Fitness energy drink maker Celsius Holdings, Inc. saw a 43% increase in global revenue to $75.1 million last year, up from $52.6 million in 2018, according to its fourth quarter and full year 2019 earnings report released yesterday.
In the U.S., sales rose 53% to $60 million and gross profit increased 49% to $31.3 million. The report comes as Celsius announces a nationwide expansion into 1,500 new Walmart stores this month. As well, the company has added over 50 new regional DSD distributors since July — including AB InBev, MillerCoors, and Keurig Dr Pepper partners — bringing its total distribution network to over 100 partners.
Speaking with investors on a conference call yesterday, Celsius president and CEO John Fieldly said the focus on DSD, which also includes a partnership with New York distributor Big Geyser, has resulted in a 40% sales increase. As well, the company signed on additional “marquee” retail accounts, he said, including QuikTrip and Stop & Shop and expanded its footprint in existing partners CVS, Rite Aid, 7-Eleven, DICK’S Sporting Goods, Kroger and Gold’s Gym.
Fieldly noted that the recent rise of performance energy drinks — a group that also includes c Bang, Reign and C4, among others — was significant in bolstering Celsius’ sales in 2019 and that the launch of Celsius drinks with branched-chain amino acids (BCAAs) has helped the brand to capitalize on the trend. He said the energy drink category in North America grew 8% last year and is expected to surpass $85 billion globally by 2025, citing market research firm Euromonitor.
“We see a massive opportunity with seismic shifts taking place in the energy category for functional, better for you offerings,” Fieldly said. “And with our proven functional health and wellness fitness position, we are gaining broad mass appeal. We have never been more optimistic about our future.”
According to Fieldly, Celsius sees a “massive opportunity” in the convenience channel and cited data from market research firm SPINS which showed Celsius grew faster than the category at a 44.5% growth rate in 2019 with an ACV of 12.2%.
“Our network of convenience storage continues to grow and will continue to grow throughout 2020 as we continue to gain interest for more convenience retail partners,” Fieldly said. “We anticipate that more convenience retailers will be allocating more placements to Celsius in 2020 based on changes in consumer preferences and the momentum we are gaining in existing accounts in this channel.”
Internationally, European revenue grew 56% year-over-year, Fieldly said, fueled by new flavors, “optimized in-store execution” and the company’s $24.6 million acquisition of Nordic wellness company Func Food Group — which distributes Celsius in Scandinavia — in September. However, he added, sales in Asia declined. According to Celsius CFO Edwin Negron-Carballo, the brand reported $212,000 in revenue from Asia in Q4, down from $1.6 million in 2018.
Speaking during the call’s Q&A portion, Fieldly addressed concerns over the COVID-19 pandemic. He said Celsius has been working closely with its suppliers and does not anticipate any supply chain disruptions at the moment. However, the virus’ impact on sales is currently unknown but that the brand has not yet seen any slowdown.
“Obviously, things are changing rapidly,” Fieldly said. “So we’re keeping an eye on it. But we – at this point, we do not have any concerns. We are keeping inventories up and our raw materials up and feel we’re in a good position to weather a storm over the next several months, if needed, and working closely with all suppliers.”
Fieldly also commented on PepsiCo’s $3.85 billion acquisition of Rockstar Energy this week, stating that the news presents an opportunity for the brand to add new distributors in the PepsiCo system that were previously inaccessible due to an exclusive agreement with Rockstar. Should Bang move into Pepsi bottlers and distributors, he added, Celsius will aim to fill its spot on Anheuser-Busch InBev trucks.
“We actually see this as a great benefit that we’re going to leverage over the next several months, and it’s a great opportunity for us,” he said.
Celsius’ stock value at end of day today was up 4.10% to $5.33 per share.