CELSIUS: The All-Natural Energy Drink That Burns Fat

When you think Celsius, forget Monster & Red Bull. This company is in a league of its own.

INTRODUCTION

Based on recent numbers, the global energy drink market has already surpassed $65 billion annually and is growing at 9-10% per year. This means the global energy drink market could reach $110 billion annually within the next 5-6 years.

Celsius is a fast-growing company in the functional energy drink and liquid supplement categories in the United States and internationally. They develop, process, market, sell, and distribute functional drinks and liquid supplements to a broad range of consumers. They provide differentiated products that offer clinically proven and innovative formulas meant to change the lives of consumers for the better. The brand is attractive to a broad range of customers including fitness enthusiasts.

It also provides Celsius Heat, a dietary supplement in carbonated flavours. The company distributes its products through direct-store delivery distributors (DSD), as well as through retailers including supermarkets, convenience stores, drug stores, nutritional stores, and health clubs, military stores and ecommerce websites.

The branched-chain amino acids (BCAA) drinks are very popular amongst weightlifters, as it is critical for endurance, performance and recovery. BCAAs are the building blocks of proteins and muscle cannot grow without them.

CELSIUS On-the-Go is a powdered form of the active ingredients in our functional energy drinks in individual On-The-Go packets as well as multiple serving canisters.

Celsius truly contains no garbage. The core ingredients are Green Tea Extract, Guarana Seed, Ginger Root, Vitamin B, Vitamin C and Chromium.

THE SCIENCE

Celsius is also one of the only energy drink companies to fund multiple clinical studies and based on those results the company can claim A single serving (12 ounce can) of Celsius burns 100 to 140 calories by increasing a consumers metabolism an average of 12% for up to a three-hour period. In addition, these studies have indicated that drinking a single serving of Celsius prior to exercising may improve cardiovascular health and fitness and enhance the loss of fat and gain of muscle from exercise.

Celsius is sweetened with sucralose which makes their beverages low-calorie and suitable for consumers whose sugar intake is restricted. Each 12 ounce can of Celsius contains 200 milligrams of caffeine which is comparable to one 350ml cup of coffee from the leading coffee shop.

BUSINESS MODEL

Celsius has three main sales channels:

1. Fitness Gyms, Studios, Spas, Private Lifestyle Clubs
2. Retailers -Grocery, Nutrition, General Merchandise, Gas/Convenience (Speedway) and Drug stores
3. E-commerce Walmart and Amazon

Fun fact: Did you know 70%of all energy drinks are sold at gas stations/convenience stores?

FINANCIALS

I have attached the income statement and balance sheet for you to peruse.

Revenue Growth of 140% is unheard of.

The company increased marketing spend from $34 million to $74 million. They have an aggressive influencer marketing strategy on social media, and it is paying off. They continue to bring on more influencers and ambassadors in both sports, lifestyle and fitness.

As of 30 June 2022, Celsius has $60 million in cash and no debt.

MANAGEMENT

John Fieldly (CEO) has an extensive consumer goods background, John Fieldly, is a results-driven executive with over 20 years of broad financial and operational experience. In April of 2018, Fieldly was named Celsius Holdings Inc.s CEO. Prior to that, he served as the companys CFO since 2012. Since beginning his accelerated career at (NASDAQ: CELH), John has demonstrated a proven track record of driving robust business results and shareholder value. In his current role as CEO, Fieldly uses his strong background in financial leadership and operational expertise to focus on maximizing resources to drive revenue, corporate efficiencies, and shareholder value.

Jarrod Langhans (CFO) comes to Celsius with over 20 years of management and financial experience, beginning his career in public accounting with Cherry Bekaert, a leading accounting and consulting firm in the U.S. where he provided both auditing and tax compliance and consulting services. 

Everyone on the Board owns shares of Celsius so they have skin in the game and several of them have very sizeable stakes.

GROWTH

Celsius acquired Func Foods in October 2019 which brought in some new beverages, protein bars, supplements and superfoods that are marketed and distributed in Finland, Sweden, and Norway. These products are distributed under the FAST, FitFarm and CocoVi brands. FAST is a market leader in Finland and has begun distribution into the Swedish market. FitFarm and CocoVi are well-established brands of superfoods and other supplements in the Nordic countries. 

By far the most exciting news this year for Celsius has been the 1 August announcement of the partnership with Pepsi. Many investors were concerned about distribution and the dominance of Coca Cola and Pepsi in these areas, but Pepsi is going to make it rain for Celsius in terms of growth and innovation. Pepsi has a beautiful vision & mission of being at every meal a consumer has and when Celsius becomes part of those meals, it will be a great day for investors. Pepsis go-to-market capabilities are unmatched. Pepsi will open worlds for Celsius they did not even know existed.

Full Disclaimer: A significant portion (7%) of my USD portfolio is in Celsius, and I am still accumulating on a regular basis to get to 10%

Disclaimer: Nothing in this article should be seen as financial advice. Everything stated is for educational purposes. Only opinions are expressed.