WEBVTT - The Incredible Rise of the Celsius Energy Drink 0:00:10.160 --> 0:00:14.000 Hello, and welcome to another episode of the Odd Lots podcast. 0:00:14.080 --> 0:00:16.360 I'm joll Wisenthal and I'm Tracy Alloway. 0:00:16.680 --> 0:00:20.560 Tracy, We're in the office drinking Celsia's energy drinks. I'm 0:00:20.600 --> 0:00:22.720 just going to start this one like really directly. 0:00:22.400 --> 0:00:25.280 Like, wait, should I do the ambient sound? Yeah? Okay, 0:00:29.080 --> 0:00:31.760 there we go. Okay, yes, you can't get better than 0:00:31.800 --> 0:00:34.920 being in the office drinking Celsius. It's not that early. 0:00:35.000 --> 0:00:37.320 Actually it's nine in the morning, so we needed the 0:00:37.360 --> 0:00:38.200 caffeine boost. 0:00:38.840 --> 0:00:40.560 This is actually my second one of the day, so 0:00:40.600 --> 0:00:43.000 I've had two. I'm on my second can of the 0:00:43.040 --> 0:00:47.000 Celsius energy drink, and also I had a coffee today. 0:00:47.040 --> 0:00:51.000 So people are always like, I love people are always asking, oh, 0:00:51.120 --> 0:00:53.279 does Joe just not sleep? How does he get up 0:00:53.280 --> 0:00:55.280 so early in the morning. The answer is no, he 0:00:55.400 --> 0:00:59.040 doesn't because he has like three celsiuses and two coffees 0:00:59.080 --> 0:00:59.960 and who knows what else. 0:01:00.120 --> 0:01:02.480 Okay, so I know we could just talk a lot 0:01:02.520 --> 0:01:06.920 about my weird sleep patterns or my caffeine consumption patterns. 0:01:07.240 --> 0:01:11.319 But speaking of Celsius holdings this energy drink that we're 0:01:11.520 --> 0:01:14.240 both drinking in the office right now, or speaking of 0:01:14.240 --> 0:01:17.600 Celsius It's owned by a company called Celsius Holding. This 0:01:17.760 --> 0:01:21.720 was like a three dollars stock in twenty eighteen. Today 0:01:21.760 --> 0:01:25.039 it's one hundred and sixty seven dollars stock. So just 0:01:25.080 --> 0:01:29.840 an absolutely extraordinary, mega home run winner for the company 0:01:29.880 --> 0:01:32.800 behind this energy drink. And the thing is, I don't 0:01:32.840 --> 0:01:35.280 know why, and I don't know why I'm drinking it, 0:01:35.360 --> 0:01:38.800 Like why am I drinking Celsius and not Monster or 0:01:38.840 --> 0:01:41.200 Red Bull? I don't know. It's something in the air well. 0:01:41.240 --> 0:01:43.520 I was going to ask, because you introduced me to 0:01:43.640 --> 0:01:45.320 Celsius and you're like, oh, we got to go get 0:01:45.360 --> 0:01:47.680 a Celsius And at the time had never heard of 0:01:47.720 --> 0:01:49.920 it before. How did you hear of it? Why did 0:01:49.960 --> 0:01:50.600 this become a thing? 0:01:50.720 --> 0:01:52.480 I think, like, you know, the cool I go to 0:01:52.520 --> 0:01:54.920 the gym and it seemed like the cool people at 0:01:54.920 --> 0:01:57.000 the gym were drinking it, or they had it in 0:01:57.080 --> 0:01:59.240 the they have it in the refrigerator at my gym, 0:01:59.360 --> 0:02:00.920 and I think, like, I don't know. I probably saw 0:02:00.960 --> 0:02:03.720 someone on Instagram drinking it, and then I started drinking, 0:02:03.800 --> 0:02:05.960 and then I posted about it, and then someone was like, oh, 0:02:05.960 --> 0:02:08.960 you know, it's publicly traded, which I didn't even realize, 0:02:09.480 --> 0:02:12.000 and then I've been obsessed partly, I don't know, like 0:02:12.000 --> 0:02:14.120 I've just sort of been fascinated, but like, where did 0:02:14.160 --> 0:02:14.639 it come from? 0:02:14.680 --> 0:02:14.720 What? 0:02:14.960 --> 0:02:17.480 Like how does this happen that a new brand emerges 0:02:18.240 --> 0:02:20.639 and we're all drinking it? Like where did it come? 0:02:20.720 --> 0:02:22.080 I just don't, like I want to know where it 0:02:22.080 --> 0:02:24.320 came from because it's now it's everywhere. 