Zevia PBC ($ZVIA)

Welcome to our Global Staples Conference this year. Joining us on stage today is Amy Taylor, President and CEO; and Girish, CFO. As many of you know, Zevia is an emerging nonalcoholic beverage company that went public about 4 years ago. Zevia's portfolio of products include a variety of flavors that are zero sugar, zero calorie and naturally sweetened with Zevia cross soda, energy drinks and organic tea beverages. Zevia just reported strong Q1 results, and we're very excited to hear more about the company's recent initiatives today, including the rollout of packaging, refresh, new on-trend fruity flavors, see some, I think expanding distribution and a significant marketing position. So thank you, for joining me again this year.

Thank you.

All right. So I'd like to kick things off with your results last week. So your Q1 top line was robust, and I think ended up coming in much better than I would say my expectations, Broad Street expectations. And it was enough so that you felt comfortable and confident to raise your top line guidance. So first, can you highlight what drove the better top line results? And then second, hoping you could highlight growth drivers as I think about for the rest of the year would be helpful.

Sure. Yes. So in simplest terms, Q1 overdelivered both on volume and price. When we look at what drove that, we did have a softer Q1 from a promotional investment perspective because we prioritize this summer for promo dollars as our new packaging is rolling out, so we wanted to align the two. And yet retail sales came in stronger than expected despite less promotional effects. So think of that as base business health. So that was a key driver. Second one, there was a little bit of help from new distribution. So we gained new distribution last year and then we're lapping Q1 prior to that change of last year as well as some new distribution, Costco. We had a national rotation there. Thirdly, we did see some acceleration in velocity from existing distribution. And then finally, in Q1, we realized our increase both a little bit faster and more completely than anticipated. So those are really the key drivers. Looking ahead, while last year was a big step change in distribution getting national distribution at Walmart, this year, we'll see growth a little more normalized from a mix of distribution gains, continued distribution gains and velocity acceleration. And we have an eye on velocity acceleration in particular because we are rolling out new packaging with clear communication of Dr. Zevia, an improved taste profile across the portfolio, innovation and then a step change in marketing, which I'm sure we'll talk about later today. So those are some of the drivers.

And then in the context of that, taking into account your Q2 guidance, your full year implies healthy growth. I would say, I think my math, 5% in the second half. So I know you're investing in the brand, new packaging and marketing. But maybe talk through a little bit more about the confidence you have in being able to kind of execute on that 5% growth in the back half.

Yes. So I think ultimately, we touched on sort of the first quarter. But in the second quarter, we knew there were going to be some shifts. We're obviously -- as a reminder, we had talked about discontinuing our line which will impact the second quarter. We had some load-ins from the prior year that we're lapping with Walgreens in the second quarter. So we knew there'd be a little bit of pressure because of that in Q2. But separately, we've also shifted a lot of our promotional spend in marketing dollars into Q3 to leverage not only the Card B relationship, but also the new packaging, the rollout of our new sort of on-trend frutiflavors more broadly and then separately, just the enhanced labor profile. So we sort of have all those things coming together in Q3 as the new packaging as a reminder, is rolling out as we speak. And so that really gives us not only confidence that we can sort of accelerate growth in the back half because of the early -- the very, very early reads on it, enhanced packaging are positive. And so it gives us a lot of confidence that we can continue despite some of the headwinds of the consumer that we can continue to sort of drive growth.

And speaking of the new packaging stage, it's rolling out as we speak. -- when is the expected to be finished rolling out? Is it in a couple of months? Or how long does that process?

It's really a Q2 rollout such that it will be complete or materially complete start of Q3, which aligns then with increased promotional support and some of our new marketing campaigns.

And then you touched on Carty B. So I'd love to hear a little bit more about that relationship and what she can do for the brand.

