Fitness-focused functional beverage brand CELSIUS announced first quarter revenue growth of 78% to $50 million in an earnings report today, reflecting a “record” sales period despite several headwinds caused by pandemic-related shockwaves.
Domestic revenue increased 101% to $39 million, up from $19.4 million the year before. International revenue was up 25% to $11 million, up from $8.8 million last year. The increase was broadly driven by 137% growth in traditional retail channels, while fitness channel sales improved 33% after steep declines during the pandemic last year.
Gross profit was 20.6%, up 58% from $13 million last year. Gross profits margins totaled 41.1% of revenues.
Speaking to investors and analysts on an earnings call today, CELSIUS president and CEO John Fieldly said the brand grew 77% year-over-year in the convenience channel, outpacing 7.5% growth for the overall energy drink category. The brand has only a 16.8% ACV in convenience, he noted, but has added over 13,500 new stores over the past year, most recently adding 1,500 Murphy USA stores, with additional accounts expected to come online during spring resets.
According to Nielsen, CELSIUS sales increased 218% in the two-week period ending April 24 and were up 8.6% for the 52-week period, with 1.2% market share of the category.
In ecommerce, CELSIUS’ Amazon sales grew 265% and its share increased by 4.5 points to 15.5%, Fieldly said, making it the second largest brand in the category on Amazon behind Monster Energy, which has a 35.6% share and above Red Bull, which has a 13.7% share.
“We continue to see acceleration through all channels of trade and are now beginning to see the additional lift from the conversion of accounts to our DSD network,” Fieldly said. “Additionally, we secured additional distribution agreements with key partners further expanding availability to new regions, as CELSIUS builds out its national distribution network, which now includes over 180 regional direct store delivery DSD partners, and distribution centers covering approximately 85% of major metropolitan markets.”
In total, CELSIUS U.S. retail footprint include sover 92,000 locations, up by 10,000 doors since the beginning of the year, Fieldly added.
The brand also launched its latest flavor innovation: Tropical Vibe. Accompany the previous Peach Vibe flavor that debuted last year, the new SKU is currently available in 7-Eleven stores nationwide.
However, Fieldly said the company is still dealing with the impacts of COVID-19 in international markets and multiple U.S. channels — including health and fitness, vending and food service — and is facing increased costs for raw materials and transportation.
In particular, Fieldly noted the pandemic has led to a shift in the company’s channel mix. Prior to COVID, about 25% of CELSIUS U.S. retail sales came from the fitness channel; it currently stands at 10%. However, Fieldly is optimistic as the U.S. market returns to full mobility that the channel is quickly expanding.
“It’s really pent-up demand that we’re seeing,” he said during the call’s Q&A portion. “We’re hearing comments about additional signups and there seems to be a lot of momentum there. They’re nowhere near where they were pre-pandemic, but it’s coming. We’re excited about the summer.”
The company has also worked to address the industry-wide aluminum can shortage, Fieldly said, and implemented contingency plans in the fall to source supplies internationally. CELSIUS anticipates 50% of its can supply for 2021 will be imported and wrapped cans, but will rely more on U.S. suppliers by the end of the year as manufacturers work to increase their production capacity.
“In the first quarter, we saw a higher proportion of wrapped cans versus imported cans, but expect that mix to change to a higher proportion of imported cans going forward,” He said. “Wrapped cans have a higher cost, so that represents a slight margin improvement going forward with the changing mix.”
Other challenges in recent months included shipping delays caused by the Texas freeze this winter, which shut down two co-packers and one warehouse for over two weeks. As well, gas shortages in the Southeast, caused by a cyberattack on the Colonial Pipeline last week, have impacted deliveries in the region as drivers struggle to fill their tanks.
In Europe, revenues grew 22% to $10.4 million, which was partially off-set by pandemic-related lockdowns. In China, Fieldly said the company maintains a licensing royalty model where its distributor covers 76 cities and over 60,000 points of distribution. Total revenue in Asia was $536,000, up 100% year-over-year.