0:02:24.040 --> 0:02:25.120 Yeah, but I don't know why. 0:02:25.320 --> 0:02:25.560 Well. 0:02:25.639 --> 0:02:28.400 Also, the weird thing about energy drinks is I feel like, 0:02:28.639 --> 0:02:31.440 you know, if you go into a seven eleven or 0:02:31.480 --> 0:02:34.400 a odega or whatever, there are so many of that, 0:02:34.639 --> 0:02:36.880 so many, and there seem to be new ones all 0:02:36.919 --> 0:02:39.440 the time, and it's difficult to keep track, and yet 0:02:39.600 --> 0:02:42.880 some of them really do have staying power. So we 0:02:42.960 --> 0:02:47.320 did an episode previously about Monster that stock has been 0:02:47.440 --> 0:02:50.959 absolutely phenomenal over the years. Red Bull is the other 0:02:51.080 --> 0:02:54.040 classic one, And I don't know, it just feels like 0:02:54.280 --> 0:02:57.920 it's such an interesting product in that there must be 0:02:58.080 --> 0:03:01.440 insane amounts of competition, but if you can get it right, 0:03:01.760 --> 0:03:04.800 it seems like it can be really really profitable. 0:03:04.360 --> 0:03:06.440 Right, I mean, and in the end, like I mean 0:03:06.480 --> 0:03:09.200 I know that you know, like supposedly, like it says 0:03:09.240 --> 0:03:11.680 on the can of Celsius, it's fat burning. I'm like 0:03:11.760 --> 0:03:14.000 skeptical of any of those claims, but you know whatever, 0:03:14.000 --> 0:03:16.360 I'm not a scientist, but like they're all seem like 0:03:16.400 --> 0:03:19.639 the same, right, which is a lot of caffeine and 0:03:19.680 --> 0:03:23.440 then either some sugar or an artificial sweetener of various swords, 0:03:23.480 --> 0:03:25.799 some different flavors. None of them are like that great. 0:03:25.840 --> 0:03:27.679 You're not really drinking them for the taste. 0:03:27.440 --> 0:03:30.200 Not really, but again, like they are kind of the same. 0:03:30.240 --> 0:03:32.400 So why do people gravitate? Like why do some people 0:03:32.480 --> 0:03:35.400 drink Celsius, who drink some monster who drinks some red us? 0:03:35.400 --> 0:03:39.200 Who is drinking those Swedish fish flavored energy drinks? So 0:03:39.280 --> 0:03:40.040 this is what I want to know. 0:03:40.200 --> 0:03:41.920 So this gets to the other thing, which is that, 0:03:42.000 --> 0:03:44.080 as you mentioned, if you go into any bodeg or something, 0:03:44.120 --> 0:03:47.000 love it. There's so many different brands of energy drinks 0:03:47.040 --> 0:03:49.680 these days, and some of them are like really weird, 0:03:49.720 --> 0:03:52.640 Like there's Skittles flavored ones and I think an oreoslavored 0:03:52.680 --> 0:03:55.440 one and a Swedish fish flavored one and ones in 0:03:55.680 --> 0:03:58.280 clearly like a gamers, I don't. It's all very strange. 0:03:58.640 --> 0:04:00.920 So how do you win? Why do some companies win? 0:04:01.000 --> 0:04:03.520 And you know, you mentioned, you know, some of them 0:04:03.520 --> 0:04:06.760 are just such big winners, like Monster as you mentioned, 0:04:07.400 --> 0:04:09.000 you know, it's one of the best performing stocks of 0:04:09.040 --> 0:04:11.600 all time. It's been better performed than Amazon over the year. 0:04:12.000 --> 0:04:15.000 Celsia is obviously just incredible. So like, there's so much 0:04:15.040 --> 0:04:17.760 money in the space for those companies that can get 0:04:17.760 --> 0:04:20.800 it right between distribution, branding, and product, and so I 0:04:20.800 --> 0:04:22.880 think the question is like, what does it take. Why 0:04:22.960 --> 0:04:24.719 do some companies like catch fire? 0:04:25.000 --> 0:04:26.800 Yes, I have many, many questions. 