'll expect to see other grocers follow. And then the other thing I think I ought to mention is just our pipeline. So we've picked up our pace of innovation. I'm sure we'll talk about this later. When we think about reasons to believe in growth for the back half of the year, you're trying our new Strawberry Lemon Burst-- we'll talk a little bit about why it's so good. And there's a number of other flavors that both our on-trend flavors or sort of core soda flavors that will continue to support our growth. So a mix of velocity and distribution and a bright outlook on the year ahead despite some of the macroeconomic headwinds.

Okay. That's helpful. And then when you -- all right, take into account your Q2 guidance when you talked about net sales growth expectation of flat to up 5%. Your full year guidance does imply a healthy acceleration in the back half to about 7%. So I know you're investing in the brand, investing in velocity. But what else gives you the comfort that guidance this year is achievable, especially as I think about that second half.

I think as Amy alluded to, a lot of 2025 is about expanded distribution. I think in addition to Walmart, we've obviously gained, as we shared, significant distribution expansion at Albertsons, and that's a part of a wide array of our broader retail base where we've gained distribution, including new channels like Walgreens, which is also 8,000 doors hitting in Q2. And so between all the new distribution and the initial reads on the new innovation, we're pretty optimistic that we're going to be able to achieve that back half growth. And again, obviously, there's macro uncertainty, and so visibility is obviously low as many people have commented on. But I think generally speaking, between the distribution gains and the velocity improvements that we're beginning to see on shelf today, it gives us confidence that we'll be able to achieve the target.

And to be clear, so with the distribution, so you're fully in some of these retail locations that you talked about gaining the distribution? Or is that still on the come?

It's still a little bit on the come. Q2, you'll begin to see that, and you'll see that reflected in the results as you will in Q3. And I think as we've alluded to, Q4 is where it gets a little wonky because of the pipeline fill for Walmart on a year-over-year basis. But really, Q2 and Q3 are going to be where you see the impact of that, most notably.

Bonnie, for us, resets, spring resets usually centered around February and March with some version of pipeline fill in Q1 were significantly delayed this year. So some of them are happening now. And that's in part, we believe, anyway, because of the Walmart news, it really caused folks to pause, caused retailers to pause and consider how do they want to set these shelves around better for you. And so some delayed decisions and some are actually mirroring some of what Walmart and Albertsons are doing. So we'll see that, as Girish alluded to in the back half of Q2 and through the balance of the year.

But you have pretty good visibility already, whether or not that happened on the shelves. Do you have a sense of...

We have good visibility. We have photos of planogram, yes, but also photos in store. And then also early reads on the performance around innovation and some initial velocity results that are very encouraging.

In the context of that, it sounds like you feel pretty confident, which is good to hear. But where do you see the biggest risk than to your guidance, especially on the top line and then we can talk...

Yes. I mean, again, I think as we alluded to, it's really the macro. And given limited visibility, potential recessionary chances that -- that is one thing we can't control, but that obviously gives us a little bit of pause. Generally speaking, as Amy alluded to, the distribution gains are sort of locked in. The velocity is encouraging. And so I think generally, it's really going to come down to macro. And I think there's opportunity to potentially outperform to the extent that we can get back into club in a more meaningful way. As we alluded to last year, and we -- our club -- we lost a lot of club distribution. And so to the extent we can overperform, it's going to be driven by club.

Speaking of that, maybe update us on that as it relates to that channel. And maybe remind everyone the loss last year and then kind of the opportunity to regain some of that.

Yes. So maybe just to ground us in this, we have mid-single-digit household penetration. We have a small, very passionate loyal user base. And our greatest opportunity is to grow top line awareness, top of funnel, drive trial, et cetera. So expansion of distribution is helpful to us and so much that it drives trial. But in club, potentially we got over our skis a couple of years back with full national club distribution. Now club typically, especially for growth brands, operates on a rotational basis. So they'll take you in, they test you in a number of regions, et cetera. And we had some of that activity in 2023. We lost a good bit of that distribution in 2024. So we are now kind of as we speak, cycling that on the very tail end. And so any incremental rotational business that we get in club this year would be upside. And club represents upside for us across the board, both the two major operators as well as some of the smaller ones. So when we get a slot dedicated to Zevia in club, we do well. We are now really focused on driving club business in the geographical regions where we have the strongest brand development index to sustain that distribution and drive proof points to then build scale from there across multiple regions.

