James Ronald Salera

James Ronald Salera inquired about the composition of The Vita Coco Company's growth, specifically if multipacks indicate increased purchases by existing households, and whether upcoming inclusion in modern hydration sections would attract new households or re-engage lapsed customers.

Answer

CEO Martin Roper explained that the multipack strategy aims to increase value, velocity, and pantry stock, partly driven by strong club channel performance. He estimated that the company's overall growth is balanced, with approximately half coming from new households and half from increased consumption by existing households. He declined to provide 2026 gross margin guidance, citing numerous moving pieces related to tariffs and other factors.

James Ronald Salera inquired about the percentage of COGS represented by cocoa, details on cocoa hedge layering, and the potential for earlier or greater gross margin relief if cocoa prices continue to fall.

Answer

CFO Chris Bealer stated that cocoa represents a mid-single-digit percentage of overall costs, including direct purchases and components. He explained that the company is covered at high prices for the first half of the year to ensure supply, with a transition to much lower, deflationary costs in Q3 and Q4, carrying into fiscal 2027. President and CEO Geoff Tanner added that recent spot price declines present further opportunity for Q4 and into 2027.

James Ronald Salera inquired about the percentage of Simply Good Foods' COGS that cocoa represents and sought commentary on the layering of cocoa hedges. He also asked if continued declines in spot cocoa prices could lead to earlier or greater gross margin relief than currently projected for Q3.

Answer

CFO Chris Bealer stated that cocoa, including its components in coatings and inclusions, represents a mid-single-digit percentage of overall costs. He explained that the company is covered far into the year, with the first half at fairly high prices due to ensuring supply. Transition to much lower, deflationary costs is expected in Q3, with even lower prices impacting Q4 and carrying into fiscal year 2027. President and CEO Geoff Tanner added that spot cocoa prices have come down considerably in recent months, offering further opportunity for Q4 and into 2027.