0:04:26.960 --> 0:04:29.760 I have many questions. So in twenty twenty one, we 0:04:29.839 --> 0:04:33.520 did an episode, as you mentioned, on the incredible performance 0:04:33.560 --> 0:04:37.160 of Monster Beverage. Our guest then was Mark Astracan. He's 0:04:37.200 --> 0:04:39.880 an analyst at Stepha Nicholas, and we have him back 0:04:40.240 --> 0:04:42.560 two years later. Actually that was February twenty twenty one, 0:04:42.600 --> 0:04:44.880 so about two and a half years later, and now 0:04:44.880 --> 0:04:48.520 we are talking about a new energy drink winner in Celsius. 0:04:48.520 --> 0:04:50.960 So Mark, thank you for coming back on odd Lots. 0:04:51.080 --> 0:04:53.400 Yeah, thank you for having me. I think the last 0:04:53.400 --> 0:04:55.080 time I was doing this, I was locked in my 0:04:55.400 --> 0:04:58.360 yeah six year old son's bedroom doing this. It's nice 0:04:58.360 --> 0:04:59.320 to be in person. 0:05:00.000 --> 0:05:03.200 In person, all three of us you were drinking the sparkling. 0:05:03.320 --> 0:05:07.400 It's apparently the top selling Celsius flavor. How do you 0:05:07.440 --> 0:05:09.320 get to be the energy drink guy? 0:05:09.760 --> 0:05:14.279 You show up? So I started covering Monsters, the only 0:05:14.440 --> 0:05:17.920 publicly traded energy drink company, probably about oh gosh, seventeen 0:05:18.160 --> 0:05:20.960 or so years ago. At the time, it was, hey, 0:05:21.160 --> 0:05:22.719 this is a fad. When is it going to go away? 0:05:22.760 --> 0:05:26.720 And why are you recommending this thing? And seventeen years later, 0:05:26.880 --> 0:05:29.680 nobody's asking about the fad piece, just about the new 0:05:29.839 --> 0:05:31.640 brands coming in. So it's sort of like I can't 0:05:31.640 --> 0:05:33.040 get out of my own way at this point. People 0:05:33.080 --> 0:05:34.839 want to talk about the space and it's sort of 0:05:34.960 --> 0:05:35.839 ballooned around me. 0:05:36.320 --> 0:05:38.880 How many energy drinks do you need to drink as 0:05:38.960 --> 0:05:39.760 part of this job? 0:05:40.640 --> 0:05:41.560 That's a good question. 0:05:42.320 --> 0:05:44.640 On certain days you can drink a lot. On certain days, 0:05:44.760 --> 0:05:46.200 you get home at like nine o'clock at night and 0:05:46.240 --> 0:05:48.440 you wonder why your hands are still shaking. And you remember, right, 0:05:48.480 --> 0:05:50.080 I had six or seven of these over the course 0:05:50.120 --> 0:05:52.640 of the day, especially during earning season, during trips to 0:05:53.160 --> 0:05:55.680 go see energy drink companies, to go to trade shows 0:05:55.880 --> 0:05:56.400 and whatnot. 0:05:56.480 --> 0:05:59.080 Yes, Oh, we're going to talk for like three hours 0:05:59.120 --> 0:06:01.600 about this. We're going to go. No, But it's interesting, 0:06:01.640 --> 0:06:04.960 you know. I remember so like right before I want 0:06:05.000 --> 0:06:07.159 to get to like why are we drinking Celsius and 0:06:07.200 --> 0:06:09.600 not others? But I but you know, right before the 0:06:09.640 --> 0:06:11.560 recent Celsius earnings and I think they hit it out 0:06:11.560 --> 0:06:14.680 of the park. I went to my local bodega because 0:06:14.680 --> 0:06:17.159 I wanted to pick one up before going to the gym. 0:06:17.800 --> 0:06:19.720 And I looked and I didn't see them. They were 0:06:19.720 --> 0:06:22.320 like none on the refrigerator. I'm like, oh, what's going on. 0:06:22.600 --> 0:06:25.160 It turned out the answer was literally the day before, 0:06:25.839 --> 0:06:28.600 they got a whole new Celsius refrigerator and so they 0:06:28.640 --> 0:06:31.080 had like the Celsius had been moved to their own 0:06:31.120 --> 0:06:33.800 refrigerator within the bodega, and they had way more. I 0:06:33.839 --> 0:06:35.839 just didn't see it at first. So that was like 0:06:35.880 --> 0:06:37.320 assigned to me as like, oh man, they must be 0:06:37.360 --> 0:06:39.919 like doing really