As the 2024 National Association of Convenience Stores (NACS) Show gets underway today in Las Vegas, energy drink maker Celsius is preparing for a larger push into the convenience and foodservice channels, as well as some new flavor innovations to ring in the fourth quarter.
At the show, Celsius (Booth #N2939) is debuting two new flavors of its 16 oz. Celsius Essentials line: Watermelon Ice and Grape Slush, touting sweet and “candy-like” nostalgic taste profiles that meet the broader innovation trends in the energy space today.
With its Essentials line, CEO John Fieldly told BevNET that Celsius is “turning it up and going bold” with its flavor innovation. He acknowledged the success that competitors like C4 and Ghost have been experiencing with their licensed candy drinks, such as Skittles and Warheads flavors, and said Celsius is looking to use Essentials, and its Vibe line, to experiment with R&D and match those “experiential” use occasions with functional benefits.
“Consumers want to try different things,” he said. “People are looking for more than just energy when they’re coming to the energy category, and that’s what Celsius really plays into.”
The flavor extension comes as Celsius makes deeper strides into the convenience and foodservice channels, which had long been a focus for the business since forging a distribution partnership with PepsiCo in 2022. Part of that expansion now includes retailer partnerships and promos, with a new meal deal launching this month at Casey’s convenience stores where consumers can get a combo meal of a slice of pizza and a Celsius.
Fieldly said the brand is looking for “additional food pairings with energy” and has found that incremental sales of Celsius are more likely when bought alongside food items.
“We’re seeing that as a huge opportunity to drive traffic to these convenience stores, help them bring people in from the [gas] pump,” he said. “The hardest challenge right now for convenience stores is to get consumers in the store, and we’re working on a variety of tactics and ways to drive consumption inside the four walls of the convenience store.”
Leveraging PepsiCo’s foodservice expertise, he added, has been “massive” for the brand, and Celsius is now “building a strategic team” to tackle the channel more directly.
“We’re just getting started, we’re scratching the surface and right around 10% of our PepsiCo revenue is currently sold through their foodservice department,” he said.
However, convenience is still a top priority, and the flavor innovations are part of its strategy to drive trial with new consumers. Sports promotions will also tie into its approach to the channel, Fieldly added, highlighting new partnerships with Formula 1 driver Charles Leclerc. The brand will also be activating at the upcoming Jake Paul vs. Mike Tyson boxing match on Nov. 15.
Although the energy drink category overall has seen growth slow down after several years of rapid expansion, Fieldly says he’s still optimistic about the future of the space, citing a recent Mintel report suggesting that energy drinks have a projected five-year CAGR of between 5.2% and 7.7%.
Noting that the category is currently cycling high comps from last summer, short-term economic concerns are also part of the reason for the recent growth plateau. However, with zero sugar continuing to fuel momentum, Fieldly said he’s “extremely bullish” on the future.
“We feel that the category is poised to continue to grow, especially as economic times improve,” he said. “Because we know consumers are struggling right now, and we’ve got gas prices coming up again, especially with the foreclosures on the East Coast. So that’ll be a short-term impact we need to overcome … but overall, long term, we’re really bullish on the energy category, especially sugar free.”
Still, some of these short-term issues have hit Celsius. Last month, Fieldly announced that PepsiCo would be significantly reducing its orders, which he said is part of the conglomerate’s standard inventory optimization.
“It’s just an ordinary course of business,” he said. “As we continue to drive more efficiencies together, I would look at this as an efficiency to further leverage the opportunities we see ahead.”