The Vita Coco Company, Inc. (NASDAQ:COCO) Q4 2022 Earnings Call Transcript

Operator: Thank you. And we also have a question from Gregory Porter with Evercore ISI. Your line is open.

Gregory Porter: Hey, guys, thanks for taking the call. As you think about the channel and demographic opportunity from here to keep growing household penetration, maybe if you could just talk about those two areas, kind of where you’re focusing in promo, where you’re going to focus marketing and kind of like where you see that penetration opportunity most. Thanks, guys.

Martin Roper: Yep. So, we obviously have significant penetration opportunities relative to both our brand, relative to the category, and then the category relative to other juice categories. We’re trying to increase occasions and increase our appeal across demographic groups. Obviously, the juice product that I just talked about is an example of that. Our promotional cadence is largely singles to try and drive impulse purchase. As we get inventory back, we’re going to be fighting for presence in the cold checkout outdoors for impulse purchase as well, right, which is distribution that was hard to maintain through COVID. And so, there’s just lots of opportunities to grow households. I think we’re also increasing our marketing this year to support some of those in initiatives.

I think from a demographic perspective, we over-index with Asian, African-American and Hispanic consumers, all of which are growing demographic groups that should provide a sort of healthy tailwind. We also over-index with sort of young adults and young families, which again, is a healthy tailwind for us because they’re at the early stage of their healthy beverage lifecycle. So, we think there’s tailwinds there, but obviously as the category leader, our goal is to try and accelerate that.

Gregory Porter: Cool. And then maybe just one quick follow-up, unrelated, but as you think about freight, you talked about the typical timing of kind of what your vision is, is sort of a couple months out. So, as we look to 2024, I know you’re not going to give guidance, but if freight rates stay where they are, should we expect some further material ramp from freight cost rolling off, or is that going to be mostly a 2023 thing for you guys?

Martin Roper: It’s so hard to tell, right? In the first quarter, obviously, we’re still using inventory that came in at higher rate. So, there’s definitely going to be some benefit in €˜24, but exactly how large it is going to be, is very hard to tell at this point in time.

Gregory Porter: Fair enough. Thank you.

Operator: Thank you. I would now like to turn the call back to Martin Roper for any closure remarks.

Martin Roper: Thanks, Catherine. Thanks, everybody, for joining us for Q4 earnings call and we look forward to talking to you again after Q1. Cheers.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.