Celsius manufactures a line of energy drinks branded as Celsius Heat that incorporate functional ingredients such as citrulline, glucuronolactone and taurine also with a suite of vitamins and a 300 mg dose of caffeine. The company also markets a line with branched chain amino acids as a recovery beverage.
Greater sales, distribution in North America and Europe
The company has broadening distribution in North America. CEO John Fieldy told analysts in an earnings call that in the past year the company has inked a deal that puts the beverage on the shelves of Kroger stores, the country’s largest collection of grocery stores, which operate under the King Soopers, City Market and other names.
The company also has growing distribution in Europe. In 2019 Celsius, which is based in Boca Raton, FL, completed the acquisition of Norwegian firm Func Food Group, which manufactures beverages and protein snacks, some of which Celsius might introduce into the US market in 2020. Sales in Europe increased 56% with the help of Func’s contribution, which began to felt on the company’s books from November on.
For the full year, Celsius hit $75.1 million in revenue, compared to $52.6 million from a year perviously. Fieldy said that upward curve is likely to continue.
“The macro trends across the industry continue to accelerate as more consumers seek healthier alternatives, less sugar, functional beverages versus conventional beverages,” he said.
“In the energy drink category, one of the fastest-growing in the beverage category, it grew approximately 8% in North America through 2019, and is anticipated by Euromonitor to be an $85 billion category globally by 2025,” Fieldy told the analysts. A transcript of the earnings call was posted yesterday on the site seekingalpha.com.
The only market in which revenue declined was in China, but this was expected as part of the company’s transition to a royalty model in partnership with Qifeng Food Group. The deal is expected to allow Celsius to recoup the investment it made in entering the market while allowing for reliable revenue in the future.
Potential COVID-19 impacts
Fieldy did field a question about the impact of the COVID-19 crisis on the company’s business. He said the company had proactively increased its inventories of raw materials, so supply constraints are not an issue for the moment.
“Obviously, things are changing rapidly. We are keeping inventories up and our raw materials up and feel we’re in a good position to weather a storm over the next several months, if needed,” he said.
The potential impact on future sales was harder to calculate, Fieldy said.
“A lot of our marketing initiatives, where we market at trade conferences, as we all know, have been canceled, which has the potential to have ramifications. But at this point, we have not seen any impact in our business, but that’s not to say there [won’t] be an impact in the second quarter potentially,” he said.