So you're regaining in club, but not to the extent where you were....

That we had it in '23.

That's the potential...

That is the potential.

Your point, as you get on shelves and it's seen, then you can continue.

The upside in distribution for us is filling out the rest of mass, right? So we're in Walmart, but we're not on their primary competitor. It's club and then it's the long-tail convenience, which I'm sure we'll talk about as well as food service. And all of these are greenfields for Zevia.

Maybe before we get into some of that, one of the things that you and I have talked about, Amy, over the years is your strategic shift to prioritize profitable growth. And talk to us about what does the longer-term top line growth outlook look like for Zevia as you kind of contemplate making sure it's actually profitable growth?

So Girish has been with us just over a year. And what I will say is sort of the mark of his work among many other things, is accelerating the path to profitability with tremendous clarity while investing in top line growth. He been able to do a little bit of both. So maybe you could talk about that as well as the outlook on top line growth, Girish?

Yes. I mean I think ultimately, we have -- there's a massive opportunity, right? We've seen the consumer preferences shift towards better-for-you soda. It's growing faster than CSD and arguably growing or driving most of the growth in the category. And so behind that, we found an opportunity to really sort of not only improve our unit economics, but really invest in the brand to drive what we believe will be long-term revenue growth. And so as we've been investing in promotion and as we've been investing in brand, while dropping savings to the bottom line, I think we're really creating sort of a really long-term path to really step-changing growth. I think it's been a bit of a reset as we've lost some distribution and regained a lot of that distribution this year. So I think as we look forward, we're very bullish on the combination of brand, product innovation and then continuing to drive distribution expansion to meaningfully step change growth for the business in '26 and beyond.

Yes. And so that's the goal to essentially become EBITDA profitable by the end of '26.

Within 2026.

Okay. All right. Switching to the current environment, legislation, secular trends, et cetera. Can you touch on how Zevia is well positioned to capitalize on some of these trends? How is your business possibly advantaged relative to soda peers? And ultimately, how can these trends maybe help you drive faster growth over the long term?

A lot of the trends right now and the chatter right now is very much sort of in our wheelhouse. So we know and we have known for quite some time that people are moving away from sugar in droves, and that is here to stay and that is global. I would say over the last five or six years, there's an increased interest, especially among younger consumers in the upcoming very desirable shopper for a clean label product, right? So simpler ingredients, ingredients you can trust are pronounced. And Zevia is indeed the soda on the market with the fewest ingredients and our sweetener is a natural one as are all of our flavor components. So we have a very simple product that's clear in color and clear in transparent in its ingredients. And so a lot of these macro trends are very much in our favor. And in the last couple of years, there has been tremendous change in the category. The biggest change of which is there's been an onslaught in sort of self-identifying better-for-you sodas. Some of those are functional, and I'll mention higher priced, sold often in singles. So I guess I'll highlight another advantage around our position in the marketplace in Zevia, not just as a better-for-you product, but as an affordable one. So we are a couple of cents per ounce price premium to carbonated soft drinks to traditional soda, a category which has struggled over the last couple of decades to get to growth and is now growing on the back of zero and diet. But for those that want a clean label product, they're willing to pay a couple of cents per ounce more for Zevia. But now that we're sitting in the better-for-you set, now that we're sitting in a Modern Soda, we are by far the most affordable option. So we're kind of a soda that tastes like a soda that's priced like a soda versus a higher-priced single-serve limited usage occasion functional beverage, which is often our neighbor on the shelf. So going into an environment where people care more about health than ever before, going into an environment where ingredients are scrutinized, going into an environment where there are macroeconomic headwinds, the most affordably priced better-for-you soda is a pretty good place to be. And we really think this is a critical moment for us right now at Zevia. And so good news that we've got our stride in marketing, which I hope we'll talk about, that we have a strong innovation pipeline and we're expanding distribution in this moment.

Okay. Quick follow-up on all of this is because that all makes sense to me, but I have to ask GLP-1s. I know. Curious...

You can talk about it.

I don't know if you have any data on this and how that might impact your business either in a positive or negative?

