Chris Carey: Okay, sounds good. And then can you just expand a bit on the Spike launch and what you’re seeing, and how big you think that can become over the course of this year, and just what you’re embedding in the outlook from that? Apologies if I missed it. Thanks.
Mike Kirban: Yes, no, it’s really exciting. Launched just – I think just over a month ago, and it’s going well. We’re getting good feedback. Got some big retailers, and it’s exciting. There is – we’re not baking anything into the plan for this year. We think it is – obviously, it’s an opportunity to obviously build potential significant profitability from it over time in future years. But this year, it’s about getting the product out and investing back in marketing. The big key with this launch for us is, the product is now available in many retail outlets that it never existed in before. So, it’s more brand visibility and we think helping to get consumers starting to think about Coconut Water for additional occasions. So, they’re seeing the brand more. There’s more awareness, and now there’s more occasions to drink, such as mixing with cocktails, which we think is a big opportunity for consumption expansion.
Chris Carey: Okay. Thank you.
Operator: Thank you. Our next question comes from Kaumil Gajrawala with Credit Suisse. Your line is open.
Kaumil Gajrawala: Hi. thanks for taking the call. Good morning, everyone. I guess the first question on Multipack, which you commented on in the opening, can you maybe just give maybe some context? What’s the incremental contribution? What are you seeing there? We’re hearing something similar around variety packs and other categories, or even the variety packs at Multipacks at Frito. So, could you just maybe talk about what it’s offering in terms of lift? And then similarly, what’s your capacity to keep offering or growing that piece of your business?
Martin Roper: Yes. So, let me address the capacity first. Obviously, we had planned for Multipacks to contribute a reasonable portion of our growth this year. So, we think we’re in good shape, but we’re probably adjusting those production plans up a little bit with the supply chain lead time of two to three months. The way we deal with that would be to hand pack in-country if we needed to. So, we think we’re fine, but again, it depends on how the growth continues. I think what we’re seeing is, when you look at the sort of IRI scan data, that the Multipacks are contributing a reasonable part of the growth. It sort of varies by retailer, depending on which Multipacks we put into the retailer, but it probably varies between 50% and 75% of the growth, where the Multipack is driving the growth.
But I think we’re also seeing the singles still being healthy. And by healthy, I mean flat to up, right? So, we’re not getting – the brand is underlyingly healthy, and I think we’re seeing some benefit from the consumers buying a four-pack instead of three singles. And it’s obviously more convenient to shop. It’s more convenient to take home. It’s more convenient to store. And there’s a little bit of a price value proposition there too for the consumers, and we’re seeing that play out, but it’s not sort of, at least in most retailers, cannibalizing the singles to a negative growth rate.
Mike Kirban: Big picture, Multipacks are growing and doing better than we had expected and continue to accelerate. And most importantly, this is how we build out our distribution at retail, right? So, we’ve had this conversation before, talking about brands like Ocean Spray, where our velocity is as good as theirs, and therefore times our size. But if you look at the points of distribution, they’re significant and they stand out on the shelf, and that’s part of this strategy. So, we think that the Multipacks are creating a better billboard. They’re driving more people into the category. People are buying more now because they’re buying larger sizes, but it’s also making the singles more visible on shelf as you’re expanding the shelf space and expanding the billboard when you walk in the grocery store. So, really excited about the performance and really excited about the upside that it brings to the brand over the next couple of years.
Kaumil Gajrawala: Okay, great. And then on inventory and supply chain, you mentioned the benefits in January. Should we be expecting some sort of notable step-up around shelf resets now that you’re kind of fully back in play versus what you’ve been dealing with over the course of the last year?
Mike Kirban: Yes.
Martin Roper: So, I think you’re seeing year-to-date better presentation of the brand on shelf, because we have inventory of most of the SKUs we need, and we’re out executing and promoting.
Kaumil Gajrawala: Okay. Thank you.
Operator: Thank you. We have a question from Bryan Spillane from Bank of America. Your line is open.
Bryan Spillane: Thanks, operator. Good morning, everyone. Hey, Michael, I guess wanted to follow up on the point you were just making about in response to Kaumil’s question about Multipacks, and just simple question, right? They stack easier, easier for the retailer to handle. So, as you’re thinking about incremental distribution points, even within your existing store footprint, should we expect to start seeing more out-of-isle display, wing displays? Just, I think it makes it a lot easier to actually do more display. And so, just curious if that’s part of what you were describing and would we expect to see some of that as we move through this year?
Mike Kirban: Yes, 100%. That’s a big focus and like I said, it’s twofold. One is expanding the billboard on shelf in our set, and yes, it’s much easier to get off-shelf and stack and promote and so on. So, these are great items. We’ve been doing this 18, 19, 20 years. I don’t even remember. And we’ve kind of figured out how the beverage aisle really works now, and this is – it’s just constant expanding of shelf space through new sizes, new pack formats, really drives additional volume.
Bryan Spillane: So, is that – do you have more display activity actually like lined up for this year than you would’ve had last year?
Martin Roper: I think our promotional cadence is maybe a little heavier because we have inventory and we pulled back on that last year. And then with that, last year when we didn’t have inventory, display activity was sort of hard to deliver. I think one additional comment I would make is, for us, I don’t think we’ve price-promoted Multipacks that much. So, part of this learning experience on Multipacks is to understand whether we can get displays on Multipack full price. It’s already a reasonable consumer price proposition. So, we’re going to look at that this year and see what works and test some things. But Mike’s absolutely right, you should expect us to execute displays at a higher level this year.
Bryan Spillane: All right, terrific. Thanks, guys.
Operator: Thank you. And our next question comes from Michael Lavery with Piper Sandler. Your line is open.
Michael Lavery: Thank you, and good morning. I want to come back to cans. If I understand it right, it’s primarily sort of focused on better penetration in C-stores, but it’s – so it’s a little bit of a different channel, but it’s obviously a different pack type, but also a different product, if I’m reading this correctly, just juice as opposed to more water. And so, how much room does that have to move beyond C-store or even potentially be in a different pack type? How flexible can it be if – it seems like it could broaden the appeal just by being a little bit differentiated versus your current offering? How much can you – is that the right way to understand it, and how much can you leverage that?
Mike Kirban: Yes, I think the focus for this year is expanding C-store. We think that that’s obviously the biggest channel for this item. However, mass is also a very significant channel for canned Coconut Juice, and that’ll come next. But we think really getting it out there, getting trial on it, single-serve trial at C-store, is the way to go. And then eventually it starts to go into mass and grocery and so on. And then eventually after that, it starts to go into different packs, Multipacks, different formats and so on and so forth. So, that’s kind of the build of this item over time. But like we said, we launched it last year with a couple of C-stores in a couple of regions. It’s done very well, and now it is launching nationally across C-store. Really excited about that. And then the next stage will be mass and then grocery.
Michael Lavery: Okay. Thank you. No, that’s great color. And just one follow-up on Spike. You touched on this a little bit, but can you give a sense of how much it could live on premise or just sort of plant the flag at least in terms of how consumers think about the product and drive at-home consumption with mixers or on premise. How could it evolve beyond just the current way that it’s launching now?
Mike Kirban: Well, like we said, it’s launching in outlets that we didn’t exist in before, which is both liquor stores and on-premise. There’s quite a bit of on-premise distribution that’s going on right now. So, again, it starts to get people to – we think it starts to get people to think about mixing Coconut Water with spirits. At the same time, we’re following up with that, with starting to put teams against actually selling Vita Coco into on-premise accounts to further expand on that potential consumer occasion.
Michael Lavery: Okay. Great. Thanks so much.
