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Zevia PBC natural soda co scored 12.3% sales gain to $40.8 mil in Q3, tho tariffs and packaging refresh sliced several points off gross margin. Still, qtr was a big win, CEO Amy Taylor said, demonstrating progress in brand engagement, flavor variety and expanded distribution without neglecting tite operations. For full yr, LA-based co anticipates sales falling into $162-164 mil range. As noted, the robust sales gain was tarnished a wee bit by 3.5-pt contraction in gross margin to 45.6% associated with $800K in obsolete inventory as packaging refresh proceeded with aluminum tariffs finally starting to take a bite in period too. Operating loss was about flat at $2.9 mil. For YTD, sales are up 6.7% to $123.4 mil. Operating loss narrowed to $10.3 mil from $17.3 mil over the 9 mos.Recall that Zevia for years had been natural-channel mainstay with its zero-sugar, stevia-sweetened CSDs before it ventured into public markets a few years ago and headed into more mainstream channels, mainly grocery. In recent years it's positioned itself not just as a natural alternative to conventional CSDs but also as a more affordable, zero-calorie alternative to the wave of gut pops, in process riding their momentum into spot in "modern soda" sets being erected by Walmart and other retailers. That task is in hands of longtime Red Bull exec Taylor as CEO.She has a lot of work to do to nudge household penetration from single-digit level, to balance its heavy reliance on multipack sales in grocers with single cans sold cold in impulse channels, and to figure out the route to retail that can get it there without undermining its highly approachable pricing. Over past 12 mos, household penetration edged up to 5.2% from 4.8%, per Numerator data cited by co.Among recent initiatives has been to ride improvements in stevia to make items taste more like real soda and to remake packaging with more vibrant, inviting look and bold callout "Soda made better." Also key has been to inaugurate flavor innovation that might have similar galvanizing effect to permanent and limited-time flavors at brands like Poppi and Alani Nu. On call yesterday, Taylor cited some successes in that realm. Strawberry Lemon Burst proved a summer hit, as was playful Summer Break sweepstakes on marketing side. Much of the marketing doesn't take itself as seriously as in past, as typified by "Get the fake outta here" campaign. A humorous effort behind Amazon exclusive Peaches & Cream demo'd some virality on Instagram and TikTok, Taylor reported, and marketing activations have ridden ties to things like Diplo's Run Club.In natural channel, Orange Creamsicle immediately became #2 Zevia 6-pk at Sprouts chain, while on conventional side Strawberries & Cream quickly became Zevia's #3 velocity entry at Kroger. A fruity variety pack that broke at Walmart quickly became brand's #1 sku there and Peaches & Cream was fastest-growing launch on Amazon. Many of these items seem to be bringing in new users, Amy said. The new-look graphics debuted with Strawberries & Cream and will be trickling out in soft cutover thru early 2026.As noted, Taylor and her team are under pressure to grow briskly but profitably. Tho there have been some ups & down, profit contributed per case has been on a generally steep upward climb from just 75c per case-equivalent in Q3 2023 to $3.35 in just-reported period, a tad off from $3.72 in Q2.For exec who spent most of her career in energy drink sector, it likely has required discipline to keep Zevia's presence in that segment modest. Asked about energy subline, Amy said she's content for now to keep it contained in natural channel and ecomm where brand recognition and trust are highest. "Right now, our focus is on soda," she stressed. Another key initiative has been to see whether DSD can play a positive role in getting brand into those impulse channels. That topic didn't come up on earnings call, but as we reported from NACS c-store show last month, modest experiment that started in Pac NW has continued expanding thru western states (BBI, Oct 16). Of course, Zevia's very presence at NACS was testimony itself to its ambitions to penetrate the nation's cold boxes.

Zevia Scores 12% Sales Gain in Q3 Tho Inventory & Aluminum Tariffs Hit Gross Margin; Vibrant Flavor Experimentation Is Resonating, CEO Taylor Reports

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