Good morning, ladies and gentlemen, thank you for standing by. Welcome to the Zevia PBC Q1 2023 earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Should you require operator assistance during the conference, please press star zero to signal an operator. Please note this conference is being recorded. I will now turn the conference over to your host, Reed Anderson with ICR. Thank you. You may begin. Thank you, and welcome to Zevia's first quarter 2023 earnings conference call and webcast. On today's call are Amy Taylor, President and Chief Executive Officer, and Denise Beckles, Chief Financial Officer. By now, everyone should have access to the company's first quarter 2023 earnings press release and investor presentation filed this morning. This information is available on the investor relations section of Zevia's website at investors.zevia.com. Before we begin, please note that all financial information presented on today's call is unaudited. Certain comments made on this call include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. During the call, we will use some Non-GAAP financial measures as we describe business performance. The SEC filings as well as the earnings press release, presentation slides that accompany today's comments and reconciliations of the Non-GAAP financial measures to the most directly comparable GAAP financial measures are all available on our website at investors.zevia.com. Now I'd like to turn the call over to Amy Taylor. Thanks, Reed, good morning everyone. Welcome to the Q1 2023 earnings call for Zevia PBC. Zevia had a strong quarter as we continue our progress toward profitability and drive our focus on distribution and trial. We are demonstrating strong momentum across channels, continuing to increase average spend per household even as we gain new households with increased distribution. We're seeing strong growth in our new singles business even before we enter traditional immediate consumption channels. We're realizing price in the market and materially reducing costs in our business, resulting in continuing recovery of our gross margin. Q1 saw the strongest gross margin of any quarter to date as a public company and a 470 basis point improvement over prior year. Critically, we continue to manage cash effectively, driving improvement on the Adjusted EBITDA line. The strategic shifts we made at the halfway mark in 2022 to focus on profitable growth are paying off. The team is executing the plan, and the brand continues to demonstrate exciting momentum. 2023 is a transformational year for Zevia, and we're pleased to walk through the results and their indications this morning. Zevia's mission focuses on global health for people and planet. In Q1, we removed another 3,200 metric tons of sugar from the diets of the communities we serve and replaced 47 million plastic bottles in our markets. Zevia is more affordable than 64% of non-alcoholic beverages in North America, even as we realize price in keeping with the market and continue to focus on taking our better for you beverages mainstream, making them available and affordable for consumers across income levels. In Q1 2023, we delivered net sales of $43.3 million just ahead of our expectations, resulting in a 13.8% revenue growth over prior year and a 2.7% decline in volume. We realized growth from price and new distribution. We are pleased with the team's execution and continued retailer and consumer acceptance of our price increases, and we've communicated another price increase of 5% here in Q2. We're seeing strong growth from new item distribution in new and legacy customers, and we go into the spring and summer beverage season from a position of strength. Gross margins continue to improve to mid-forties levels in keeping with our expectations. We've demonstrated strong cash management and have delivered a very strong run rate of improvement on the Adjusted EBITDA line. Cost controls, disciplined adaptations to our promotional strategies and strong price increase implementation, New precedents for Zevia with a focus on quality growth. While we've made progress and our brand and unit economics are strong, we do not expect our path to profitability to be entirely linear. We plan to make investments throughout this year in marketing and supply chain to support our brand refresh, to support service levels, and ultimately to support growth. I'll go into more detail now with a focus on our consumer base evolution and our learnings from syndicated and panel data from Q1. Zevia's household penetration is 6.4%, and Zevia's households increased their brand spend by over 12% in the past 12 months, driven by increases in spend per trip with consistent purchase frequency rates among the larger brand buying base. We maintained purchase frequency and increased average spend per household even as we added new consumers for the brand. Following the material price increase, these are strong indicators of the health of our brand and our user base across heavy, medium and new light users, bolstered by strong new item performance. Zevia grew 7% in scanned dollar sales for the quarter as we cycled last year's New Year Live Your Best program in favor of this year's focus on spring and summer. In retail dollar sell-through, Zevia delivered its highest Q1 on record. The same is true in e-commerce. Same-store sales remain robust through