Yes. I mean, early to cite data as it relates to our brand. But what I can tell you is, again, the macro move away from sugar is supportive of -- for those that choose to go the medical route or not. And as a category that represents sort of indulgent we can allow that the person who's diet conscious, whether they're taking medication or not and are seeking to avoid calories don't have to burn those calories in soda. And so unlike maybe snacks and some of the other challenged categories, as a zero sugar soda, we actually can be a partner for somebody who's either medically directed in trying to manage weight or just motivated to reduce sugar consumption and save the calories for food and for nutritional additive, right? So generally speaking, taking in your calories through beverage is not nutritionally additive. And so we have the health profile of sparkling water, but the taste profile is something more indulgent. We think it's really a strong kind of complement to the macro trend.

Okay. Yes, can makes sense. Innovation pipeline. On your Q1 call, you mentioned that it's stronger than ever. So can you touch on maybe the evolution of your pipeline and your approach towards innovation? And yes, the Strawberry Lemon Burst is very good. So any other updates on some of the innovation?

Bonnie will not lie about taste this I will promise you, I've known you -- just about you for a while now. Yes, I think what's changed about our innovation. One is the pace of innovation. So we're bringing more new products to market. There's a relationship between that and my next point, which is we've also had somewhat of a breakthrough in a more sugar-like taste experience. So historically, given our blend of stevia as a sweetener and natural sweeteners, we've done really well in creamy products like Creamy Root Beer and some of these other faster growers for us. The challenge has been translating that taste profile into lighter and fruitier and some of those big commercial subsets of soda flavors like orange and lemon lime, et cetera. And then the new on-trend flavors like Strawry Lemon Burst. And now with this breakthrough that we've had with a blend that really sort of shows up well in this fruitier and lighter taste profile, we've really unlocked a whole new avenue for innovation. And then finally, just organizational maturity and getting some reps under our belt with innovation, we're able to bring them faster. So you'll expect -- so Strawberry Lemon Burst will be in 75% to 80% of grocery stores in the next several weeks. We've launched a variety pack. We're bringing a new fruity variety pack to Walmart. And then we have a number of additional flavors we haven't announced yet that will either be seasonal or early launches with strategic retail partners. And each of those then explores what could be bigger launches in 2026. So a much more rapid innovation pace than we've had in the past.

And something you and I talked about, I think it was post your call was that last week anyway, about the variety packs. Maybe talk to us a little bit about how you're using them strategically also to try and whether it's drive trial to some extent, but also the ability for the consumer to try different flavors and then go back and...

Yes, we're very much a variety brand. And so an initial insight that we were able to garner is when we were selling rainbow packs and variety packs in e-commerce, we saw through the data pattern that folks were coming back to grocery and buying a higher-margin straight flavor pack as like a pantry builder, right? So we said, okay, we're on to something here. We need to continue to drive trial across flavors and not make presumption that a cola drinker doesn't like grape or orange, right? And so we're doing exactly that. And it's been really, I guess, validating that the #1 selling SKU for Zevia and Walmart is indeed the variety pack. So it's early days in tracking that data back, but what will be interesting to see is can we win new users with variety pack and then get that pantry loaded behavior from largely a multipack brand out of our straight flavor. So that's what we expect to then manifest in grocery. And then for the first time ever, we're rolling out variety packs in grocery as we speak, in a 12-pack, which should keep that kind of virtuous...

That for the summer, when you just mentioned the...

It's rolling now. And so it will be sort of fully to bright, the goal is anyway by Memorial Day and the summer campaign will really support Strawberry Lemon Burst and the availability of variety pack.

And remind us the up -- or the margin impact from variety packs and the multipacks, how does that change the margin...

Yes. Well, Girish has kept us honest on this, and we have been able to achieve either automation or semi-automation in the variety packs to get the margin profile as close to the multipacks as possible.

Okay. So that's [ key ] as well, all right. Switching to DSD. I guess it's been about a year since the initial phase of your DSD rollout in the Pacific Northwest. So curious if you could just touch on some of the learnings from this and essentially what's been working well and maybe where there's opportunities to kind of treat things or improve things.