well and they must be moving a 0:06:39.920 --> 0:06:41.760 lot of product if like, you know, the celt there's 0:06:41.800 --> 0:06:46.040 a special Celsius branded fridge. Though it is like when 0:06:46.080 --> 0:06:48.560 you like do your work as an energy drink analyst, 0:06:48.839 --> 0:06:50.520 is that what you're looking at you counting the number 0:06:50.520 --> 0:06:52.440 of cans on the shelf, Like what is that into 0:06:52.480 --> 0:06:53.479 the sort of the field work. 0:06:53.680 --> 0:06:55.720 Probably back in the day you you could do that. 0:06:55.880 --> 0:06:57.919 At this point, you're you're talking to folks who are 0:06:58.160 --> 0:07:00.440 are putting into the product on the shelf, talking to 0:07:00.440 --> 0:07:02.520 the distributors that are that are managing the folks that 0:07:02.600 --> 0:07:04.599 are going into stores every day and resetting. And you 0:07:04.640 --> 0:07:07.360 also have what we like to call scanner data, which 0:07:07.400 --> 0:07:10.280 is basically data that we pay for that measures how 0:07:10.360 --> 0:07:12.920 much product is purchased on a weekly or bi weekly 0:07:13.160 --> 0:07:14.800 basis a sort of cheat and you get to see 0:07:14.840 --> 0:07:16.440 the revenue, you get to see the volumes, and you 0:07:16.480 --> 0:07:20.000 can slice and dice the data into grocery stores and 0:07:20.200 --> 0:07:22.320 convenience stores and all sort of which ways and have 0:07:22.320 --> 0:07:23.320 a whole lot of fun with it. 0:07:23.600 --> 0:07:26.360 My favorite brand of analyst research is always when they 0:07:26.400 --> 0:07:29.200 just send people outside to the stores, like they send 0:07:29.200 --> 0:07:31.840 them all to the shopping mall to measure like retail 0:07:31.840 --> 0:07:34.880 footfall and things like that. But Mark, why don't we 0:07:35.320 --> 0:07:37.880 start sort of at the beginning and maybe go back 0:07:37.920 --> 0:07:42.560 in time. Because Joe mentioned the Celsius stock chart, I'm 0:07:42.600 --> 0:07:45.000 looking at it going back to I think two thousand 0:07:45.040 --> 0:07:48.800 and seven. What is this company where they always making 0:07:48.840 --> 0:07:52.200 these energy drinks? And because Celsius itself, I feel like 0:07:52.720 --> 0:07:55.960 is fairly new, or at least I had only heard 0:07:56.000 --> 0:07:58.760 about it relatively recently. What have they been doing for 0:07:58.840 --> 0:08:02.080 the past, like more than a decade. 0:08:02.240 --> 0:08:06.000 Well, essentially the same thing. It's just a question of 0:08:06.320 --> 0:08:10.440 showing up and getting increasing brand awareness, people knowing the product, 0:08:10.440 --> 0:08:14.040 and sort of trying it and trying it again. I 0:08:14.080 --> 0:08:16.720 like to call it a ten or fifteen year overnight success, 0:08:16.760 --> 0:08:18.840 and that the product has always essentially been the same. 0:08:18.880 --> 0:08:21.000 You have a lot more iterations of it today, but 0:08:21.080 --> 0:08:23.960 essentially it's the same product. And they had struggles for 0:08:24.000 --> 0:08:25.800 a while in terms of getting the product on shelf, 0:08:25.800 --> 0:08:27.520 getting people to understand what it was or why they 0:08:27.560 --> 0:08:29.960 wanted to drink it, and then it's sort of blossomed 0:08:29.960 --> 0:08:32.600 as you had more product on shelf. You know. The joke, 0:08:32.640 --> 0:08:34.680 of course, is like eighty ninety percent of success is 0:08:34.679 --> 0:08:36.040 showing up, and then once you get there, you have 0:08:36.080 --> 0:08:38.520 to figure out how to keep people coming back, in 0:08:38.559 --> 0:08:41.839 this case, consuming the product. And so I think that's 0:08:41.880 --> 0:08:44.200 an interesting sort of story in and of itself, in 0:08:44.240 --> 0:08:47.040 that you have to understand how to get on shelf, 0:08:47.120 --> 0:08:50.079 or understand why these products get on shelf, because that's 0:08:50.120 --> 0:08:53.400 really what drives a lot of the opportunity to be successful. 