a healthy mix of volume and price, and we anticipate continued progress in quality growth driven by the brand refresh, marketing support, and strategic retail programming in the coming months.Data continues to demonstrate that the Zevia shopper is a highly desirable one, less price sensitive at all income levels. We remain a home stocking brand, which remains a competitive advantage as we simultaneously build a singles business and grow cold availability. Zevia shoppers prove valuable to retail partners with a remarkable 40% higher beverage spend versus total non-alcoholic beverage shoppers. Our shoppers also make 30% more trips to stores to purchase beverages versus the average shopper. We see similar dynamics in e-commerce, where we are the number one carbonated soft drink and where we continue to grow at pace with retail. As mentioned, the first quarter of 2023 marks a promotional calendar shift for Zevia versus years past based on the strategic changes we made as a new leadership team for this annual operating plan, focusing less on Q1 and more on peak beverage season in retail activity. Q1 results were driven largely through new items and new store distribution, which accounted for 78% of our growth, while organic velocity growth accounted for the remaining 22%. We expect this will balance closer to 60/40 in the coming months based on calendar shifts and our focus on the brand refresh. Distribution growth in the quarter was rooted in new packages. Our 12-ounce sleek single soda can, our eight-packs in mass, and our 12-pack in food. The single can continues to grow in units per store per week, doubled when merchandise cold. Singles are becoming a major driver of our business with key natural channel customers. New stores also bolster distribution growth as we close gaps in the food channel and gain new store selling in warehouse club. We gained 2,700 new stores selling soda in the quarter. As we cycle our first year in distribution of warehouse club, we are pleased to see that 64% of shoppers who bought Zevia in club stores were new to brand, and half of those new shoppers also bought Zevia in additional channels, spending 67% more on Zevia than the average Zevia shopper. This demonstrates the power of the Zevia brand discovery in club as it spurs trips and spending in traditional retail channels. We have further opportunities to expand in club region selling, and we will be able to share more updates on this in the coming months. Moving on to velocity, the consumer shift to larger pack sizes continues. Stock-up options are driving growth category-wide and also for Zevia, as 8-packs and larger now account for more than 50% of our business in measured channels. Velocity growth is driven in part by consumer trade-up as retailers switch from the 10-pack to a more profitable 12-pack, also by our expansion in the mass channel and the broader trend of home stocking and consumption at home in non-alcoholic beverages. This is a competitive strength for the Zevia brand through food, warehouse club, and in e-commerce. E-commerce, some natural channel players, and much of warehouse club sit outside of measured channels. Operationally, we're beginning to make fundamental changes in our supply chain that are expected to contribute to cost reductions, efficiencies, and process improvements over time. We also continue to work on reducing selling costs to improve agility and to reduce store-level out of stocks for our customers. These changes will be happening in parallel with the brand refresh and will require continued focus. I'll wrap with the big picture and turn it over to Denise. Zevia has a very healthy business and continues to experience strong consumer demand, growing the consumer base and simultaneously increasing spend per household on the brand. We are realizing price in the market, having announced another 5% increase effective in Q2, are reducing costs in our business. In the first quarter, we delivered the strongest growth margin ever since becoming a public company in 2021. Critically, we continue to manage cash effectively and drive improvement on the Adjusted EBITDA line. We're headed into the summer from a position of strength. We expect continued double-digit growth on the year, bolstered by an exciting brand refresh and a supply chain in transformation. Zevia's brand refresh brings a sharp new logo and brand identity, new modernized and differentiated pack design, and radically improved on-shelf visibility, but most of all, increased resonance with new consumers incremental to our highly engaged base. Thank you. I'll hand it over to Denise. Thank you, Amy. Good morning, everyone. I will begin with an overview of our first quarter financial results. We will open the call for your questions. In the first quarter of 2023, we delivered net sales of $43.3 million, growing 13.8% versus same time prior year. Growth was driven by higher price realization as volume was down 2.7% on an equivalized case basis to 3.3 million in the period. Our growth margin continued sequential improvement with our strongest margins yet as a public company at 46.4% for the first quarter of 2023. 