Having emerged this year as one of the fastest growing energy drinks in the U.S. market, CELSIUS’ momentum continues to surge, earning an “outperform” rating according to a new report by Credit Suisse.
According to the report, which stems from CELSIUS’ analyst day event in Miami, Florida last week, the brand has seen “a strong rebound in demand post pandemic,” with sales up 193% in the two-week period ending July 3 and up 195% in the 12-week period (not including online and gym sales). Since the fall, CELSIUS has grown its value share of the energy drink category from 0.6% to 1.6%.
Revenues for the publicly traded company were $131 million in 2020, up 74% year-over-year, with an EBITDA of $15 million. The growth has come as CELSIUS has expanded its DSD network, primarily using Anheuser-Busch InBev houses that picked up the brand last year after rival fitness brand Bang signed an exclusive distribution agreement with PepsiCo. According to Credit Suisse, while it still uses warehouse distribution, the company has added roughly 130 new DSD partners in the U.S. over the past two years, up from just 50 in 2019, expanding its availability to about 85% of major metropolitan markets and into more than 82,000 doors (up from 40,000 in 2018).
Though CELSIUS experienced shortages in Q1 of 2021, with fill rates falling to 80%, Credit Suisse notes the company’s immediate focus is returning to a 95% fill rate.
Rising sales have also resulted in better placement for CELSIUS in retail. According to Credit Suisse, recent resets have seen the brand improve its shelving in CVS coolers and receive large floor displays in stores such as 7-Eleven and Publix. Currently, the company is marketing around the national launch of its Tropical Vibe flavors, rolling out now into convenience, food and mass accounts.
The company also recently raised $68 million, which it will invest in branded coolers to increase its placements in high traffic retail doors, as well as adding six new distribution centers in regions that align with co-packers, increasing its inventory and focusing on data collection. In November, former Rockstar Energy SVP of sales Tony Guilfoyle joined CELSIUS as its EVP of sales. Credit Suisse noted that Guilfoyle plans to utilize “new data systems to better organize and track inventory at distributor partners and sales trends.
With CELSIUS stock price currently around $65 per share, Credit Suisse has assigned a target price of $78 per share, with a potential high of $96 and a low of $23. However, with revenue expected to nearly double this year, the equity research firm remains optimistic about the company’s prospects, particularly as the “energy-plus” category of functional beverages continues to grow.
“We believe the market is missing a fundamental change in the energy drinks space: evidence is mounting that energy drinks are becoming more mainstream,” the report stated. “Celsius acknowledged a raft of energy drinks innovation from established beverage companies as well as new companies. Management believes Celsius has the benefit of being a functional beverage, an advantage over many of the entrants.”