00:00I mean, your company, I don't know, you're like 15, 16 years old.
00:03We kind of know you for the sparkling waters that you have.
00:06But just over the last couple of weeks, you've started to roll out a tea.
00:10Why, Dave?
00:12Yeah.
00:13Well, thanks for having me, by the way, Romain.
00:15I think the tea category is a really interesting category.
00:18It's a $5 billion category.
00:20It's been around for a long time.
00:22It has a very healthy halo to it.
00:25And actually, there's been very little innovation over this category over the last five-plus years.
00:29So we think there's an opportunity to really get consumers excited again about tea and bring a new product.
00:35And in this case, with Spindrift, we're all about real-squeezed fruit.
00:38So when you bring real-squeezed fruit to real-brewed tea, it's never existed before.
00:44And it just gives a different drinking experience.
00:45It's really smooth.
00:47You want to drink a lot of it.
00:48It's good for you.
00:50It's new for us because it's non-carbonated.
00:52It has a little bit of caffeine, normal caffeine levels for tea.
00:56And we think to take a big category and bring news to it, you can really reawaken it.
01:00And we're very excited about this opportunity.
01:02Well, I am curious about the marketing side, Dave.
01:04I mean, you know, when I go to the grocery store, I mean, the displays of sparkling waters and teas
01:09and other beverages, I mean, it's immense.
01:12It's vast.
01:12And I am curious as to how you make sure that your brand actually stands out.
01:18You know, I think you just said, I think you want to get displays.
01:21You want people to basically trip over your brand when you can.
01:23So part of it is working with retailer partners and making sure that we get the right price points to
01:29start.
01:29We get display activity.
01:30We get visual inventory or landscape in the store so people can find us pretty easily.
01:35And then, of course, you have to come over the top of that and drive brand awareness.
01:39You have to invest in advertising, whether it be paid social, digital, traditional TV advertising.
01:44You have to create some awareness and buzz for consumers so when they come into the store, they're looking to
01:49find your product.
01:51I am curious just about generally your pricing of the product and the idea that we are, at least by
01:57some accounts, in an economy where you have certain consumers,
02:00a huge swath of consumers, if you will, that are a little bit more cost conscious.
02:04They're looking at discretionary items in a way that maybe they wouldn't have looked at a couple of years ago.
02:09And I am curious as to how you sort of hold the line on pricing to sort of keep those
02:13people tethered to the brand and not scare them away.
02:16Yeah, I mean, we're very aware of that, of course.
02:19And I think we definitely live in a bifurcated environment right now where you have some people who, of means,
02:24can trade up for premium products.
02:25Other people are trading down for value.
02:27I think the benefit of being in our category, which is a better-for-you health and wellness space,
02:33people, even lower- and middle-income households, are looking to trade up if there's a health benefit
02:38or if there's a brand that they identify and they think is valuable.
02:42So we actually track very carefully monthly low, middle, and high-income households
02:48and how much they're buying our product.
02:51And we've been looking and actually expecting maybe lower-income households to fall off the pace a bit.
02:56We haven't seen it yet, but it's something we're very acutely aware of.
02:59And we need to make sure that we're addressing the needs not just of the high end of the K,
03:05but also the low end of the K.
03:07Have you seen any issues right now, at least in the short term, Dave,
03:10with regards to your costs potentially going up?
03:12Obviously, with the war in Iran, there's been a lot of focus on energy prices,
03:16but, of course, aluminum prices have risen as well.
03:19Have you anticipated or started to model in the idea that your production costs
03:23might actually be higher later this year?
03:26Yeah, I mean, certainly on the aluminum front, we've been hedged for about six months or so now.
03:30So we got in pretty early on that one and didn't want to risk not knowing what our costs would
03:34be.
03:34So we'd rather take maybe in some cases a little bit higher price for the predictability.
03:39Now with the war in Iran, we're expecting obviously freight costs to go up.
03:43And so there's not much we could do about that other than find other areas to cut costs.
03:48I mean, I've never spent so much time focused on the line items between gross sales and gross margin
03:54before in my entire career to really understand what are the elements, what are the drivers,
03:57how do we eliminate unnecessary costs so we can make sure that we can deliver value to the consumer?
04:03And we absorb most, if not all, of those incremental costs.
04:07Well, obviously, you have a very kind of illustrious background in this space.
04:11Obviously, you are working at Boston Beer and Pepsi.
04:14I'm probably forgetting a couple others, Pete's, I believe, as well.
04:17So you're obviously a veteran in this space.
04:18And you've navigated through other economic cycles, other sort of commodity shocks, I'm sure.
04:24Does this one feel any worse than those?
04:27Is it better, potentially, than what we saw in the past?
04:31I think it's maybe more uncertain, honestly, than it's been in the past.
04:36But I think you can't focus on the things that you can't control, obviously.
04:41So for us, what we need to do is remember what's our brand stand for,
04:45how do we continue to invest in our brand, not cut.
04:48When we talk about reducing costs, it's all about things that the consumer never sees.
04:53We have to keep investing in our brand.
04:54We have to keep doing the things that make sense for the brand.
04:58Just keep talking to the consumer.
04:59And in this case, with Spindrift going from a sparkling business to now a tea business,
05:04we have to look for some adjacencies where it makes sense to actually bring what we do uniquely
05:11to another place and to bring new consumers in.
05:14So you can't get rattled.
05:17And you just got to keep focusing on what is our consumer looking for?
05:20How do we give them more of that?
05:22And ultimately, in this environment, I think the strongest brands where people and companies
05:29maintain their investment levels will be the brands that win.
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