Celsius Growth Led by Refined Distribution, Digital Marketing

It’s been a good year for Celsius, a brand that, once mired in an unmanageable distribution system, now benefits from simplicity.

In a release of its third quarter results, the company reported Monday morning a 61 percent increase in net revenue from the quarter, ending on Sept. 30, and a 34 percent increase in revenue from the previous nine months ending on the same date.

“This is a turnaround,” Celsius CEO Gerry David said. “The sales were really nosediving 24 months ago.”

In September 2011, investor Carl DeSantis replaced Celsius founder Steve Haley with David, who said that the previous regime’s strategy included distributing Celsius in 4-packs across the country with a focus in Costco stores. However, sales figures declined during this period. David said that consumers were struggling to identify with the brand.

Source: Celsius Holdings Quarterly Report

“That was a major mistake,” David said of the 4-packs. “They should have made a single strategy so people had an opportunity to try a couple different flavors, experience the product and then make the market purchase.”

The company’s revised strategy, which since January involves single-serve cans alongside multi-packs and has drawn a $2.2 million investment from DeSantis, pinpoints six “drill-deep” markets: Los Angeles, San Diego, Texas, South Florida, Tampa and New England. David said that these markets make sense in various ways. Sales continue to boom in Texas. Major distributors in New England (Polar Beverages) and Southern California (Haralambos Beverage Company) keep these markets in play. Headquartered in Boca Raton, Fla., South Florida and Tampa are right in the company’s backyard.

“Focusing in our energies and our resources in those six drill-deep markets really allowed us to get more daily consumers to drive success,” David said.

While the company plans to continue strengthening these six markets, Celsius also plans to increase its number of “drill-deep” markets. David said that in 2014, the company plans to boost its presence in New York, Chicago, Detroit, Milwaukee and Iowa, where it already has a strong foothold in Dubuque and Des Moines.

David said that he credits much of the increasing sales figures to the company’s beefed-up international footprint. Celsius recently shipped its first order to China and partnered with Latco Beverages to bring the beverage to Brazil, Argentina, Paraguay and Uruguay. He added that the timing works out nicely with the South American arrival. While the added distribution flows with the company’s rising trajectory, it also coincides with Brazil’s hosting of the 2014 FIFA World Cup and the 2016 Olympic Games, which will take place in Rio de Janeiro. Compounded with its already strong footprint in Sweden, Celsius reported Monday a net revenue increase of 131 percent from international sales in the third quarter, ending on Sept. 30.

While the international placements are more tangible, few boons are more quantifiable than the company’s digital marketing efforts, David said. With advertising efforts through Pandora, the popular online radio website, David said that Celsius pays about $1 per click-through to the company website (compared to the $2.50 average with Pandora) for about 100,000 click-throughs from 7.8 million ads per month.

“You can measure the traffic and results from those ads,” he said. “It’s proven to be just a big, big winner for us.”