So the first thing we love about Card B is that she is a radically real character. We talk about our brand as being the radically real people's champion, and she certainly keeps it real by every definition. Importantly, though, what she does for the brand in addition to like representing it very well, is step change reach. So she has 280 million total social media followers. She has the 25th most followed account on all of Instagram with super high engagement. So when you invest in Carty as a partner or a mutual investment as she also as a shareholder in the company, you get high engagement. She really, really works hard for the brands with whom she partners. She has, like I said, strong reach, but then also what that manifested as strong engagement for the consumer. So ultimately, we're hoping to speak to a new consumer, set step change, the top of funnel or the top of mind awareness and then drive trial for our product.

And when does all of that start? It just started it off ?

We just announced the partnership -- now Carty, and there's been a couple of social posts on her side and hours. She did a spontaneous and super authentic no makeup host from Whole Foods in the beverage aisle the other day, and that's the kind of organic incredible communication we see from her. But that's really just the announcement. What you'll see is a full campaign, including mainstream television and digital advertising this summer, concurrent with the other initiatives Girish was mentioning earlier, always on social media, a couple of appearances, some editorial support, some retail activation and then eventually, at the right time, some product innovation that we work on together is definitely at least in the ideation stages.

So she came to you with some ideas or collaborating already.

She definitely has a point of view he's also mentioned . And so we're able to leverage some of her ideas as well as her personal preferences so she can work on something she's really passionate about.

And then while we're on the topic of this, to some extent, thinking about marketing spend as a percentage of sales -- what is the right level? And as I ask that, thinking about the ability to accelerate top line growth, whether it's from the brand, new channel, new innovation, et cetera. what level of spend do you think?

Yes, I think as a reminder, we've doubled marketing spend as a percentage of revenue over the last 2 years. And so I think we're starting to approach the appropriate amount of marketing spend that sort of will call load it into the P&L. I think appear happy with what we're seeing right now in terms of investment. And so we could see certainly incremental investment is warranted. But right now, I think we're happy with kind of where it is today as a percentage of revenue.

Is there a particular area of focus that you're, I don't know, channeling more of that dollar spend, whether it's channels, brand, social, et cetera?

The critical thing for us is the right mix of brand spend -- so establishing distinction from a brand identity perspective as well as reach. So think of that as a top of funnel investments, advertising, et cetera. And then closer to the point of purchase those kind of accountable dollars that drive velocity for which we can have some form of attribution of metrics, right? So retail, digital advertising, so it's a mix for us. And then I think what we've added in new is also some grassroots marketing. It's a page out of my old book from my Red Bull days, but we're doing a lot more sampling. We're showing up kind of on the ground close to the consumer, whether it's the Diplo Run Club or South by Southwest or a Sampling Tour that we're executing this summer. We are also a part of CardiB's first-ever sold-out arena tour. So we had brand presence at every stop. And this way, we're getting cans in hand. Our product tastes better than ever. Taste is the #1 driver of this category, hands down. And while better-for-you positioning keeps people coming back, it's taste that gets to the new door. So sampling becomes really a big priority for us.

Speaking of that, because you just mentioned it, talk to me about how you have evolved the taste profile because I think that's something you've been working on for the last few years.

Yes. We're really focused on -- as Girish briefly mentioned earlier, we have the portfolio to get focused on soda and our nascent energy drink business opportunity over time. In the soda portfolio, we've made a couple of fundamental changes. So first of all, recall that we have a core business of soda that is kind of classic soda flavors; cola, ginger ale, root beer, et cetera. And then we have a lot of innovation in the fruit and fruit creamy spaces. But across the baseline, we've improved taste for about just over half of our core existing SKUs with a more sugar-like taste experience as we continue to learn best use of the components of the stevia leaf and our blend of natural flavor. So we've improved the core taste profile across the portfolio. The second thing that we've done is started to pick up a pace of innovation. So we're innovating within that core classic soda flavors. And then we've started to introduce new on-trend fruity flavors, which is bringing a new shopper to the franchise as well. And then finally, just expanded distribution and presence is helping us to drive trial against that -- the two areas of play, right, the core soda flavors and then the innovation piece.

