Fitness-focused energy drink maker Celsius continues to make strides in growing its share of the energy drink market, reporting a 167% year-over-year increase in revenue to a record $133.4 million in its Q1 earnings report released on Tuesday.
The Florida-based publicly traded company has enjoyed rapid growth over recent years, as its female-friendly, better-for-you positioning and fitness attributes align with evolving consumer preferences within the energy space. While still lagging behind category giants Red Bull and Monster, Celsius President and CEO John Fieldy said in a prepared statement on Tuesday that the band had surpassed Rockstar as the fourth-largest brand in the category as of Q1 2022.
North American revenue increased 217% to $123.5 million from the same quarter a year ago. International sales contracted by 10% to $9.9 million.
While sales and revenue are up, so are costs. Total operating expenses rose to $43 million from $19 million this time last year, largely attributed to investments in marketing opportunities, increased employee costs and distribution expenses. In response to spiraling inflation, the company raised prices last month and is expected to continue doing so over subsequent quarters, it said on Tuesday.
“Our record first quarter represented our 14th consecutive quarter of sequential growth and a 20% increase over the fourth quarter period,” Fieldy said in a prepared statement. “During this period, Celsius increased to a $4.1 share and surpassed Rockstar for the number four position in the energy category.”
Celsius, which is distributed primarily via DSD, reported distributor revenues were up 395% compared to Q1 2021. Vending foodservice channels grew approximately 296% in the first quarter and drove over $202 million in incremental revenue. The company also continues to perform well in e-commerce, with Amazon reporting that Celsius represents 18.23% dollar share of the energy category, the second largest behind Monster.
After a successful launch in Costco outlets in 2021, Celsius continues its expansion in the club channel with distribution in 589 Sam’s Club locations starting in March 2022. The energy-drink maker is anticipating moving further into the club channel with expansion to BJ’s Wholesale Club stores later this year.
Elsewhere, Celsius has made inroads in c-stores, the top-selling channel for energy drinks. The brand is now sold in nearly 64,000 convenience stores, an 88% increase from Q1 2021. The drink maker also continues to expand in Walmart and fitness locations nationwide focusing resources on new SKU facings, cooler placements and more endcap activity.
In terms of innovation, Fieldly said the company expects to release new flavor options geared toward summer activities in Q2. The company sees potential in expanding its On-The-Go energy sticks into more locations and varieties.
Aluminum prices continue to be a headwind for many beverage makers. Celsius reported that an additional shipment of international cans are arriving in Q2 which will put some pressure on profit margins but will normalize by Q3/Q4. The company is also investing in local delivery options to offset freight costs.
The most recent Nielsen report as of April 9, showed Celsius sales of up 230% for the 12 weeks with a 3.4 share in the energy category.
Credite Suisse maintains a “Neutral” position saying that “Celsius has the tools to support topline momentum but could veer off the “Monster pathway” in the short term for profitability.
“We are well positioned,” Fieldly said. “When you look at the category growth, we brought in about 38% of the growth during that period. We are bringing in a new consumer into the energy category. We are helping the category further expand.”