0:08:53.440 --> 0:08:56.880 So as you can imagine, it starts with money. And 0:08:56.920 --> 0:09:00.400 so you have a bunch of beer and the legacy 0:09:00.440 --> 0:09:04.199 soft drink distributor selling the stuff, and they're always on 0:09:04.240 --> 0:09:06.959 the lookout for the newest and latest and greatest products 0:09:07.040 --> 0:09:10.599 to increase consumption of stuff on their trucks. Right, you 0:09:10.679 --> 0:09:12.920 think about a beer or soft drink distributor, You've had 0:09:12.920 --> 0:09:15.199 a truck, You've got stuff on shelf, and so if 0:09:15.200 --> 0:09:17.720 it's selling well, great. If it's not selling well, you're 0:09:17.720 --> 0:09:19.319 trying to figure out what you can put on the shelf. 0:09:19.360 --> 0:09:22.319 And so from a volume standpoint, you think about beer distributors, 0:09:22.640 --> 0:09:24.600 and volumes have been declining for a long time, and 0:09:24.640 --> 0:09:27.720 so they're always looking for things, especially outside of alcohol, 0:09:27.800 --> 0:09:30.640 to put on those trucks that ultimately sell. And so 0:09:30.679 --> 0:09:33.440 if you go back fifteen years ago, Monster, which was 0:09:33.480 --> 0:09:35.640 the up and comer at the time, goes and does 0:09:35.640 --> 0:09:38.200 a deal with Anheuser Bush. A few years later, Coke 0:09:38.240 --> 0:09:39.960 gets a little bit jealous and says, man, this is 0:09:40.000 --> 0:09:41.760 doing really well. They strike a deal, so you have 0:09:41.880 --> 0:09:44.679 fifty percent of Monster's business in the late two thousands 0:09:44.720 --> 0:09:47.600 going through Monster or going through antzer Bush, fifty percent 0:09:47.679 --> 0:09:51.840 going through Coke. Twenty fourteen, Monster and Coke announce a 0:09:51.840 --> 0:09:54.640 big asset swap, including Coke taking what's now a twenty 0:09:54.640 --> 0:09:57.720 percent steak in Monster. As part of the deal, Monster 0:09:58.400 --> 0:10:01.040 has to put all of its distribution into the Coke system, 0:10:01.080 --> 0:10:03.400 so you leave fifty percent of the enheuzer Bush network 0:10:03.840 --> 0:10:08.120 high and dry. They're looking for products to replace our 0:10:08.160 --> 0:10:10.200 math is like a billion dollars of profit at that 0:10:10.280 --> 0:10:13.360 point that the beer distributors lost when Monster decided to 0:10:13.360 --> 0:10:15.560 go to the coke system. So we're talking lots and 0:10:15.600 --> 0:10:18.040 lots of money. We're also just talking about trucks to 0:10:18.080 --> 0:10:19.480 go to the same store at the same time of 0:10:19.559 --> 0:10:21.760 day every day with the same driver. You already paid 0:10:21.760 --> 0:10:23.360 for the truck, and so you're trying to figure out 0:10:23.360 --> 0:10:26.160 a product that you can put on there to make money. 0:10:26.320 --> 0:10:28.680 So those distributors went out and found a brand called 0:10:28.679 --> 0:10:30.160 Bang that was. 0:10:30.280 --> 0:10:31.960 I've had some of that. It's not bad. It's like 0:10:32.000 --> 0:10:33.959 their flavors is like they have their a little more 0:10:33.960 --> 0:10:36.600 candy flavored, like bubblegum flavored, and it's a little I 0:10:36.640 --> 0:10:38.720 go back and forth, but anyway, keep going. 0:10:39.160 --> 0:10:41.959 Yeah, So Bang replaces Monster in a lot of those 0:10:42.000 --> 0:10:44.760 nhezerd Bush houses. They do it across the country. They 0:10:44.760 --> 0:10:46.880 move from the fifty percent to one hundred percent distribution. 