And as you mentioned you're picking up the pace of innovation. Are you also discontinuing any SKUs? Or is it just continued to adding adding to the portfolio?

So far, distribution has been the gift that keeps giving. So our new products have demonstrated remarkable incrementality to our existing portfolio, which I think it just bodes well for the future productivity of innovation. But yes, in time, there's also some flavors that can kind of find their way out. So we make best use of every linear square foot on the shelf.

Okay. And in terms of household penetration, I think you mentioned during Q1 call that you're in the mid-single-digit range. How does that compare to last year? I was trying to remember. And then ultimately, what's a realistic goal for household penetration for your ?

Sure. So we -- I would tell you, if we back up a little bit to the story of the brand, we had to settle from our household penetration based on a couple of initiatives first and then get back to growth. And what I mean by that is we pruned some unproductive portions of the portfolio, getting out of mixers and kids and now tea. And then we also though in the midst of a supply chain transition, lost distribution at Sam's and at Target, as Target launched a private label. Now we expanded distribution in 2025 to 100% of Walmart in the U.S. and about half the business in Canada and growing. And that was then a step change back for household penetration, as you mentioned, into the mid-single digits. But all the additions, both from a distribution and new consumer perspective from here forward is net additive. So I think with some of these initiatives we've talked about in the pipeline, we to see continued steady growth from household penetration from here forward. We have distribution upside in Club. I mentioned Target, of course, and then just continuing to win new consumers and existing distribution as well.

Got it. And then I was thinking about the current environment, whether it's legislation, secular trends, et cetera. How do you think about your portfolio and your brand, possibly capitalizing on some of these trends? Do you think about being advantaged relative to peers? And can this ultimately drive faster growth for your business over the medium term?

I think so. So there's a macro move away from sugar. We know this especially relevant for a younger consumer, they're looking for a clean label product. We have the fewest ingredients of any soda on the market. So no artificial ingredients is certainly an advantage for us. But within our peer set where we sit on the shelf next to modern soda, we're also the affordable player. We're the key performer when it comes to kind of core soda flavors and we're the multipack and home stocking brand. And in an environment where folks are thinking twice with their discretionary income, we find that kind of overperforming as a home stocking brand is really to our advantage. Another place where we spike from a strength standpoint is e-commerce as well as digital retailer.com and click and pick type of an environment. So all of these tend to be a little bit more resilient. We are not immune to the macroeconomic climate, of course, that's why we're a little bit cautious about how do we project but we do think that we have a relative advantage within the category given our price points that look a little more like a soda than the rest of the category, who is close to twice our price point per unit.

True. And then I think about the context you're positioned the better-for-you. Beverage segment, but if I think about all the big players and new entrants, it's gotten quite competitive. So how are you dealing with that competitive dynamic? And what kind of pressures are you seeing? And how do you feel that you're going to be able to kind of win there?

Net-net, the excitement in the beverage category, the return to growth for CSD and then the rapid growth of what they're calling modern soda or better-for-you, those are tailwinds, net-net they are tailwinds. Because in our early stages, we were far away the #1 brand in a category that didn't garner a lot of attention. And now we're a top brand in one of the most exciting categories in beverage. So when you think about the modern soda category in a Walmart or an Albertsons and increasingly in additional national and regional grocers, getting set up as a true category. There's a foot traffic impact for us. We're getting trials from folks that are trying products across the category. And that's been, again, a tremendous tailwind. But the competitive environment for us just is indicative of the future opportunity. At the end of the day, 90-plus percent of households stock soda. And people are increasingly leaving the category because of sugar or artificial ingredients, and we're literally a solution for both, and we taste great at a great price point. So all the macros point to tailwinds for Zevia for the long run. And our job is to continue to turn out great tasting products, keep the price point accessible and drive distribution so that we're at arm's reach.