Yes, absolutely. So driving trial, driving singles distribution is critical for us, and that's best enabled through DSD or direct store delivery partners that help us to deliver singles into grocery and help us to unlock new distribution in convenience. And so as you mentioned, we launched our first DSD partners in the Northwest. In the Northwest, it took a little while to get our footing, but now that our partners are really adept at selling our brand and increasingly competitive, we are seeing over performance versus rest of market in grocery. And we are rolling out some, let's call them, test market regional convenience chain. Convenience has been slower going for better-for-you soda than imagined. And for those of you who don't know, I'm a 20-year veteran from Red Bull, so I know my convenience business. But -- and I remember these early days of convincing a convenience operator that energy drinks had a place. And then same thing with convenience now for better-for-you. So in our regional play in both the Northwest and then now the Southwest, where we newly have DSD partners, we'll be rolling out a number of regional convenience chains in order to test merchandising, pricing and flavor combinations to see really what works. And so hopefully, for the category, we'll start to unlock some learnings and seek to scale that regionally and then nationally.

Maybe frame for us the DSD opportunity because I know then you and I talked about this most recently. Roughly how big it is today as a percentage of measure, where do you expect DSD...

It's less than 10% of our business today. Why? Because it's only in two regions, and it only services a portion of the channels within those regions. So I think we'll be really thoughtful about making sure those two regions are successful before taking steps beyond that geographical.

And then ultimately, just based on your C-store comments, you still see that as an important driver of distribution also...

110,000 convenience stores in America. So we -- yes, it's a challenging environment right now, but we want to drive thoughtful, sustainable distribution. And so let's see what we can learn and probably more to talk about after the next quarter.

Okay -- next. Okay. Marketing. What's the right level of marketing spend as a percentage of sales for your business to ultimately drive accelerating profitable top line growth from the brand, whether it's, yes, from the brand, new channels, new innovation, new distribution in the coming years.

Talk a little bit about brand mix.

I mean, I think ultimately, CSD is a heavily branded category. And I think you could argue historically that business has been under invested in from a brand perspective. And I think we're very big believers that brand can be a moat, and it's an important part of how we can really drive breakout growth here. And so we've doubled marketing spend or will double marketing spend in 2025 as a percentage of revenue versus where we were in 2023. I think you're beginning to see that both in terms of how we deploy national campaigns, whether that's on television or digital or how we sort of support our teams on the ground at retail. And so I think, generally speaking, low double digits, mid-double digits is kind of the right level of spend, and we're going to continue to drive efficiencies out of the P&L to plow that back into brand and retail activation.

So is there going to be a balance what you just touched on the efficiencies and what you're hoping to achieve, the idea that you're going to reinvest? Is that all of it? Or is there a balance between letting some sort of the bottom line?

Yes. I think it's an ever-evolving equation. But generally speaking, given what we see right now is a huge opportunity to drive share, capitalize on the distribution gains we've already made and capitalize on what we believe to be a very exciting innovation pipeline, we are going to bias a little bit of it towards investing to grow. But that being said, and I'm sure we'll touch on this in a bit, but I think the team has done an incredible job of pulling out costs out of the P&L to date. And we believe we would identified incremental dollars that can be material that we'll continue to sort of prioritize doing both, really driving superior unit economics and reinvesting that into the business. So that we can sort of meet both our goals, right, which is really accelerating top line growth while also hitting profitability in 2026, which is why we've given ourselves the leeway to invest this year because we know it's an important year for us to sort of demonstrate that.

That makes sense.

And probably what's the most important about marketing is, yes, we're going to get the spend levels right. And I would say, generally, we've been underinvested and now we're kind of rightsizing that. But what's most exciting for us is for us to be distinctive. Like what is the distinguishing reason to pick the Zevia brand. And we haven't given that to the consumer before. And I think we've really hit stride, specifically in the last six months to continue to stand for being the anti-artificial brand. And so we're anti-artificial in ingredients. We're anti-artificial in claims. We're anti-artificial having some fun with AI. If some of you saw our holiday campaign in our most recent campaign featuring a crossover artist called Jelly Roll, who's a super authentic guy. Then we had some fun poking ad artificiality in celebrity endorsements, ironically with a celebrity endorser. But he's a guy that he lost 100 pounds. He just encourages people to get up off the couch and go run a 5K. They don't even time the 5K that he runs. It's just about finishing them. But what's the message? It's really a message around authenticity and inviting really everyone across America and North America for today and the globe eventually to be a little bit better version of yourself, right? And to sort of withstand all the artificiality out of the world, be it AI or social media or influencers or all the messaging of marketing, we have a bit of a parity sense as a brand now in a twinkle in our eye poking fun at artificiality as sort of the radically real people's champion and being a simple and real soda. So this is what I'm really excited about investing in brand and bringing this distinctiveness within the category.