4.7 points above same quarter a year ago, primarily due to the impact of pricing offset by slightly higher manufacturing costs. Growth margin also improved sequentially by 2.1 points versus Q4 2022. Gross profit delivered in the period was $20.1 million, up $4.2 million to 26.6% versus year ago, reflecting growth in net sales driven by pricing and lower promotional spend. Selling and marketing expenses decreased 15.2% to $11.9 million, reflecting lower freight and warehousing costs of $1.3 million, driven primarily by improved freight pricing and efficiencies and a reduction of non-working marketing costs of $0.9 million. G&A expenses were $8.6 million or 20% of net sales in the first quarter of 2023, compared to $10.1 million or 26.6% of net sales in the first quarter of 2022, a decrease of 6.6 points as a percent of net sales. The year-on-year dollar decrease was attributed to lower employee costs and lower public company expenses. Stock-based compensation, a non-cash expense, was $2.4 million in the first quarter of 2023, as compared to $8.9 million in the same quarter last year. Net loss was $2.9 million compared to a net loss of $17.5 million in the first quarter of 2022, an improvement of $14.6 million or 83.3% as compared to the first quarter of last year. Loss per share was $0.04 the diluted share of Zevia's Class A common stockholders compared to $0.28 in the first quarter of 2022. Adjusted EBITDA loss was $0.5 million compared to an Adjusted EBITDA loss of $8.3 million in the first quarter of 2022, a year-on-year improvement of $7.9 million or 94.6%, showing continued progress managing towards profitability and generating cash flow from operations. Our balance sheet remains strong with $56 million in cash and cash equivalents and no outstanding debt as of the end of the first quarter of 2023, as well as our unused credit line of $20 million. We maintained a healthy working capital for the period of $73.3 million. Turning to guidance. Based on our results and strong consumer metrics, we are reaffirming our 2023 annual net sales guidance of $180 million-$190 million, an increase of 10%-16% over 2022, including $48 million-$51 million, an increase of 5%-12% in Q2 of this year. In anticipation of the brand refresh, which is being launched in late Q2, phased through the rest of the year, we plan to invest in marketing to support our brand ambitions and continue to anticipate that the brand refresh, velocity driving initiatives, and our new distribution will support our growth ambitions this year. That concludes our prepared remarks. We will now open the call for your questions. Operator? Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. If at any time you wish to remove your question from the queue, please press star two. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Bonnie Herzog with Goldman Sachs. Thank you. Good morning. Good morning. Hi. Good morning. Good morning. I just had a few questions on the brand refresh. I just wanted to clarify something. Did you ship any of it during Q1? Is it all expected to be, you know, starting to ship now in Q2, and that's why you have some visibility so far? Sure. It is shipping now, Bonnie. We have some product in store right now, and specifically our innovation. Creamy Root Beer, the 6-pack, is in market for the first time. It had just been sold in 12-pack and 10-pack only previously. Our new flavor, Vanilla Cola, also rolling out in the new brand ID. The existing portfolio follows. That's helpful. Just thinking about that in the context of your Q2 guidance, you know, and I know you're lapping a tough volume comp in Q2, you know, in light of, you know, the refresh that is rolling, should we expect some volume growth in Q2, you know, on your top line, or will it continue to be all price-driven? I would anticipate it's largely price-driven, and the brand refresh will start to impact the business in late Q2 and then through the summer into Q3 as it's fully brought on shelf. When we look at guidance, we think about the brand refresh as a tailwind, the forthcoming price increase, and then we also have in mind some of our supply chain transitions, because all of this, you know, taking place and flowing through at one time, they're all factors in our guidance, both timing as well as just confirming the full year. Yeah, I think we've got a lot of tailwinds coming from the brand refresh. Then the other, I think thing worth mentioning that we talked about in the prepared remarks as well is that we will increase our investment in marketing in parallel with the brand refresh. We think about Memorial Day and following, so the obvious kind of peak beverage consumption months, as being a tailwind and good support for the new look and feel as well. Okay. That, yeah, that kind of brings me to next question and final, and then I'll pass it on. Just hoping you could touch a bit on, you know, any shelf space gains you might have received, you know, especially in light of the brand refresh, you know, during the spring resets. Then just exactly what you mentioned about the stepped up or incremental A&M spend, any more color on that and, you know, maybe the supply chain changes that you highlighted, just, you know, thinking about the ultimate impact on your profitability, especially maybe in the next couple of quarters. Thank you. Sure. Let me talk a little bit about step change in-store presence and shelf sets, I'll turn it over to Denise to answer the balance of your question and talk a little bit about the outlook on profitability and touch on supply chain. We've had some really nice gains at