Natural channel authenticity boosts energy brand as it expands in mass channels

17-May-2019 - Last updated on 17-May-2019 at 14:04 GMT

Having a history in health food stores as it expands into mass channels has helped fast growing Celsius Beverages compete in the rapidly evolving energy beverage category, an executive said.

In an earnings call with analysts, CEO John Fieldy said the authenticity that comes with a natural channel positioning has stood the company well as it expands in the food drug mass channel. That expansion has been a primary focus for the company in 2019.

Celsius went through a period of new product development that saw the launch of a line called Celsius Heat to go with its standard line of energy beverages. Now the company is banking on new flavors to carry the brand forward.

In the past quarter the brand has signed a deal to greatly increase its distribution in the New York metro area, and sales in 7-11 stores. During the first quarter of its fiscal 2019, the company has also signed distribution deals with additional distribution including Anheuser-Busch, Keurig Dr. Pepper and MillerCoors independent network partners.

Authenticity as a differentiator

But competition has been ramping up, too. On the earnings call, an analyst noted that both Dr Pepper and Amazon have recently launched new energy beverages. Fieldy acknowledged that the competition is fierce, but his brand’s authenticity is providing an advantage.

“People are looking for better for you healthier alternatives and that is allowing Celsius to get placed and gain that placement with our healthy functional position and really our fitness forward position has allowed us to open doors. Competition has been continuing to increase. As you mentioned, Amazon's coming out with products, we have Monster Reign has launched a fitness forward product,” Fieldy said.

“There's a lot of other players out there really going after this space. But Celsius has this authenticity really coming in being born and steeped in science, born in the diet nutrition, sports nutrition channel which is allowing us to take this journey and allowing the placements. Retailers today are more open than they have ever been to shelf Celsius,” he said. Fieldy’s comments were taken from a transcript of the first quarter 2019 earnings call posted on the site seekingalpha.com.

Earnings details

Fieldy took over the helm of Celsius after the brand had almost run out of money shortly after going public in 2010. Since then, the company has been on an upward course, including a new royalty deal in China that followed on the heels of an investment by Hong Kong billionaire Li KaShing.

The company reported first quarter revenue of approximately $14.5 million, which represents a 20% increase from the same period a year previously. That was driven by a 41% increase in sales in North America. Revenue from operations in China was down as a result of transitioning to a royalty model.

On an adjusted EBIDTA basis, the company broke into the black in the quarter, recording a positive $878,000 compared to a loss of $2.1 million in the first quarter of 2018.