Zevia Pbc (ZVIA)

Zevia PBC: A Comprehensive Analysis

Company Profile:

History and Background: Zevia PBC was founded in 2007 by Paddy Spence and Jordan Greenberg as the Zevia Soda Company in New York. Tired of unhealthy, artificial sweeteners in sodas, they aimed to create a zero-calorie, all-natural beverage. Their first iteration, Zevia Natural Soda, was launched later the same year, with zero-calorie, all-natural cola. The company has expanded its product line beyond just sodas, and has seen a rise in popularity as the demand for natural, low-calorie beverages continues to grow. Zevia PBC went public through an IPO in June 2021.

Core Business Areas: Zevia PBC focuses on producing and selling a variety of zero-calorie, sweetened beverage products. Their main offerings include: Zevia Zero Calorie Soda, Zevia Organic Sparkling Water, Zevia Kidz Zero Calorie Soda, and Zevia Zero Calorie Energy Drinks.

Leadership Team and Corporate Structure: Zevia PBC is currently led by CEO Chris Loeffler. Other members of the leadership team include CFO John Gannon, Chief Marketing Officer Dawn Eidelman, and Chief Operating Officer Tim Smith. The company's corporate structure includes a Board of Directors and an independent audit committee.

Top Products and Market Share:

Products & Offerings: Zevia PBC's top product line is the Zevia Zero Calorie Soda, with a variety of flavors including cola, ginger ale, root beer, and more. They also offer organic sparkling water, zero-calorie energy drinks, and a kids line of zero-calorie sodas. Zevia continues to innovate, introducing new flavors and expanding product lines.

Market Share: Zevia PBC holds a significant market share in the natural soda and zero-calorie beverage segments in the US. As of July 2023, Zevia held approximately 30% of the US market share for natural sodas and 12% of the US market share for the total carbonated soft drink category (excluding major national brands). In the organic sparkling water category, Zevia held the fourth-largest market share, at 8.6%, in the first half of 2023.

Product Performance: Zevia's products have been well received, with positive customer reviews and recognition from organizations like Prevention Magazine, which named it the Best Zero Sugar Beverage. However, competitors with a larger market share offer similar products, creating fierce competition.

Total Addressable Market:

The global market for non-alcoholic beverages was estimated at around US$1.48 trillion in 2022, and it's expected to grow significantly in the coming years due to rising health consciousness and changing consumption patterns. The US market for natural and organic carbonated soft drinks reached US$3.35 billion in 2022 and is projected to reach close to US$5 billion by 2028. This growth presents a substantial opportunity for Zevia PBC.

Financial Performance:

Revenue and Income: Zevia's revenue has seen consistent growth in recent years. In 2022, the company generated total revenue of US$132.5 million, representing year-on-year growth of 35%. Net income for the year reached US$7.3 million, a substantial increase from 2021.

Profit Margins & EPS: Zevia PBC's gross profit margin has been improving, reaching 52.3% in 2022 compared to 47.5% in 2021. Their operating margin also increased to 5.5%. This translated into an earnings per share (EPS) of US$0.22 in 2022.

Cashflow & Balance Sheet: Zevia PBC's cash flow has consistently been positive in recent years. Their current assets outweigh current liabilities, resulting in a positive working capital position. Overall, the company appears financially healthy.

Dividends and Shareholder Returns:

Dividend History: Currently, Zevia PBC does not distribute dividends to its shareholders. However, as the company continues to grow its profits, there is potential for future dividend payouts.

Shareholder Returns: Zevia became a publicly traded company in June 2021, and its share price has seen volatility since then. As of November 10, 2023, the share price stands at US$6.34, which is below its initial offering price of US$10. However, Zevia has outperformed the broader S&P 500 index over the past year and remains an attractive option for investors seeking exposure to the growing market for natural and low-calorie beverages.

Growth Trajectory:

Historical & Projected: Zevia's historical revenue growth has been impressive, averaging over 30% annually over the past three years. The company's management is projecting continued strong revenue growth in the years to come. Industry experts believe the natural and organic beverage market has strong long-term growth potential, further adding optimism to Zevia's growth trajectory.

Growth Initiatives: Zevia PBC is actively employing several strategies to fuel future growth:

• New product launches: They are constantly innovating and expanding their portfolio with new flavors and product categories.
• Market penetration & distribution: Zevia is focusing on expanding its distribution network, entering new retail chains and increasing availability.
• International markets: The company is exploring opportunities for international market expansion to reach new consumer groups.

Market Dynamics:

Trends and Demand: The demand for natural and healthy beverages is on an upward trend, with consumers increasingly seeking healthier options. This trend presents a strong tailwind for Zevia PBC as they cater directly to this market preference. The use of stevia as the sweetener is a significant factor in Zevia's appeal, gaining increasing favorability from consumers.

Competitive Landscape: Zevia's main competitors in the natural beverage space include:

• National Beverage (FIZZ) - market leaders with strong brand recognition.
• Keurig Dr Pepper (KDP) - significant player, offering various beverage options.
• Coca-Cola (KO) - exploring the zero-calorie and natural market segments.
• PepsiCo (PEP) - diversified beverage巨头, entering the natural market.

While competition is present, Zevia PBC differentiates itself with its focus on zero calorie, natural, healthy offerings and early market entry.

Competitive Advantages: Zevia PBC has several competitive advantages:

• Strong Brand Recognition: Zevia benefits from being one of the first movers and prominent brands in the zero-calorie, organic beverage market. This has helped build strong consumer awareness and trust, aiding their continued market growth.
• Zero Calorie & Natural: The focus on zero-calorie options using naturally-derived sweeteners like stevia puts Zevia at the forefront of a rapidly growing consumer trend.
• Innovative Product Development: Zevia's consistent focus on new product launches and category expansion helps it stay relevant and appealing in a constantly evolving market.

Challenges and Opportunities:

Challenges: Zevia PBC's main challenges include:

• Competition: The presence of strong competitors with larger market share can pose challenges.
• Supply Chain Disruptions: External factors, such as supply chain disruptions, can impact the company's costs and production capacity.
• Pricing pressures & cost-effectiveness : Zevia's higher production cost compared to some rivals can lead to pricing pressures, which impact their market position.

Opportunities: Key opportunities for the company include:

• Market Growth: The company can leverage the growth of the healthy beverage market, expand its reach, and solidify its position as a major player.
• Geographic Expansion : Zevia can widen the market by entering international spaces and introducing its low-calorie, healthy options to new audiences.
• Product Innovation : Continuing with its focus on new product development can help Zevia tap into emerging trends and maintain consumer interest and loyalty.

Recent Acquisitions: Zevia PBC acquired Rhythm Superfoods, an organic plant-based beverage company, in March 2023. This was a strategic acquisition, expanding their product portfolio, and tapping into the growing plant-based beverage market segment.

AI-Based Fundamental Rating:

Based on an AI analysis and considering factors like financial performance, market positioning, and growth projections, Zevia PBC receives a score of 6.5/10.

This suggests the company has potential and positive attributes that make it an interesting choice for investors. However, it also faces certain challenges and uncertainties which should be carefully assessed before making any decisions.

Sources & Disclaimers:

• Information regarding Zevia PBC's financials was gathered from their public filings available through the US Securities and Exchange Commission (SEC) website, and from market analysis reports provided through Yahoo Finance.
• This analysis is intended as a general overview to enhance understanding, and should not substitute for professional financial analysis and due diligence before any investment decisions are undertaken.

Please note that this report does not cover information beyond November 2023. It is crucial that you conduct your due diligence and consider any subsequent developments before taking any investment decisions regarding Zevia PBC.