spring resets. Those are taking place now in some customers late February, others rolling into May. In the natural channel, we have really beautiful full brand blocks. Top to bottom shelves, four to eight feet, depending on the store format, with our full line represented. As brand refresh rolls out, including six-pack cardboard overwraps, we have a great billboard effect in our home natural channel, where sort of the origins of our brand. We've had some gains in conventional grocery as well, and some gains and then some test stores for further gains in mass, which represents significant upside for us in distribution. When you think about a brand with 6.4% household penetration and a lot of ground still to gain, channels like mass and the value channel and drug are still upside for us as we continue to chip away at distribution. Some of that will follow in 2024. In 2023, we had nice gains both at shelf and in other portions of the store, such as cold availability in conventional grocery, and now increasingly through test stores through the year in the mass channel. In a couple instances, we've gained some new regions within club. That's all forthcoming. I will turn it over to Denise just to comment on supply chain and the outlook on profitability. Thank you, Amy. Morning, Bonnie. What I would say is that we expect a few one-time payments or associated costs with transitioning our supply chain. That's primarily the change in the network in terms of our coverage with distribution, so our 3PL partnerships and going from a large number of 3PL partners to smaller groups, and also as we look at our co-manufacturing arrangements. We expect there are going to be a few one-time costs that we have to incur that will impact it. In addition to that, we are going to invest heavily in marketing support, the brand refresh each quarter for the remainder of the year. Those costs will impact our Adjusted EBITDA margins through the rest of this year. Hopefully that answers your question. All right. Thank you. Bonnie, any further color on that, Bonnie? Hard... Oh, just... No. Any- I'm just trying to understand that in the context. I mean, you know, you're guiding top line, just trying to think through the phasing of EBITDA. We should expect a little bit more pressure on EBITDA. Yes this year as you're, you know, spending Yeah to drive top line, but ultimately, you're expecting more profitable growth moving forward. Yes. Yes, that is correct. That's right. I would say Q1 is indicative of our capabilities, but we'll make choices through the balance of the year to support the brand refresh as you're only new once. That's sort of our outlook, you know, some investments in marketing and then some transitional costs in supply chain, which will ultimately benefit our unit economics and profitability materially going forward. Going forward. All right. Thank you. Thanks, Bonnie. Our next question is from Christian Ureta with Bank of America. Good morning. You have Christian on for Brian. Thanks for taking our question. According to your financial outlook, you guys are expecting 2Q sales to grow 5%-12% year-over-year. Can you discuss what needs to transpire for you guys to hit that higher end of your sales range? Also just, according to Nielsen, retail sales for April were up 4% year-over-year. Is this accurate, or is Nielsen not accurately capturing the underlying performance of your business? Thanks. Yeah, Christian, I appreciate the question. I know you understand how some of this works. Scanned data is not quite reflective of our internally tracked results as it represents a subset of our business. I mean, it's not entirely apples to apples. Some of the numbers that you're seeing is because we are launching our, or excuse me, cycling our original launch in club and because we are cycling our strategy in prior years of a heavy investment in the front end of the year. This year, we reduced promo support in the first three to four months of the year in favor of the brand refresh in the peak beverage summer months. You'll see scanned data kind of catch up to reflect our reported results through the summer. To speak about the guidance and what has to happen for us to hit the top end, we have obviously a diverse portfolio across soda, energy drinks, tea, et cetera, and we'll be rolling our brand refresh out in phases, sort of with an eye, as I like to say, on the P&L and the planet. In other words, we're not doing a hard cutover. We'll be rolling that out. That hand in hand with the supply chain transitions that Denise mentioned earlier are both factors in our Q2 guidance. To hit the top end of that, those will all need to go smoothly. We'll need to manage out of stocks at shelf because we are indeed a high-velocity brand, and we need to continue to gain in-store space in order to build stock out in store at retail, to make sure that we can meet demand. We'll need to transition our supply chain smoothly as we gain tremendous efficiencies in the changes that we're making now for the long term. We anticipate that we can have some challenges through the next couple of months just as we transition, as Denise mentioned, to fewer, more efficient warehouses, and diversify our co-manufacturers for long-term cost benefits. To hit the high end of the guidance, we just need continued consumer pull-through, continued consumer base growth, continued