And that's great. Timing is good heading into the summer, too. For sure. Great, right. You mentioned also on your Q1 call that there might be some room for future price increases. Remind us when you took your last price increase, and I know we talked earlier about the affordability still. But given the environment, do you also see upside in the form of mix as you think about your package evolution?

So briefly, we took price last year, and we've always been a bit of a fast follower. And given we're just a couple of cents per ounce more than conventional soda, but we're still significantly value proposition within better-for-you. So we do see room in price. We haven't announced any plans to take a price increase per se. But you're right, we have price pack architecture opportunities ultimately, we do have pricing opportunity and price has been a part of our growth in the last year or so as well. So...

All right. Let's pivot to gross margins. So Q1, record 50.1%, right, to give you the 10 bps, driven largely by lower inventory write-downs and favorable unit costs. Now you expect margins in the high 40s for the rest of the year. And so I think it's the tariff. 200 bps, I believe you called out the impact from tariffs.

That's right.

So remind us or update us on that situation, how you're impacted from tariffs and then just mitigation efforts ultimately.

So as you alluded to, we hit a record in Q1 of 50.1%. We do see about 200 bps of risk with tariffs under the current rates, primarily from aluminum. That's the majority of the expense that will be hit with, i.e., the aluminum tariffs. And so we expect that to begin to hit the P&L in Q2, a more fulsome impact in Q3 and beyond. We do have a number of opportunities to continue to tweak our COGS and tweak our mix in order to offset that. There's various -- price could be an element, but I think ultimately, we have opportunities with our product formulation, with how we manufacture. We've talked about some of the automation that we are running with regard to variety packs. So there's a variety of levers that are disposal that we will have to accelerate in order to offset that. And so you may see a little bit of choppiness in the next quarter, but -- that being said, I think we're pretty confident we'll still be able to deliver in the upper 40s. And long run, though, there's no reason that we can't be in the low 50s. It's just going to take us a few -- it's going to take us a little time. It's going to take a little time.

Okay. That was going to be my follow-up question. What's the long term. So yes, so low 50s is maybe an achievable goal, but it might take a little time. Okay. Well, let's talk about some of the productivity initiatives. You've made a lot of progress on some of these initiatives. So I think you're recognizing it's a $15 million in annualized cost savings. It's a bit ahead of your initial expectations, if I'm not mistaken. So remind us where these cost savings are coming from? And then update us on the savings you're generating from the supply chain transformation and how that's driving ultimately improved unit economics.

No, yes, I appreciate that. So I think we rolled out the productivity initiative exactly 1 year ago. It was on the Q1 earnings call last year. And so at the time, I had set a target of $8 million to $12 million that would take 6 to 8 quarters to realize in the P&L. So today, we're at about $15 million. It's still going to take about 8 quarters to fully realize all of the savings. But we've begun to see that in the P&L today. And I think I'm really proud of the work the team has done and able to do that. And at the time, we said it would be about 1/3, 1/3, 1/3, 1/3 out of COGS, 1/3 out of sort of selling and warehousing expenses and 1/3 out of G&A. And so we've largely gotten most of the G&A and the remaining is really going to come out of COGS and selling and warehousing expenses. And so we've been able to continue to sort of step change and rationalize and make the supply chain network efficient while maintaining near record service levels. And so it's -- we're doing this in a very measured way. But that being said, I think we're really encouraged by the costs that we've taken out to date. It will continue to flow through the P&L over the coming quarters. And we think we've identified incremental opportunity that will allow us, as we alluded to earlier, not only continue to reinvest, but also get to our profitability targets in 2026.

Possibly.

Again, we want to be biased. It makes us feel confident that we can get there, but we also want to give ourselves the flexibility to invest because, again, the real goal is to drive profitable long-term growth. We could get to profitability, right? If you looked at our Q1 results, if you simply stripped away the investment in marketing, we would be EBITDA positive. And so -- but that's not the right long term -- that's not the right long-term view.

