Beverage maker Zevia files for IPO


Dive Brief:

  • Zevia plans to go public through an IPO, the stevia-sweetened beverage company said in an S-1 filing with the U.S. Securities and Exchange Commission on Friday. The S-1 does not include the number of shares that may be offered or a proposed share price range.
  • Zevia, founded in 2007, has recently experienced skyrocketing sales growth. Net sales in 2010 were $6.8 million and $110 million last year — a 32% compound annual growth rate, according to the S-1. Last year alone, net sales grew 25% compared with 2019, and the company sold 240 million cans — 15% more than in 2019. Despite the growth, Zevia has operated at a loss until the most recent quarter. 
  • Zevia’s recent popularity is reflective of the move by consumers to turn away from sugary sodas and toward beverages that don’t have the same negative health impacts. In recent years, sugar-laden soda sales have dropped across the board, even for the biggest companies. 

Dive Insight:

Zevia’s planned IPO is tangible evidence of the consumer shift toward food and drink they see as better for them. What started out 14 years ago as a small soda company with three flavors has grown into a fast-growing business with five product lines — soda, energy drinks, tea, mixers and children’s beverages — in 37 different flavors. Zevia’s beverages are all zero calorie because they use non-caloric stevia as their sweetener.

As soft drink sales as a whole have fallen, Zevia’s revenue has grown. In fact, according to SPINS statistics in Zevia’s S-1, the brand has been growing at a faster pace than other zero calorie sodas. Zevia’s retail sales during the last year have been up 25%, while other zero calorie sodas have grown at a slower 9% rate.

Zevia is not just looking to sell soda. The company outlines a mission toward improving consumer health in its S-1. Chairman and CEO Paddy Spence writes in a letter to potential investors that he discovered two decades ago he was consuming about 1,000 sugar calories a day from items he thought were healthy. Spence wrote he made big life changes to get to a healthier diet.

Zevia’s mission mirrors its CEO’s commitment by improving public health through a sugar-free soda option, and making it easily accessible through wide distribution and prices comparable to other soft drinks. The company also embraces sustainability, packaging all of its drinks in recyclable cans versus plastics. In addition, Zevia touts an inclusive company culture that gives full-time employees equity in the company.

By relying on stevia as a sweetener, Zevia has succeeded where other soda companies have been unable to compete.

Stevia is a calorie-free intensely sweet natural extract of a plant that can grow in a variety of climates, so it’s often been seen as a good place to start for sugar replacement. However, many types of the extract naturally have a somewhat bitter aftertaste. Stevia has been tried as a sweetener for Vitamin Water, Pepsi and Coca-Cola, as well as other smaller drink brands, but all have dropped it because of consumer complaints.

Zevia, on the other hand, has stood by the sweetener and formulated new beverages with flavors that better harmonize with stevia’s taste. A Zevia consumer is likely buying the soda specifically for the sweet and zero-calorie profile of stevia, which has helped the company grow.

Zevia’s recent growth has allowed it to attract new investors. In December, the company received a $200 million minority investment from Caisse de dépôt et placement du Québec (CDPQ), an investor that manages pension funds in Canada. At the time, the company said these funds would help it pursue its global expansion strategy.

Despite the surge in sales, Zevia has only recently started making a profit. The company says in its S-1 that investments in innovation and business growth have kept its finances in the red since the company’s inception. Perhaps this is part of its IPO strategy: Now that Zevia has turned a profit on its own, having investor capital can help keep it there, especially in the post-pandemic phase as consumer trends toward better-for-you options are projected to continue. 

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