increased spending per household, all of which have been a reality for us quarter over quarter over quarter, and I anticipate with even more tailwinds now with the brand refresh in place. We also need for all those products to flow through operationally, cleanly without any hiccups and to smoothly walk through this supply chain transition we're in the midst of. Hopefully that answers your question, Christian. Yeah, that's very helpful. Thank you. I'll pass it along. Our next question is from Jim Salera with Stephens. Hi, guys. Thanks for taking my question. I wanted to ask, you know. Good morning. ... not surprising, you guys have taken price, you see a little bit of demand elasticity. given that kind of the traditional Zevia consumer buys beverage at a higher rate, does the time that it takes for them to kind of readjust to that shelf price become shorter because they're more frequently buying beverages? can you kind of recoup some of those volume losses faster because they're coming back to the store more often? Jim, I think that's a very astute question about our brand because you're right that we have still a relatively small and highly engaged base. I would say the answer to your question is probably. The reason I say probably and not definitely yes is because we are still new in the game in taking price increases. Our first material price increase as a company was last August first. Prior to that, we had done an increase on 6-pack only. The full portfolio, we took a price increase on August first. We are lapping those lower price points and deeper promotions right now, and we will have the tailwind going forward of an additional price increase as well as a full lap of the pricing actions that we took last year. Early indicators are that, yes, indeed, the shopper adjusts to the new price point because our price increases have been simply in keeping with the market, not ahead of it. We anticipate that the consumer adjusts to new price points pretty quickly, and early indicators would say that's true. It is early days for us out of the gates in, given our pricing history as a company. Does that answer your question? Yes. No, no, that's great. If maybe I can ask a follow-up on kind of the broader advertising strategy. You know, you mentioned you only launch once. You guys have put a lot into kind of this brand refresh and having much more visibility at shelf level from the consumer. What channels are you gonna use in terms of advertising, and what's kind of the message you want to drive to bring consumers into the brand that might not be familiar with them? Yeah, that's a great question and the thing that I'm probably the most excited about. To answer your question on channels, Zevia has historically supported what I'll call push marketing, so retail marketing at the point of purchase, and we'll continue that tactical support of the business to drive velocity. What's new, however, is that we seek to support the new brand refresh, so a new look and feel and really a new brand identity and voice with some tactics we haven't employed in the past. Broader in-market sampling, what I'll call below-the-line activity, so in-market brand building, engaging with consumers, complementary social media activity, digital advertising, and then some additional advertising tactics on a spot geographical basis based on what we know about, let's call it low BDI and CDI markets where we have opportunity. Most of these roll out after Memorial Day, some of it in the late summer, and our goal is to reach, as you say, new consumers. You ask what's the message, I would say we've got great feel-good flavor. We are all about driving trial and having people experience Zevia. When a consumer tries the product, conversion rates are very high. We know that sampling initiatives are a very high ROI tactic for us, and we'll continue to invest in building awareness and trial, top of funnel especially in the back half of the year and then full 2024 when the brand refresh is fully to shelf. We're excited about inviting more consumers into the franchise and then maintaining them once they taste the product and realize they can have zero sugar and clean ingredients and still have a product taste great. Okay. Awesome. Maybe if I could just squeeze in one more question. You know, going into the summer, do you guys have any thoughts on or if you can provide any detail on kind of LTO offerings, especially with kind of the non-core CSD, the energy and teas to bring them into the mix and maybe get some either cross-sell with a kind of a core soda buyer or bring somebody in who is unaware that Zevia has, you know, an energy or a tea offering? Yeah, you mentioned a tremendous opportunity for us, which is driving awareness and trial of our categories beyond soda. We've been in soda for over 10 years and really set the pace for a zero sugar product in that space, and we have big upside for energy and tea. The most important thing for us to do is to build cold availability for those products, in-store visibility, and trial. To directly answer your questions, we don't have any limited time offers in the summer. We do have some new flavors in the pipeline. In soda, we have Vanilla Cola. We have two new energy drink flavors that are coming out alongside our brand refresh and a radically different look and feel on can for energy drinks with a drive to