Encino-based zero-sugar beverage company Zevia last month received $20 million in growth equity in exchange for convertible preferred stock from a fund managed by Bermuda-based GP Investments.
The investment will fuel its strategic pivots under Chief Executive Alexandre Ruberti, who took up the mantle in June. His priorities include expanding Zevia’s Gen Z and Millennial consumer base, focusing on digital marketing and maintaining a multi-channel distribution model to increase home penetration.
“This growth equity investment marks an important milestone in Zevia’s evolution and provides the capital, strategic resources, and operational expertise to accelerate our medium- and long-term growth agenda,” Ruberti said in a statement. “GP Investments brings a proven blueprint for building category-leading consumer businesses.”
The company reported an 18.4% growth in net sales year over year to $48.3 million in the third quarter, with a profit margin of 46.4% – up 0.8% compared to the year before.
Addressing concerns from investors
The pivots respond to investor concerns about the company. Despite heralding the zero-sugar market when it started in 2007, Zevia suffered from increased competition with younger entrants such as Olipop Inc. and PepsiCo Inc.’s Poppi, which focus on probiotic drinks and increased fiber content.
Zevia’s stock performance has plummeted about 30% compared to a year ago. On Wednesday, its stock closed at $1.20 per share, a fraction of its public debut price of $14 per share in 2021.
Florida-based Kanen Wealth Management, which holds about 4% of the company’s outstanding shares, said the board and the management team “have failed to capitalize on the largest shift the soda aisle has seen in a generation” in an August letter.
It further urges a sale of the company. “Management has characterized the past several years as a ‘rebuilding’ period; shareholders paid for that rebuild and the category was won by others in the meantime,” the letter said. “Shareholders should not be asked to fund a fifth year of attempts, particularly when every one of these gaps represents a capability that a strategic acquirer already owns.”