Yes. I want to ask about GLP-1, I'm just curious because I touched on some of this. And how is that impacting your business as we see potentially more consumers going on GLP-1s, et cetera? Is that a potential opportunity, risk? Have you seen any noticeable consumer behavior changes?

I think we observed the same trends that others report on, meaning folks are snacking less. But for beverage, that's not necessarily the case. So we provide support for someone on a wellness journey, kind of with or without GLP-1 but being able to have like a tasty hydrating treat with zero calorie, zero sugar and no impact on the glycemic index is certainly a complement to a wellness journey, a weight loss journey inclusive of GLP-1. So if I had to pick between a headwind or tailwind, I would definitely say tailwind. And I think we're a great sort of halfway through your day or first thing in the morning or otherwise along with food as well for a GLP-1 user.

When I circle back to innovation, the pipeline. You mentioned on your recent call that you have some new product launches and early signs of incrementality. Can you touch a little bit more on that? And maybe just in general because I've known you for a few years, can you speak about the evolution of your innovation pipeline just generally as well?

Sure. So the comments we made on the call were as follows. There were one retailer, which our new items were delivering 38% incrementality and the second retailer where our new items were delivering 53% incrementality. Now we don't expect that to sustain. It's not -- doesn't indicate 150% growth. But what we do know is that, that's indicative that our innovation is additive to the portfolio. And that's really one of the stories of Zevia overall is that we are powerfully incremental. This is what the retailer, of course, wants to hear as well. So as more and more functional beverages at high price points come into the category, they are stealing share from the top 2 functional brands and far less so from us. It indicates that we play a unique role in the category. So how do we innovate based on that insight, we want to continue to grow with our kind of loyal user that is drinking our cola and our root bear and our ginger ale most classic soda flavors. And then we want to continue to surprise and delight and bring younger consumers in with this fruit and fruit creamy. So I'll use examples, our Orange Cream sickle flavor, our strawberry lemon burst, which was new news from last year. An up-and-comer strawberries and cream which has become the #1 Zevia SKU at Kroger, and we think has tremendous opportunity for nationwide distribution next year. So those are some examples of just continuing to diversify the portfolio bring in new and younger shoppers to complement the loyal base that drinks our classic soda flavors.

And with some of this innovation, are you structuring it such that it's staggered as you roll it out into the marketplace as I'm thinking through e-commerce selling?

Yes, a lot of time, what we'll do is we'll bring in a limited time offer or a retailer exclusive. That is both like tactically advantaged to help us kind of get things done with a specific retailer, but it's also a great opportunity to road test a new flavor, build some proof points and then bring that with tremendous confidence to the full market the next year. So you are seeing that pattern and that has been what we've learned has worked for us.

All right. I'm excited to try some of it.

I appreciate you in the best .

Yes. All right. And then Spring shelf resets. I'm curious to hear. I think your shipments were strong in Q1. I think you suggested maybe a little bit pressure on Q2 shipments potentially. I'm just trying to think through this phasing of that? And how do I think about that in the context of spring resets or shelf space this year?

Maybe I can share a little bit on the spring resets and Girish can talk about the phasing of our growth expectations and what pays into that. So last year with a big step change in distribution with National and Walmart, which I mentioned, but we also increased our space by 30% in a major grocery operator Albertsons. But Albertsons, again, in 2026, will increase the space more in part, that's because the entire category is growing and in part as velocities are accelerating. So the learning is when you set the shelf properly for Zevia, Zevia is incremental to your growth. And so we're continuing to take that story to other retailers, and we'll see improved spring sets across Kroger and the other ones that I mentioned in prepared remarks were HEB and Publix, but there are more. So we're bullish on just continuing to chip away at same-store distribution increases, both through incrementality from innovation and through insight-based selling, that gets us up to that vertical brand block and eye level. So that is part of what will contribute to our growth for the balance of the year, although our eye is largely on philosophy. But Girish, maybe you could talk about the phasing of that?