0:10:47.040 --> 0:10:50.480 By late twenty seventeen twenty eighteen, the product is just 0:10:50.600 --> 0:10:54.280 flying off shelves hundreds and hundreds of percent growth. The 0:10:54.320 --> 0:10:56.880 brand goes from a nothing sort of like where Celsius 0:10:57.000 --> 0:10:59.240 was ten fifteen years ago, to be four or five 0:10:59.320 --> 0:11:01.320 market share and arts to get the attention of Monster 0:11:01.360 --> 0:11:04.240 and a whole bunch of these other companies. By twenty nineteen, 0:11:04.320 --> 0:11:07.440 run rate revenues were probably approaching a billion dollars at retail. 0:11:07.559 --> 0:11:09.960 It's got something in the high single digits of market share. 0:11:10.280 --> 0:11:13.760 Like a lot of brands, you look for the better, 0:11:14.040 --> 0:11:17.560 the better distribution. And so by early twenty twenty, Pepsi 0:11:17.600 --> 0:11:20.440 decides to go out and buy a brand that they 0:11:20.480 --> 0:11:22.760 had long time distributed called Rockstar, because Rockstar had an 0:11:22.800 --> 0:11:25.160 exclusive relationship with Pepsi that didn't allow Pepsi to sell 0:11:25.200 --> 0:11:28.280 any other energy drink brands. And once they bought rock Star, 0:11:28.480 --> 0:11:31.280 they allowed themselves to go out and do more distribution deals, 0:11:31.280 --> 0:11:34.800 including going after Bang. So early twenty twenty, Bang moves 0:11:34.840 --> 0:11:37.680 over to the Pepsi system. The Anheuser Bush distributors who've 0:11:37.720 --> 0:11:39.440 been selling Bang and making lots of money doing it, 0:11:39.480 --> 0:11:41.840 are like, uh, oh, now what And they go out 0:11:41.880 --> 0:11:45.120 and they find this brand Celsius, and they put it 0:11:45.160 --> 0:11:47.000 on trucks, and essentially at that point it's kind of 0:11:47.080 --> 0:11:49.240 muscle memory to put the product on the same space 0:11:49.280 --> 0:11:52.000 that Bang was losing to go over to the Pepsi system, 0:11:52.520 --> 0:11:55.080 and all of a sudden, Celsius is everywhere and obviously 0:11:56.280 --> 0:11:58.040 get on shelf. As I said, eighty ninety percent of 0:11:58.040 --> 0:11:59.800 successes getting there, and then once you get there, you've 0:11:59.800 --> 0:12:00.880 got to keep it. 0:12:17.120 --> 0:12:19.400 So Monster kind of shot itself in the foot with 0:12:19.480 --> 0:12:21.280 the coke deal. It sounds like, or at least they 0:12:21.320 --> 0:12:24.080 made a hole for a potential competitor to come in 0:12:24.120 --> 0:12:24.520 and fill. 0:12:24.920 --> 0:12:28.240 Well they didn't. They didn't. Monster stocks probably up four 0:12:28.280 --> 0:12:31.160 or five x. This is true from from twenty fourteen 0:12:31.160 --> 0:12:36.600 twenty fifteen. Monster got great distribution through coke domestically. But 0:12:36.679 --> 0:12:39.599 what they more goot was. 0:12:39.440 --> 0:12:43.439 Joe's had so much energy just knocked over my. 0:12:43.480 --> 0:12:45.400 Can on my keyboard. I was worried I was going 0:12:45.400 --> 0:12:48.000 to do that. Well, okay, keep going. 0:12:48.720 --> 0:12:52.600 They really work. We're like literally buzzing in the studio. 0:12:52.679 --> 0:12:55.439 I keep going, keep going. So yeah, Monster also got 0:12:55.480 --> 0:12:58.600 it big international distribution through Coke. You know, Coke is 0:12:59.240 --> 0:13:02.480 one of the biggest, not the biggest, and best distributed 0:13:02.920 --> 0:13:05.720 brands around the world, and they have their distribution system. 0:13:05.800 --> 0:13:09.600 So Monster got a great, great distribution from Coke. But yes, 0:13:09.679 --> 0:13:13.000 they also gave up their slots with others and sort 0:13:13.040 --> 0:13:15.160 of created opportunities for other brands to come in. But 0:13:15.200 --> 0:13:17.559 I also think, and we'll probably touch on this, Yeah, 0:13:17.600 --> 0:13:21.040 there's an evolving consumer taste going on here as well. Right, 0:13:21.080 --> 0:13:23.079 so it's not just hey, I want to drink this Celsius. 