The Vita Coco Company, Inc. Common Stock Piper Sandler 5th Annual Growth Frontiers Conference

Yeah. We're looking at that as the coconut water category is taking share of the overall beverage category. It's growing at a very healthy clip. I think it's up 28% year to date in the U.S. We're seeing very healthy growth internationally. A lot of the major retailers are growing very healthily, Walmart and some of the others. It's driven by, we see basically consumer growth, about two-thirds of it is coming from new households in the U.S., about one-third from the same households buying more. That is driven by two big intrinsic drivers. One, people want functionality from their beverages. They want it from a lot of food as well. They want healthier, natural, better-for-you beverages. So if you have a category and a brand that hits on both, we think there's a lot of potential.

From a household penetration perspective, we're still significantly below some of the major juice categories, for example. So with a consumer that's aging down, we see a lot more younger people drinking it. We see a lot of long runway for growth in the U.S. as well as internationally.

It all comes down to penetration opportunities. To have sustained growth, you got to have a runway for increased distribution. We believe that around 15% growth for the brand is a good place to be. It'll go in leaps and bounds a little bit. One year there's more expansion, the other year, but we're feeling very confident about that number. If I look at the U.S., we still see distribution opportunities with our major retailers. You've talked with us a lot about Walmart over the years. Walmart still has stores that have just a few Vita Coco SKUs, while we think they should have more Vita Coco SKUs and category space. That's an opportunity. If you look at places like C-store, a couple of years ago, we talked about having two or three items in a store.

We're now talking to retailers about having full shelves, and I think, as this progresses, you can see this growing into multiple shelves. That's not unimaginable. In the U.S., food service is a channel for us with very low penetration. We historically haven't been strong there. In the U.S., that's another big focus for us. Then internationally, we have markets where the per capita consumption is still, in the U.K., it's less than 50% of what it is in the U.S. In Germany, it's less than high teens versus U.S. per consumption. So there's still a lot of runway in those markets as well, which coincides with distribution growth.

I will say as a disclaimer, we love disclaimers. Walmart, you don't know until you're in the store and you see your actual set represented. That reset happens probably end of this year. That's when they did it last year. The pitch that we're making to them certainly is, "Hey, you've got a lot of stores where you have maybe 10 items per store," but they have a lot of stores where they have just a few Vita Coco items. Our main pitch has been explaining to them that if they just level up the stores where there's just a few items and the category has a lot less space, there's a lot more growth in that juice section that they can generate. That's the pitch that we're making. We'll see by end of the year where we are.

Yes, as we talked about, the category's growing high 20s in the U.S. That exceeded our expectations, especially earlier in the year, and capacity is quite tight. Service levels are pretty good, but they're impacted by the tightness of capacity, certain SKUs, certain customers, where there's less factory diversification. We're starting to see improvement. We expect in Q4 we'll fully recover and start to build inventory going into next year. A little tighter than we would like, but we'll recover soon.

Correct, and we've been building capacity all along and accelerated capacity and investments to secure more capacity going into next year. As more capacity comes online as we get into the end of the year, that allows us to build more inventory to prepare us better for next year.

Broadly, it varies by factory and partner, but about 18 months to secure a new line, sign up a new partner, put in that line. If it's an existing partner, maybe you can go a little quicker. If it's a partner that has capability already, you could go even quicker, but about 18 months to build out a new line.