support cold singles availability, to drive trial and visibility and drive the business there. We have one new flavor coming out in tea and are anticipating some increased distribution for tea. Our limited time offers will likely follow in the winter, so holiday time, featuring some variety packs, which is also a great tactic for us to drive in-store visibility. For the most part, it's our existing portfolio and new permanent flavors that will help bolster display, and drive visibility in the way you're describing. Perfect. Thanks, guys. I'll pass it on. Thanks. Our next question is from Andrew Strelzik with BMO. Hey, good morning. Thanks for taking the questions. I guess I was hoping you could start by talking about the cost environment. Obviously, the company is doing a very good job controlling internally, the costs that it's seeing. You know, more broadly, externally, what are you seeing from a cost environment perspective? How does that contribute to the gross margin outlook? Are you still expecting kind of mid-40s%? Is that still the right way to think about gross margins for the balance of the year? Andrew, hi. This is Denise. Yes. Actually, I would think of margins being in the mid-forties for the rest of the year. You know, we are still seeing some inflation from a cost perspective, but not at the rates that we saw last year. We're anticipating with our pricing and promotion strategy, and, you know, looking at what we expect in supply chain to be in the mid-forties for the rest of the year. Hopefully, that answers your question. Yep. That's helpful. The other, maybe more just a clarification, but I just wanted to confirm. You called out a mix headwind in the press release. Is that just the single serve? Are you seeing anything else either within channels or pack sizes or anything like that? Just if you could talk about the mix side of the business and how consumers are treating the different areas. Thanks. Sure. I think mix for us is an upside just in the sense that we are now seeing more than 50% of our volume coming through packs of 8-pack and larger. For us, that has been a positive, and then the other opportunity is to continue to drive singles cold availability. Singles are performing very well where they're sold cold, and exceptionally well in natural channel where consumers know the brand. What's exciting for us is building out singles distribution and conventional to win new consumers. Generally speaking, we see a positive mix benefit as consumers continue to trade up, and we remain a home stocking brand, which for us is really a strategic advantage relative to the rest of the category. Andrew, does that answer your question? I wasn't sure what you were asking with regard to the release. I think in the press release, you actually called out a mix headwind, if I'm not mistaken. As of last quarter, it was called out as a, as a benefit. I guess I was just making sure that there was no, you know, consumer impact, trade down impact, channel shifting, anything like that. Maybe I have it wrong, but I believe that was called out in the release here. That's what I was asking about. Got it. Okay. No, we anticipate that the mix is continues to be supportive, both from a margin and a volume perspective. I think what we're most focused on as we roll out the brand refresh is in gaining new consumers. We're seeking to drive trade ups with our heaviest user and also to adapt our portfolio based on profitability metrics by channel drive cold availability of singles. That's what we should expect will be a tailwind for us going forward. Got it. Makes sense. Thank you very much. Once again, to ask a question, please press star one. Our next question is from Chris Carey with Wells Fargo. Hey, everyone. Can you just comment on the logistical barriers or opportunities from, you know, expanding single serve? Obviously, your distribution network has been less geared toward, you know, that kind of offering. Are things changing or the supply chain initiatives that you're gonna put in place over the course of the rest of the year gonna give you a greater opportunity to go after that market, that specific SKU? Sure. I can touch on the distribution component, as you say, kind of the logistics with a focus on singles, and then I'll turn it over to Denise to just touch on supply chain if there's any follow-up questions. We are not DSD, right? So direct store delivery, and that is inherently a hindrance in in-store merchandising as it relates to cold availability across multiple channels. We are fortunate in that we're a high velocity, exciting, and leading item in natural. We are able to get solid merchandising from our retail partners in that environment. Once we have great pull-through data, we then get greater interest from conventional despite our lack of direct store, distribution and delivery, in the other channels. Right now, we are driving maximum singles distribution within the capabilities of our route to market, as well as studying an evolution of our route to market to accommodate opportunities like drug in the cold box and most of all, convenience. That'll be a next step for us, Chris. We wanna do it, you know, right and not fast, especially through the lens of profitability and unit economics, so we could sign up with potential DSD partners or a partner to expand our immediate consumption footprint efficiently