Zevia PBC, a beverage company that makes calorie-free, sugar-free drinks with “clean” ingredients, has filed for publication.
The Encino, California-based company plans to list the Class A shares on the New York Stock Exchange under the symbol “ZVIA”.
Goldman Sachs & Co. LLC, BofA Securities and Morgan Stanley are the main underwriters in a syndicate of six banks. The company plans to use the proceeds of the IPO for working capital and other general corporate purposes.
Once the deal is completed, Zevia, which started out as a public benefit company, will reorganize into a holding company through a UP-C process that will provide tax benefits to existing members of the company. Full-time employees have an interest in the business.
“At Zevia, every full-time team member has a stake in the business, receives high compensation and benefits, and is a key stakeholder in our mission,” Spence said in his letter to the CEO.
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Zevia is classified as an emerging growth company, which means it does not have to make the same disclosures that are required of large public companies. A company remains an emerging growth company until it reaches a number of milestones, including annual sales of over $ 1.07 billion.
Founded in 2007, Zevia manufactures sodas, energy drinks, teas, children’s drinks, mixers like tonic water and ginger beer and sparkling water that are distributed in the United States and Canada.
“All of our drinks are made with just a handful of herbal ingredients that most consumers can easily pronounce,” the company said in its prospectus.
Cola accounted for 24% of the company’s sales in 2020. Cola’s competitors include Coca-Cola Co. KO,
and PepsiCo Inc. PEP,
two of the biggest brands in the world.
Zevia presents data from Statista and Beverage Digest showing that per capita consumption of conventional carbonated soda fell to 38.6 gallons in 2019, from 45.5 gallons in 2010.
On the other hand, the health and wellness drinks category reached $ 301 billion in retail sales in 2020 and will grow at a CAGR of 2.8% from 2019 to 2025, according to data from Euromonitor.
Zevia estimates that it has 88% of the calorie-free and naturally sweet drinks market in 2020. Zevia has six product lines and 37 flavors.
Zevia estimates that the global liquid refreshing drink market is worth $ 771 billion.
Additionally, Zevia drinks are suitable for people with a variety of diets, including kosher, vegan, and gluten-free.
Paddy Spence has been Managing Director of Zevia since March 2021. Previously, he was CEO and Director of Zevia’s Board of Directors while operating as an LLC. He acquired the company in September 2010. He also founded SPINS, a market research company for the natural products industry, and was its CEO from 1995 to 2003.
Hank Margolis will be COO once Zevia goes public, and Bill Beech will be CFO. Both held these respective roles for Zevia prior to the IPO.
Zevia puts its efforts in environmental, social and corporate governance (ESG) at the forefront, highlighting its partnerships with dietitians and nutrition educators to provide educational material on the impact of the consumption of sugary drinks, which has been linked to health issues like obesity, diabetes and other illnesses.
Spence started keeping a food journal in 2001 and found out how much sugar he was consuming despite his diet of natural and organic foods and drinks. He and his wife decided to eliminate sugar from their diet.
“Today we still use a ‘sugar budget’ to manage our sugar intake at home,” Spence wrote in the CEO letter included in the flyer.
Spence says there are “barriers” for others that prevent them from making healthier food choices.
“So at Zevia we pride ourselves on bringing accessible drinks to consumers across a wide range of income levels,” he said.
Zevia has also taken steps to eliminate waste and establish transparency standards.
“We have never sold a single plastic bottle, which we believe has eliminated 15,000 tonnes of plastic bottles from the supply chain by selling only aluminum packaging since 2011,” the company said. . “In addition, one of our main ingredients, stevia, requires less agricultural water resources than sugar, which strengthens our mission of sustainable development. “
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Here are five more things to know about Zevia before it goes public:
Zevia is in deficit but income is growing rapidly
Zevia made a profit of $ 19,000 in the first quarter of 2021, following a loss of $ 2.6 million the year before, but the company acknowledges that it is indeed not yet profitable.
“We have a history of losses and we may not be able to achieve profitability,” he said in his IPO documents.
The losses in 2020 were $ 6.1 million, larger than the loss of $ 5.4 million recorded in 2019. As a result, it does not plan to pay a dividend anytime soon, which means investors will have to rely on appreciation in stock prices for returns.
Sales, meanwhile, are on a growth path, reaching $ 110 million in 2020, or nearly 240 million cans, up from $ 7 million in 2010, or a compound annual growth rate (CAGR) of 32. %. Calorie-free drinks with plant-based sweeteners were a $ 150.6 million business in the United States in 2020, up from $ 90.8 million in 2018.
E-commerce accounted for 13% of sales in 2020. Data provided by retail intelligence platform Stackline shows that Zevia was the # 1 selling soft drink brand on Amazon.com Inc. AMZN,
Sales in 2019 were $ 85.6 million.
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Zevia has an “asset-light” business model
Zevia does not manufacture its own products, but instead uses third-party manufacturing and logistics providers, which the company says “is designed to take advantage of lower costs and overheads, with capital expenditure of less than 1%. net sales in each of the past two years. “
The benefit is the ability to focus on ESG initiatives, sales and marketing while still providing financial flexibility, depending on the company.
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Concerns that stevia is dangerous have arisen in the past – and could rise again
Zevia’s marketing focused on the company’s use of stevia and other herbal sweeteners in their products. Questions about the safety or quality of these ingredients could harm Zevia.
“For example, in the past there have been unfounded and scientifically refuted claims that stevia can cause reproductive problems or require allergy warnings,” the prospectus states. “Future similar claims, whether founded or unfounded, could cause customers or consumers to reduce the number of our products they buy or to stop buying our products. ”
Zevia has some supply chain risk
Zevia only has one stevia extract supplier, which she highlights as a supply chain risk in her prospectus.
“Events that negatively affect our supplier of stevia extract and other raw materials could affect our ability to obtain raw material inventory in the quantities we desire,” the company said.
“In the past, we have experienced interruptions in the supply of carbon dioxide and caffeine. While these disruptions did not have a significant impact, future disruptions could have a significant negative impact on our business operations. “
The company says it is looking for alternative suppliers of stevia extracts.
Climate change could become a problem
Zevia relies on agricultural products, such as plant-based sweeteners, which could be affected by changing weather conditions and other effects of climate change.
“Due to climate change, we may also be subject to decreased water availability, deteriorated water quality or less favorable prices for water, which could have a negative impact on the activities of our manufacturers under third party contract, as well as on our suppliers, which depend on the availability and the quality of the water ”, indicates the prospectus.
The IPO of the Renaissance IPO ETF,
was slightly lower on Tuesday, but gained 0.4% year-to-date, while the S&P 500 SPX,