00:00At which point out, you had earnings last week by, you know, a beaten race quarter.
00:03You saw a big pop in the stock, so investors seem to be pleased.
00:06You've been having to navigate the sourcing of your materials,
00:10the majority of which I assume come from outside the United States.
00:14What has that process been like over the past, I don't know, seven, eight months?
00:17Well, it's been interesting.
00:18I mean, you know, we've got this business that's growing tremendously.
00:22Coconut water is one of the fastest growing, if not the fastest growing,
00:25beverage in the entire beverage aisle.
00:28So, you know, we're focused on growth, focused on availability and growing availability at retail.
00:34But at the same time, we're dealing with uncertainty around tariffs.
00:36So we've taken some pricing, which we did with the first round of tariffs,
00:40the initial baseline 10% tariffs.
00:42We've taken pricing to cover that.
00:44We've seen ocean freight rates decline significantly over the past months
00:48as trade has slowed, international trade.
00:51And that's helped mitigate some of the other tariff effects that we're dealing with.
00:54We're hopeful that, you know, things continue to go well and that, you know, as trade deals get done,
01:01the administration has been pretty clear that they're looking to exclude unavailable natural resources,
01:07coconuts and other things.
01:08And so we're hopeful that we'll see some relief there also.
01:10So it's not only just the natural ingredients that go into that bottle, so to speak,
01:15but it's also the packaging itself.
01:17Is any of the packaging that you have also affected by tariffs?
01:21Finished goods.
01:21Yeah.
01:22So we look at, you know, tariffs are assessed on finished goods coming into the country.
01:28And it's part of the process.
01:30So you're only, so just to be clear, so you're just paying on the finished product more or less,
01:34not necessarily paying on the coconuts, paying on the packaging and then, you know, on whatever you ship.
01:38So most of that is bottled overseas and then brought in.
01:40Yeah, everything is produced at source, brought in, ready to go to retail.
01:45And that is where the tariffs are assessed.
01:47Gotcha.
01:47It's interesting.
01:48And you say that you've taken some pricing to mitigate the effects of some of those tariffs.
01:53How many times can you pull that lever?
01:55How do you think about that from where you're sitting, especially to evaluate the strength of the consumer?
02:00Yeah.
02:00So like you mentioned, this consumer is very strong in coconut water specifically and in beverages that are functional.
02:06So people are buying protein drinks.
02:08They're buying energy drinks.
02:09They're buying coconut water.
02:10That's what's growing today.
02:12And so we feel that we're in a very good position price-wise.
02:14We've taken very little price over the last four or five years in relation to other beverages across the beverage aisle.
02:20The price that we took to cover the initial 10% tariffs, we took it earlier this year.
02:26And we haven't seen much of an effect.
02:28So the consumer seems willing to pay.
02:31Again, we have other offsets, other mitigating efforts that are working.
02:35And we'll measure it as we see what actually happens with tariffs for unavailable natural resources and decide if we need to take more pricing coming into 26.
02:46Well, while we have you here, I do want to talk a little bit about beverage trends.
02:49You mentioned a few of them when it comes to energy, when it comes to protein.
02:53Of course, Romain had a great conversation with the CEO of Starbucks last week.
02:57They're one of the companies that's really hopping on the protein trend.
03:00Fiber as well.
03:01How do you sort of keep up and evaluate with the different trends that emerge, specifically when it comes to the beverage landscape, and decide whether or not that's something that you also want to hitch your wagon to?
03:13Well, I think consumers, again, they're willing to pay for products that offer something besides just basic thirst quince, basically something to drink, right?
03:25So we feel that as we look across the beverage aisle, those are the areas that are growing.
03:30Hydration is key.
03:33So we think that coconut water is playing into this hydration time, which people are very interested in and paying for.
03:41But also, as you look at things like protein and things like energy, we believe that we have the ability to play in other spaces also.
03:48But there's a lot of competition in this space.
03:50And I mean, anyone who's been in any kind of grocery store knows.
03:53I mean, you have a pretty prominent shelf space, at least in most of the grocery stores I have traffic in here.
03:57But there's also a lot of other coconut water brands out there and other sort of, I guess, you know, hydration, thirst quenchers, if you will, spins on that, not necessarily coconut.
04:06So how do you sort of stay, I guess, ahead of some of those other competitors?
04:10So if you think about coconut water in general, we're by far the largest player in the industry.
04:15I mean, we have almost 50 percent market share in the U.S., the nearest competitor as sub 10.
04:21So we have a pretty strong position in the market.
04:24In our other large markets like the U.K., we have almost a 90 share.
04:28So we're in a very good position.
04:29And, you know, we think that as you look across hydration in general, people are looking for natural products today, natural alternatives to artificial sport drinks like Gatorade and others that are, you know, filled with sugar and all sorts of coloring.
04:45We think, you know, when the product comes right out of a tree and is three and a half times the electrolytes of the leading sport drink, that's something consumers are interested in and excited about.
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