Yes, I think just coming into the year, we knew Q1 and Q3 were going to be the sort of the big quarters, and then Q2 and Q4, we're going to have some sort of headwinds. And I think, again, the discontinuation of the T line, the lapping of some of the onetime sort of fill -- pipeline fill from last year and then just our shifting promotional calendar and shifting Club rotations, we're really going to drive some of that volatility quarter-over-quarter. So generally speaking, I think we're seeing a lot of strength in the base business, as we alluded to earlier. And so I think although there are some shifts which are normal, I don't think it's anything to -- it's not anything that we're concerned about.

Yes. It's just timing. Okay. And then on your Q1 call, you also talked about passing through a price increase, but no further plans for pricing, I believe. So maybe remind us of the pricing that you're expecting this year versus your approach in prior years and just the cadence of that.

So I think we're really laser-focused on the consumer and really trying to understand we all see the same things, right? We all see it as a new heterogeneous consumer base. And so we want to ensure that we're delivering as much value as we can to the consumer. And so as a reminder, we actually did not take price last year. And so we passed through a moderate price increase earlier this year, primarily to offset some of the headwinds that not only we experienced last year, but also knew we were going to experience this year as it pertains to aluminum. So that being said, again, we're really trying to maintain that sort of affordability angle of our value proposition. And as Amy alluded to where price is a slight premium to conventional soda, but at a significant discount to the rest of the modern sort of competitive set. And we think that's like -- we think that's an advantage, especially today. And so given that we're also a multipack home stocking brand, which, again, all very unique and sort of can play into a sort of sort of long-term moat for the brand. But again, from a pricing standpoint, I think we're comfortable with sort of where we are right now. I don't know that we're going to sort of pass through a second price increase. It's probably pretty unlikely. But again, we'll reevaluate that as the year goes on.

Okay. And what about package innovation, I'm thinking of RGM or price pack architecture, Other ways as maybe if you need that to offset some of the headwinds, which we'll talk about?

Do you want to? Yes. No, I was going to say there's still a ton of opportunity in that regard, meaning there's obviously some opportunity for us to continue to find incremental cost out opportunities. But that being said, there's also incremental opportunity to drive more favorable package mix as well, which can help offset some of those, whether that's mixing -- further mixing into singles, our energy portfolio is highly accretive. And then certainly playing with different pack sizes will allow us to sort of offset and mitigate some of those pressures?

Okay. I wanted to switch gears a little bit, just kind of go back to the Club channel because you did talk about this on your call in terms of the national rotation program at Costco, which really has given you access to new markets, consumers. So what else have you seen with this program? And do you expect it to result in additional rotations or maybe permanent new distribution?

Those would be the 2 great outcomes, right? So we probably, in the early days, got into club too early. We are now establishing a healthy and sustainable approach to club from a pricing and flavor mix and pack size and everything. So we had a national rotation, meaning 100% of outlets in January. And what that helped to do is not only kind of confirm -- put us at the front of the door and confirm strong velocities in our existing footprint, but open the door to exactly what you said, which would be incremental rotations in new regions. Permanency, so permanent item status in a number of regions and/or a national rotation. So there is some club in our presumed outlook or -- Club presumed in our outlook, but incremental club distribution would be upside on the current guide.

Have you quantified -- I guess I could look into this, what percentage of your portfolio is in Club?

We haven't. We haven't. It's not a major one, but Club -- strategically club is a sort of a treasure hunt, is a place to find new consumers and drive trial, and that's really why we're focused there. And of course, volume helps bring scale and profitability to the channel. But right now, it's not a major driver of the business but from a mix standpoint.

To your point earlier, you see further opportunities within [indiscernible] other retailers like?

That's right. Upside on Club for us is incremental Costco. Sam's is white space for us. BJ's, there's incrementality to be had at BJ's and then Restaurant Depot and JERA.