And as we stick with some of what you just talked about, where are you at with these productivity initiatives, the realization, what inning are you in as I think about this journey?

Yes. So I'm more of a basketball guy. So I'll tell you, we're at half time. We're basically -- we're starting the third quarter right now. So I think we're about 50% of the way through in terms of having realized it through the P&L. And as I mentioned earlier, there's still more to come. And so that will more fully sort of bleed into the P&L over the next 4-ish quarters.

But there's no doubt that this is a huge priority at your company and the focus and -- okay, encouraging to hear that there's incremental opportunities that you're identified.

Yes. And again, I think it's really in the pursuit of investing for growth because that's really -- that's really the priority.

Okay. I want to kind of go back to just the environment in the consumer, which has been challenging. So I'm curious from your perspective and your business, what are you seeing in terms of any changed behavior? What are consumers looking for? Like you mentioned on the health and wellness trend. I do believe -- I don't care if we call GLP-1s, it's just an overarching acceleration of that trend. But also just in this tough environment, what are you seeing that the consumers are doing and how they're shopping?

It's really early to say, to be honest, in terms of what are we literally seeing. I can tell you what we expect a little bit. We're a multi-brand -- a multipack brand and inherently a home stocking brand. Consumers that are more health conscious are willing to continue to invest in a way, don't consider these foods and beverages to be discretionary, but rather a part of their routines. And so we do expect some resilience just based upon the shopper that is attracted to Zevia. And then I think finally, the pricing dynamic we were mentioning. We're sitting in a new and exciting category, and we're the most affordable option. So it's early. We're not seeing a lot of consumer behavior shifts yet, but we do expect some home stocking, and we expect that if there is trade down within better-for-you that we could or should benefit from that.

Okay. That's interesting. So all right. And we've got just a few minutes left. I did want to ask few couple of questions about your stock. I know we just talked the stock has actually been doing quite well recently. But in general, what do you think investors are missing about the story?

Maybe I'll just talk a minute about our opportunity, and then Girish could kind of bring us home on this. But I would imagine that investors look at our stock or our valuation and think it's small. And here's how I think about this business and it's both immediate and long-term opportunity. We are in single-digit household penetration of a category that is in over 90% of American households. People are increasingly drinking diet and zero sugar soda, but they actually don't want to be. And so there are massive business opportunities for us for people that are moving away from conventional diet to a clean label product and for a generation and really 2 generations coming up who have always rejected soda. And now because of massive investments and new entrants in better-for-you soda across the board may consider soda for the first time under this umbrella of better-for-you Modern Soda. So on the back of these category tailwinds with our exciting new distribution, with our breakthrough taste profile, our rapid innovation and then our ability to invest in marketing through the productivity that Girish has outlined for us, all the while continuing not just to maintain but improve margins, I think there's a pretty compelling story as to why we're just getting started within a massive opportunity.

Yes. No, I mean, I think you hit a lot of it. I mean, ultimately, I think there's a huge opportunity. I think we finally sort of hit our stride vis-a-vis sort of that strategic and operational fit where we've hit on a marketing message that resonates. We have hit on a sort of product and whether it's packaging or the actual product itself that is really differentiated, and we're developing a compelling financial profile that will allow us to grow. And I think we're making all of the right long-term investments to accelerate future growth. And I think that's really what gives us -- that gives us confidence that we'll be able to achieve the things we've talked about. And I think it's really -- I think it's a great place to get in right now.

And Bonnie, maybe just one other quick thing. I'm just really proud of the team, if I may say this, because I know this is webcast. I'm really pleased, I think you can probably see with the progress that Girish has made in leading a large portion of our organization is doing with us just a year. And I think his both capability and ability to execute and do what we say we're going to do is reflective of the spirit of the whole Zevia organization these days. So I'm really pleased that we executed the plan in Q1, and I can really see the path to do exactly that for the rest of this year. And that's how we realize the full upside of this thing to execute exactly what we say we'll do.

That's great. Well, I wish you all the best. That's all the time we have.

All right. I'm glad you liked our Strawberry Lemon Burst.

Yes. Thank you.

Appreciate it, everybody. Thank you.