Celsius reported a 95% year-over-year increase in net revenue to reach $260 million during the first quarter, largely driven by strong sales velocity, cost-efficiency improvements and distribution expansion.
According to president and CEO John Fieldly during a call with investors this week, Celsius is the number one dollar growth brand in total US Mulo+C for energy for the last 52 weeks, per recent IRI data. Celsius’ strong performance this quarter, including its 111% gross profit increase to $114 million, was attributed to increased brand awareness in addition to the realized impact of its continued transition into the PepsiCo distribution network.
“Looking ahead, we have plans in place and initiatives underway to further leverage our expanding distribution and continue to build our global brand equity,” said Fieldly during the call.
The brand is currently the number three energy drink in the U.S. and holds 7.5% market share. Celsius is also now ranked the second largest energy drink brand on Amazon, in terms of dollar sales, capturing over 19% share of the category within the ecommerce giant’s platform.
“We continue to see growth across all channels, including those non-tracked, with club channel sales totaling over $47 million for the quarter ending March 31, 2023 – up 77% compared to $26 million in the first quarter of 2022,” said Fieldly during the call. “In addition we continue to expand growth opportunities in non-tracked food service channels and are gaining more distribution and colleges, universities, hospitals, hotels, eateries, casinos and more.”
According to Fieldly, food service presents a significant opportunity for the business to grow, stating that the channel currently accounts for only 10% of the business’ total sales. Though expansion has been a key focus of Celsius’ growth strategy, incremental improvements to active operations have also been integral to growing the business.
The team is working to build out its back office and will now hire for additional operations and finance roles after focusing efforts to grow its HR and legal team over the past year. The company grappled with a range of legal challenges in 2022 – including a class action lawsuit over labeling claims and a $82.6 million settlement for a suit brought by rapper FloRida – but has now put many of those to rest. CFO Jarrod Langhans noted that the company is still working with the Securities and Exchange Committee (SEC) regarding terminated distribution contracts following its deal with PepsiCo.
Further driving improvements, Celsius shifted back to domestic sourcing for its metal cans last year which it attributed some of the cost savings that support its current, 40% gross margin rate. This move also put the brand in “great shape” to drive growth from a supply chain, raw material and production perspective, said Langhans.
“From a capacity perspective, we’ve got the ability to quickly double. In terms of production, we’ve got our open model built, but we’ve got a number of co-packers that we can flex to. We have capacity at our current co-packers that we can utilize as well so we’re in great shape in order to meet the demand we’re seeing or even demand outsize relative to what we’re seeing.”