A soda without sugar and calories might sound like an odd pairing to go with a bag of Doritos or a pack of Oreos. But for Zevia, and its new CEO, the unique combination speaks to an untapped opportunity the stevia-sweetened soda has with mainstream consumers.
Amy Taylor, who took over Zevia in August, said data collected by the company in 2022 found 68% of its customers had Oreos in their basket when they shopped while 71% tossed in a bag of Doritos.
The surprise findings disrupted the company’s prior belief that it only had a market among people eating salads, kale chips and other healthy offerings. Instead, executives found the soda has a strong following among people trying to improve some parts of their diet while continuing to indulge.
“The fact that folks are putting Oreos and Doritos in their basket when they’re buying Zevia was a big wake-up call for my team,” Taylor, a former Red Bull executive, said in an interview. “It’s not a niche, natural channel play, but a broad mainstream consumer play.”
Zevia, which was founded in 2007, has experienced skyrocketing sales growth as consumers shun sugary sodas in favor of beverages that don’t have the same negative health impacts. Zevia drinks were carried in more than 35,000 stores last year, up from 22,000 just three years ago. The soda brand is now found in 6.4% of U.S. households compared to just under 5% at the time of its IPO in July of 2021.
Demand for Zevia has climbed even after the company raised prices. Households increased their spending on the brand by more than 12% during the last year, purchasing the soda more often and grabbing more of it when they do despite an average 14% jump in price per IRI scan data provided by the beverage company.
While it’s a far cry from the dominance juggernauts PepsiCo and Coca-Cola have in the marketplace, Taylor said Zevia has plans to further chip away at their market dominance. Still, she acknowledged it won’t be easy, with the soda giants having more than a century of experience and insight into how to turn “every knob and dial perfectly tweaked to drive growth.”
Starting this summer, Zevia plans to spend millions on marketing to increase brand awareness. The company is in the process of rolling out a new, simpler package design, the first overhaul since the brand was created in 2008. Zevia is accelerating the rollout of additional packaging sizes, offering more 8, 12, 24 and 30 counts aimed at different retail channels, shoppers and usage occasions, along with its customary six-pack.
The beverage maker also is reassessing how it works with retailers.
Zevia uses reams of data to show retailers the benefits of carrying its product, including how stocking the brand in the carbonated soft drink aisle increases traffic, profitability and draws in younger consumers looking for cleaner label products. According to the company, Zevia’s shopper spends 40% more and makes 30% additional trips for drinks than the average consumer.
The goal is to replicate the success Zevia has had at Target. The retail giant, which has carried the brand in the soft drink aisle in all its stores for three years, recently increased the flavors offered from five to 12 and added additional package sizes.
Zevia is conducting a 100-store test in the soft drink aisle at Walmart that the beverage maker hopes could lead to space at additional locations, and it is aiming to convince Kroger to do a similar trial.
“Those are big opportunities,” Taylor said.
Taylor said one of Zevia’s most promising avenues for growth comes in narrow single cans. The company is working to convince retailers in the natural channel to carry the cans in the deli, traditional stores to stock it in coolers by the checkout or convenience stores for on-the-go-consumers.
Zevia believes single cans will serve as a way for shoppers to try the product before they decide to purchase larger pack sizes later on. “The opportunity to drive trial and thus grow the user base with singles is massive, and so far, entirely untapped for Zevia,” Taylor said.
Zevia finds itself immersed in many of the trends important to consumers today, and this factor should aid in its future growth, Taylor said. The drink maker uses non-GMO ingredients, is a Certified B Corporation and embraces sustainability by packaging all of its drinks in aluminum cans versus plastics. Zevia also uses organic stevia to sweeten its beverages.
Zevia started as a small soda company with three flavors. Since then, the California-based beverage company has expanded its portfolio to include energy drinks and tea. Soda accounted for 80% of its $163 million in sales during its fiscal 2022 year.
“We are we’re very early in that journey, and I kind of feel like we just showed up,” Taylor said. Zevia’s goal, she added, is “to improve global health, and that would indicate that we’re a global brand.”