Okay. Food channel. You've been making some nice distribution gains and especially, you mentioned Albertson. So what percentage of your business in the food channel or is in the food channel? And how much more growth do you see there?

Yes. So we haven't broken down channel split, but food is a top channel for us. and it continues to grow. And we're seeing some -- where we set the shelves properly and have a full mix of the assortment, we gain share. And so this is a great story for the retailer is incremental. And for us, we continue to help support user base growth. So we have store distribution growth opportunities. We have ACV or SKU distribution growth opportunities in Club. And then we really believe that the marketing, packaging and taste improvements will drive velocity acceleration. So those are really the 3 opportunities to drive further growth out of food. So we're pretty bullish on food actually.

All right. Anything else that I can ask about as it relates to channel mix because food service?

Yes. I think the next frontier is singles for us. Most beverages are built sales driving trial and then you move people up to multipack. We did it backwards. We're a multipack brand. We're a home stocking brand so we sort of super serve our super fan. And now our opportunity with this new packaging is to finally really drive singles, right? And so that's that can be in grocery, and it can be a now, which often operates a bit like a deli. But to your point, the white space is food service and convenience. When the category is broadly ready for convenience than -- or rather when the convenience channel is ready for the category, we will be there, and we'll build that in a steady way. But in the meantime, foodservice is a great place to drive trial.

And you've made progress within the C-store channel.

Regional pilot, we're there. We have some learnings. It's just really a matter of change fit the brand, meaning who is their shopper? Are they looking yet for a better-for-you product? We think that over time kind of next generation, that will be 100% of convenience stores, but it will take some time to get there.

Yes. All right. Now I want to pivot to the fund topic yet gross margins and costs, look, your gross margins were down in Q1, you expect margins to be under some pressure this year as most do. given some higher costs from whether it's aluminum, fuel increases. So can you talk a little bit about some of the levers you have to pull in the near term to offset the impact? And then also curious as we're talking about this, where can you source aluminum from -- have you broken out what percentage of COGS now?

Yes. So I guess there's a few questions in there, so I'll try to unpack them. But we haven't like everyone else, we're seeing tremendous sort of inflationary input cost environment. And so as a reminder, we've taken $20 million out of the cost structure. We see room to take another incremental $3 million to $5 million towards the end of the year, maybe really the beginning of 2027. We've largely found opportunities in COGS and in selling and transportation expenses is fundamentally where we've taken the majority of the expenses out, there will continue to be opportunities there. I think in the short run, for a business of our size, it is -- there aren't a lot of levers that we have to pull, given we have an asset-light model, we really leveraged the aluminum purchasing contracts and aluminum purchasing practices of our manufacturing partners. And so we continue to work with them. But as we talked about earlier, the levers really are around price pack architecture, around penetration into singles and then driving more penetration into our energy drink business, which is -- which has very high margins. So those are some of the levers we have to play with. And I think, generally speaking, we've made a lot of progress on the cost out. But some of that is just we're dealing with the same transitory headwinds that everybody else is dealing with.

And some of the cost savings. Was that already planned? Or was there anything that you were able to pull forward some of these initiatives? Are there other opportunities?

Yes. I mean I think it's sort of an ongoing exercise where -- and $20 million as a reminder, will be completed this quarter. And so that sort of completes the sort of initial transformation journey that we talked about 2 years ago. And so there will be -- the 3 to 5 is probably what we pulled forward from '27 into sort of end of '26 given some of the incremental headwinds we're seeing.

And your gross margins in Q1 were 48.4%. What do you think is a realistic gross margin over the, I don't know, medium, long term?

I'd say the long term -- yes. No, it's a great question. Long term, this should be a business with sort of mid-50s gross margin. We would have been in the low 50s setting aside all of the tariff fuel impacts. And so I think we're on that path, and we're on that journey to get there. How will we get there? Again, it's mixing into singles, driving higher mix into energy. Obviously, don't we price opportunities over time, we see price opportunity. And then with more scale, we'll be able to drive more efficiencies. And so the path is clear. We just have to continue to sort of go down.

