Is This the Next MONSTER Energy Drink Company?
Monster Energy took over the world soon after its 2002 launch. From UFC to NASCAR, and from skateboarding to skydiving, Monster sponsorships were everywhere over the past few decades. So much so that Monster seized the undisputed mantle of THE energy drink company. But its success did not go unnoticed.
Competitors flocked to the beverage market to elbow the leader to the sidelines and capture market share. One leading contender to the throne of top energy drink company is Celsius Holdings (CELH). This firm brings a new approach to the energy drink market at a time when innovation can separate a successful company from a mediocre one. So, what makes Celsius special?
Celsius 101
The Celsius Holdings company manufactures drinks, including a flagship product with a mix of natural ingredients, including:
- Taurine
- Guarana
- Green tea
- Ginger
This fits with some of the big trends in food and beverage today, with natural ingredients playing a key role.
Sales Growth Has Been On Fire
Celsius top line sales have been scintillating over the past few years.
In 2017, the company posted top line sales of $37 million, representing 58% growth over the year prior. By 2018, sales had grown another 45.5% to $52.6 million.
The explosive growth continued in 2019 when Celsius posted revenues of 42.9%, followed by 74% in 2020. In its most recent fiscal year, Celsius reported revenues of $314 million, representing a 140.4% year over year growth increase.
Next year, the forecasts are for sales to top $483 million and by 2025 the numbers are expected to reach a staggering $1.3 billion.
What Celsius Is Doing Differently?
A key strategic initiative that has separated Celsius from its pack of rivals is the firm’s direct store delivery network.
This distribution approach comprises shipping products directly to stores from the manufacturer’s production facility. By contrast, most drinks companies will use a distribution center connected with the store as a first stop.
Why is this so crucial?
Individual stores can restock inventory as soon as it sells out. Stores make more money and loyal customers are more satisfied. Store chains are therefore incentivized to stock Celsius. There are few better strategies in business than incentivizing those selling your product and Celsius has a slam dunk in this respect. It also ensures products are fresher than would otherwise be the case.
What Supply Chain Disruptions?!
Celsius hasn’t been immune to supply chain challenges but it’s not letting them slowdown growth. With that said, gross margins did decline from almost 48% in 2020 to just under 40% during the most recent fiscal year.
What is causing the decline in margins?
Higher transportation costs and input costs, such as aluminum cans. Regardless of the economic woes, EBITDA grew by 51%.
Brand Awareness Increasing
Celsius Holdings is featured in just under 120,000 locations across America. That represents a footprint increase of 72% year-over-year and comprises 92% of counties across the country.
Coolers have increased from 400 to 900 quarter-over-quarter, demonstrating accelerating growth.
A Stamp of Approval
The story of Celsius is clear: growth, Growth, GROWTH! With revenue up almost 300% over the past 3 years, Celsius has secured a place in the S&P SmallCap 600 index, an enviable stamp of approval.
As investment funds buy the S&P SmallCap 600, Celsius benefits because index funds have to buy CELH shares.
The bottom line is Celsius has both demonstrated extraordinary growth and has massive growth opportunity ahead. As the price has pulled back significantly in recent months, the value proposition is even more compelling and the odds are today’s prices will look like a steal in the years ahead.
