We can share more on the next call. The target is indeed spring reset and we’ve had strong interest there and are optimistic about being able to operationalize a couple of different test partners. So it scales to the future. And then of course, why are we ready for that as you mentioned, we’ve enlisted a third party sales agency, which helps with not only selling horsepower but also enhancing merchandising. So that’s a step in the right direction to support our enhanced route to market and specifically convenience readiness. We don’t have any specific DSD partnership progress to share today. But we’ve made steps in the right direction. We’re far more ready now for convenience than we were just months ago.
Bonnie Herzog: All right. Sounds great. Thank you.
Amy Taylor: Thanks Bonnie.
Operator: Thank you. Next question comes from the line of Jim Salera with Stephens. Please go ahead.
Jim Salera: Yes thanks for taking my question.
Amy Taylor: Hello, Jim. Hi.
Jim Salera: Hi. Good morning. I wanted to drill down a little bit on the household penetration. I know you guys mentioned in the footnote on the slides that it is largely temporary due to the supply chain disruptions. But can you give us some context for — if a consumer that previously was the Zevia consumer that the product isn’t available for them? Do they replace it with another diet soda or is that something that just gets dropped from the basket? And then maybe as a follow-up to that when you do get back on shelf do they just snap back or do you need some sort of kind of advertising or promotion to kind of motivate them back to the brand?
Amy Taylor: Okay. Jim very much understand your question. It’s one of loyalty. So thank you for the question. Yeah, when we do see strain in our household penetration figure in terms of the size of the user base that is a bit of a misnomer as an indicator of interruption to the panel data, because of out of stock. And where you can measure health is of course our continued double digit growth in velocities the sales per point of distribution and for our existing consumer base, we saw a material increase in dollar spend per household, and dollars spent per trip with the sustained purchase frequency. So what that tells us is the base is healthy. So to answer your question, when folks can’t find a Zevia on-shelf and this is why we and retailers both passionately committed to getting out of stocks eliminated.
They generally build spend dollars. So that could for a retailer be a lost sale. We do see some leakage back into other zero sugar beverages, but rarely do retail group fully replace that higher spend that comes to the Zevia shopper. We believe and even in October, we can provide the data to back it up. That way when we are back in stock the Zevia shopper goes back to buying the Zevia flavors that they love. And we’re able to continue to drive trial on new users faster, especially now that we’re starting to ramp cold singles distribution. So the brand loyalty for Zevia is a big part of our quick recovery in the way that you’re asking. And it also means that we don’t have to spend per se to get sharper back. I think the one caveat that, I’ll make because of course in e-commerce, if you have declined the e-commerce, I need to fill that back up, so there’s an investment necessary to bolster top of mind within that shopping environment.
But in retail, let’s say regaining those sales is quite straightforward as we simply fix customer fulfillment. Hopefully that, is clear.
Jim Salera: Yeah, no that’s all very helpful color. And then maybe as a follow-up as you guys expand the soda and the tea offerings, I’ve seen tea at wholesale clubs near me are a lot of those different consumers like soda consumer versus tea consumer and do they find the brand because they already know soda and then they also drink tea or is it a new consumer coming to the tea or coming to the energy that might not be aware of the Zevia soda?
Amy Taylor: Sure. So, tea in particular is incremental. It’s a very different shopper and different consumer. We see a lot of interaction between soda and energy. It is largely an existing soda consumer also purchasing Zevia energy drinks. And the reason this is relevant is that we have the opportunity to bring let’s call it a more health scrutinizing shopper to the energy category for the first time. And so those are incremental purchases in dollars, but potentially for some of the same shoppers that already know and love trust Zevia brand. So there are incremental, tea tends to be with a new shopper, energy tends to be with the Zevia shopper that spends more now on the brand and enters energy drinks for the first time.
Jim Salera: Great. That’s all helpful. I’ll hop back in the queue. Thanks guys.
Amy Taylor: Thanks Jim.
Operator: Thank you. Next question comes from the line of Chris Carey with Wells Fargo Securities. Please go ahead.
Chris Carey: Hey good morning. Can you just address margin visibility? So clearly a lot of focus on the top line, but it’s the fourth consecutive quarter of margin — gross margin expansion. This has been kind of a point of attention over the past couple of years. So can you just talk about how you feel about your ability to predict specifically gross margins and how you see things progressing perhaps in the medium term please?
Amy Taylor: Sure. So we’re pleased that we continue to improve year-over-year our gross margins and central to that improvement is sustained improved pricing — strengthened pricing as well as more effective spend on promotion and then finally containment of COGS. And so we’ve obviously not guided on gross margin but we’ve talked in the past about gross margin in the mid-40s and we continue to realize those expectations and would expect the same in the next quarter. And then our plans for the future to continue to March toward those drivers of gross margin improvement at things strengthening in the top line through price and promotion. We don’t have any specific plans for price increases, but we believe that there’s room there as well as continuing to optimize promotions as well as continue to contain costs with a more efficient supply chain continue to drive COGS down overall. Chris does that answer your question?