I'm looking at the clock. Maybe I should -- I want to take a couple of minutes on energy because you've touched on this because clearly, by background, we've seen this category growth, which been incredible. So what is your approach to the energy?

Yes. I think every time we're talking about this, I nodded and acknowledged. We have a nice small energy drink business. Now we're ready to get after it. And what do I mean by that? So we have truly been through a very specific and disciplined and well-implemented transformation program, and now we stand on a really solid foundation with the path to profitability and a more efficient operation. And that gives us organizational bandwidth to turn our focus to what now I think the consumer is catching up to, which is the overlap between those that we choose to drink an energy drink and are looking for a clean label product, which that overlap did not exist before, right? There's a mainstream you know -- well, the mainstream energy drug category. -- there's -- over the last 5 to 10 years, fitness energy, which has really exploded, but those are not necessarily what I'll call, clean label products. So for those that are seeking to avoid artificial ingredients but want the benefit of an energy drink, we think we're proverbially skating to where the puck is going, and we're actually really excited about our energy drink business. It's profitable. It's healthy and growing in the natural channel and in e-commerce. And so with sort of concepting a marketing plan and an expansion plan around that, more to come in the coming quarters to talk about '27 and beyond, but that's a material next revenue source for us that would really be complementary to our margins, and to our user base.

And not only that, but top line and the margin and profitable.

Yes, all the way down. Yes. It's a very attractive category, as you well know.

Yes. No, exactly. And speaking of profitability, I know we've talked about this in the past, but EBITDA profitability, what is the endgame? Or when do you expect to be able to kind of cross the line of becoming profitable?

Yes. I mean -- and look, I mean, ultimately, if you were to sort of strip away the fuel and aluminum impact, I mean, we would be in the mid-single digits this year. And so of course, there's some unforeseen and uncontrollable events. And we do see those as transitory fuel will eventually come back in line. And so although this year will be a bit of a -- this year will be a challenge. But as a reminder, on a trailing 12-month basis, we're basically EBITDA neutral. And so we're at that cusp right? And so really, it's about underpinning the business are very strong unit economics. And so as we continue to prioritize investment and continue to prioritize accelerating top line growth, we will get there. And I think it's all that we thought we'd be there. This year, it's probably just get to not a lot -- it gets pushed by a year. But generally speaking, we're very confident that, that will happen, and it's just going to take a little bit -- a little longer than we had anticipated.

Well, it sounds like you have a lot of green shoots this year and then really the setup for '27. It sounds like just kind of heading into the year from a position of strength with everything that you just touched on.

We can say that with confidence.

Yes. Good to hear. Okay. The final minute. And I think I always ask you this, but I'm curious to hear what you think investors might be missing in terms of your performance and whether it's the stock.

Yes. This is a business that answers the tension in one of the largest categories in all of CPG, which is carbonated soft drinks. We solved the problem, which is the tension between health and taste, great taking product that's healthy. And so with 5% household penetration, now a stable foundation, increasing distribution, really strong package communication, refresh, improved taste and a rapid pipeline of innovation. What I'm excited about demonstrating in the back half of this year is that when we're able to invest in marketing on that foundation that I just described, we're going to start accelerating velocities and step changing the user base. And while I don't necessarily sit here and tell you that this will be an 80% or 85% household penetration brand, today, it's around 5%. And I can see it being 8% and 10% and 15% and 20%. And I really see such a massive opportunity for this brand as really the perfect solution to the problem that carbonated software has with the next generation. So it's a long-term play. Girish is demonstrating where we're -- how we're going to get there in the near term as well. But I think the opportunity is probably much larger than people would see at first glance.

Okay. Perfect. Thank you.

Cool. Thank you very much. Thanks for having us.

Thank you.