Having posted consistent triple-digit retail growth over the past several months, energy drink brand CELSIUS reported quarterly revenue grew 157% to $94.9 million during its Q3 earnings call this week.
Those numbers were fueled by the company’s performance in North America, where revenue was up 214% to $84.5 million, compared to $26.9 million last year. International revenue increased 5% to $10.4 million, up from $9.9 million last year. In the U.S., the company said it benefited from strong retail execution in traditional channels, SKU expansion in existing accounts, growth of its DSD network and the addition of new convenience channel accounts. The brand reported a triple-digit rise in fitness and vending channels, contributing $5.2 million of incremental revenue.
Overseas, Nordic revenue was flat at around $9.5 million, while other markets — including China — increased 110% to $883,000.
Gross profit was up 115% to $37.7 million, versus $17.5 million in 2020. Net income was $2.7 million, a 44% drop from $4.8 million last year. The results were impacted by rising costs of supplies and shipping, including aluminum can imports.
Speaking to investors and analysts during an earnings call this week, CELSIUS CEO John Fieldly said that inflationary pressures forced the company to “sacrifice efficiencies on the margin side.” He noted that many of the costs are expected to be one-time or transitory, but that the company will see a permanent increase in expenses from its distribution warehouse expansion.
“We expect to see tangible efficiencies in both miles on cases freight costs as well as reduced inventory stock-outs with our distribution partners going forward from this initiative,” Fieldly said. “But we did have incremental cost in Q3 as we essentially moved from two main warehouse centers to six, while also significantly expanding inventory runs with our co-packers.”
The company is now working to optimize its supply chain, signing two new contracts with U.S. can manufacturers for production which will provide an “adequate U.S. can source” for the next year, Fieldly said. As well, CELSIUS is aiming to offset rising costs tied to co-packing, raw materials and tolling fees by negotiating better pricing as the brand scales.
CELSIUS is now available in over 118,000 stores in the U.S., up 48% from the beginning of 2021 with an additional 38,000 doors. In particular, the brand made headway in the convenience channel, adding 20,000 new c-stores since January. Citing SPINS data, Fieldly said the brand has grown 205.5% year-over-year in convenience, as of October 3, while its ACV has increased to 34.7%.
CELSIUS is also now available in over 550 club channel stores, including Costco and Sam’s Club, contributing $21.3 million in incremental revenue. Across all channels, the company said it placed over 400 new coolers in stores in Q3.
“Industry-backed third-party data continues to show accelerated growth metrics and we are confident that CELSIUS will continue to drive sales even higher as we continue to accelerate our ACV across channels through additional launches with new nationwide chains and transitioning existing accounts to our DSD network,” Fieldly said on the call.
During the call’s Q&A portion, Fieldly noted that the transition to DSD has been a pivotal part of the brand’s expansion. In particular, CELSIUS gained a number of new accounts following the discontinuation of The Coca-Cola Company’s Coke Energy line earlier this year. But the DSD network is “nowhere near fully optimized,” he said, giving the brand a significant runway to grow with plans to add new team members in the near future