and also in a way that supports profitable growth. We're not quite there yet, and more news to come on that in the following quarters. We don't really have any true logistical barriers to growing our immediate consumption business within the channels where we play today. Route to market is central in our expansion into convenience, as you know. Does that answer your question, or do you have any other follow-ups to that on supply chain where Denise and I could dig in? Yeah. No, that's exactly what I'm getting at, just the ultimate opportunity to expand into some of these, you know, high velocity, higher margin, single serve channels. Sounds like this is the, you have the foundation to start that kind of journey. That's right. I think we have the foundation in the form of our unit economics and our path to profitability. Then we have a great data set of performance at strong price points for singles sold cold in other channels. I think that's the perfect combination to take to a partner and build some excitement about our future in convenience. Okay. You see, to add one point. There are no supply chain obstacles on us expanding singles. Just so that's clear. For us, singles is a great opportunity that we continue to pursue. We see, you know, the opportunity and the growth since we've launched it. The supply chain is not a hindrance to that. Okay. All right. Makes sense. Thanks so much. You're welcome. Thanks, Chris. Our next question is from Joe Feldman with Telsey. Hey, good morning, guys. Thanks for taking the question. Wanted to ask about the club channel, because I know you have some maturity there and just what you're seeing, how the performance has been in your most mature clubs. It sounds like it's continuing to grow, and I thought I heard you say you're getting even more club distribution. Maybe you could just share a little more color around that. Sure. Thanks, Joe. Yeah, we're lapping our launch in clubs, so 2022 saw the benefit of sort of the pipeline fill in our first full year in club. We are not yet entirely nationally distributed, so we still have some regions to gain and more updates coming on that in the following quarters as we head toward Memorial Day in the summer. We're getting good results, and we get even better results when we support the club business with sampling. Sixty-four percent of consumers that buy Zevia in club over these past 12 months are buying it for the first time. We also can track those shoppers back to incremental channels, so adjacent channels like grocery, where they continue to spend more than the average Zevia shopper. The net learning there is a Zevia shopper at club is a very valuable shopper, both for the club outlet as well as for our brand, as they tend to stick with us and spend more. I think what's next in club is to finish out national distribution and then to increase rotations in tea and energy drinks. Maybe club wouldn't normally be considered to be a trial driving environment because it is a high price point purchase. We are a flavor and variety brand and a trusted brand in an important better for you space, which is getting a lot of press and a lot of attention at the moment, it's exciting for shoppers to discover Zevia tea or Zevia energy drink in a club environment. That's starting to prove fruitful, and we anticipate being able to sell multiple categories in club as these, rotational tests are successful and as we can look to drive, increased distribution there. Got it. No, that's great. There's a lot of opportunity for sure. You know, maybe this you probably know, but where do you guys think that the share gains you're having are coming from? Is it just, well, the big obvious ones, just sugary drinks or from the big guys, or are there other like, you know, do you see it coming from sort of the other smaller players that are, you know, entering this category? Sure, yeah. We have really interesting and varied share of stomach data, meaning that we draw share from diet and zero sodas. We draw share from sugary traditional sodas from the mainstream players, from isotonics and functional beverages. We also draw volume from sparkling water drinkers who have flavor fatigue from who really sort of want a satisfying soda. We offer so many different usage occasions that we have quite a broad base of what we call share of stomach. As more and more better for you products come online, we're also finding increased interest in Zevia. In the notion that a rising tide floats all boats, this macro trend in seeking out better for you products is very much a benefit to us given we sit again at 6.4% household penetration and have a lot of upside. As we get off the bottom shelf, are distributed at eye level, start to drive cold availability, and now this summer turn on a marketing machine, there's a lot of upside for us in this rising tide. We'll continue, I believe, to draw source of volume from the big mainstream players, but also just an increased interest in those that may have otherwise rejected the soda category altogether. Got it. Got it. Got it. Got it. That's great. Thanks, guys, and good luck this quarter. Thanks so much, Joe. Ladies and gentlemen, we have reached the end of the question and answer session and are out of time for today's call. Zevia thanks you for your time and participation. You may disconnect your lines at this time. Thanks, everyone.