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Zevia is studying potential of distribution partnerships

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Zevia (NYSE: ZVIA), the maker of natural, zero-sugar beverages, is doing its "homework" to bring aboard a new distribution partner, CEO Amy Taylor tells Axios.

Why it matters: The company sees a big opportunity to expand into convenience stores, where it can get consumers to try its cold single-serve drinks.

Of note: In addition to being sold online, the brand is nationally distributed in Target and in 90% of grocery stores.

Details: Zevia wants to take its base business — multi-packs, grocery distribution and natural beverages — into cold singles to drive trial, Taylor says.

  • To do that, Zevia will need to evolve its route to market to be competitive in the convenience store channel, likely requiring a partner.
  • The beverage maker is exploring hybrid models, in which it may use a combination of brokers and partnerships depending on geography, category or channel.
  • Obvious candidates include big beverage players, but Taylor says snack food businesses and noncompetitive beverage companies like beer businesses could fit.
  • Zevia could also partner with a large convenience store chain that would not require direct store delivery (DSD), she adds.

What's happening: "We are doing our homework right now, which includes having some exchanges with potential partners," Taylor says.

  • A partnership could involve an investment or exchange of equity, Taylor notes.
  • Taylor noted the company uses consultants and has a scrappy in-house team, declining to disclose exactly who is providing the company with financial or legal advice.
  • Zevia could reasonably make a decision within 12 months, pointing to an "exciting" 2024, she adds.

What they're saying: "You can take an established business that has immediate returns for you, and increase your profitability and revenue per stop, if you think of it that way," Taylor says.

  • Taylor says Zevia excels at blending natural ingredients with carbonation to address the bitterness of stevia, resulting in a great-tasting product.
  • Its shoppers, according to data it has studied, are also buying items like Doritos and Oreos, underscoring the brand's mainstream appeal.

By the numbers: With a market capitalization of $260 million, Zevia is considered the No. 1 soda in the natural channel and in e-commerce.

  • "We are increasing our path to profitability as a foundation before scaling to the degree that something like convenience and global distribution would indicate," Taylor says.
  • Net sales increased 13.8% year over year to $43.3 million and the company has seen a 30% CAGR over the past decade-plus.

What's next: Zevia has its eye on energy drinks and tea, Taylor says.

Editor’s note: This story has been corrected to note Taylor said  you can increase your profitability and revenue per “stop,” not per “stock.”

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