0:13:23.080 --> 0:13:25.800 There's a reason behind it, or why Ghost or See 0:13:25.800 --> 0:13:28.800 four or Alanni New or all these other upstart brands 0:13:29.040 --> 0:13:30.679 have done what they've been able to do. 0:13:31.320 --> 0:13:33.360 I definitely want to get into that. But before we do, 0:13:33.520 --> 0:13:38.079 I have a sort of like distribution versus customer preference question. 0:13:38.360 --> 0:13:41.800 And I actually don't drink a lot of energy drinks 0:13:41.800 --> 0:13:43.520 on a normal basis, but I do drink a lot 0:13:43.520 --> 0:13:47.079 of diet coke and things like that, and my local 0:13:47.480 --> 0:13:51.440 cvs they are constantly running out of. Actually the irony 0:13:51.559 --> 0:13:54.960 is I mostly drink caffeine free diet coke, and they're 0:13:55.000 --> 0:13:57.679 constantly running out of it, Like it is a certainty 0:13:57.880 --> 0:14:00.720 that every week they will run out of cafe free coke, 0:14:01.040 --> 0:14:04.680 but they will have hundreds of bottles of vanilla flavored 0:14:04.720 --> 0:14:07.600 coke and god knows what else. And my question is, like, 0:14:07.640 --> 0:14:10.760 it is clear that consumers are expressing a preference here 0:14:10.840 --> 0:14:13.120 by buying the stuff they like and leaving the stuff 0:14:13.160 --> 0:14:16.200 that they don't, And yet the shelves seem consistently filled 0:14:16.200 --> 0:14:18.960 with it feels like things that the brands are trying 0:14:19.000 --> 0:14:22.800 to push. So how how do the decisions about what 0:14:22.960 --> 0:14:26.040 to stalk and distribute actually get made? 0:14:27.040 --> 0:14:28.680 Well, I guess in theory it should get made on 0:14:28.880 --> 0:14:31.520 analytics and what people are consuming, and so going through 0:14:31.520 --> 0:14:33.920 the data that I alluded to before and what people 0:14:34.000 --> 0:14:37.360 are purchasing, I mean, essentially that's what drives the decision. 0:14:37.400 --> 0:14:39.680 I think your caffeine free diet Coke is probably one 0:14:39.680 --> 0:14:42.560 of those brands that that maybe a little smaller today 0:14:42.560 --> 0:14:44.200 than it was ten or fifteen years ago. 0:14:44.040 --> 0:14:46.880 And no cares about my prize. You know. 0:14:46.880 --> 0:14:48.840 It's sort of like there was an old Simpsons episode 0:14:48.840 --> 0:14:51.800 when I think somebody bought al Gore's book and like 0:14:51.920 --> 0:14:54.600 all of these like Mechanaians in it like back to 0:14:54.680 --> 0:14:56.080 him and all of a sudden like he you know, 0:14:56.720 --> 0:14:58.520 somebody bought the book and he put on a record 0:14:58.560 --> 0:14:59.840 and said, celebrate good times. 0:14:59.840 --> 0:15:03.520 You know, I remember this episode. I remember that. 0:15:04.160 --> 0:15:04.320 You know. 0:15:04.360 --> 0:15:06.880 I'm sort of thinking there's like that like Domino meme. 0:15:07.000 --> 0:15:10.080 It's like monster signs to deal with cocaine. Then like 0:15:10.400 --> 0:15:12.680 one distributor has a hole to fill, and then the 0:15:12.760 --> 0:15:14.800 next distributor then has a hole to fill, and so 0:15:15.040 --> 0:15:18.080 like there's big game of musical chairs and suddenly we're 0:15:18.160 --> 0:15:22.280 drinking celsius. So my one of my questions is if 0:15:22.280 --> 0:15:25.480 you look at some of these big distributors, like a 0:15:25.520 --> 0:15:28.800 Pepsi or an Anheuser Bush, that is sort of senses Okay, 0:15:29.280 --> 0:15:32.240 beer consumption is down. We need something to fill this 0:15:32.320 --> 0:15:36.080 gap because we just lost this client or partner to 0:15:36.120 --> 0:15:39.120 another distributor, et cetera. What is the process by which 0:15:39.160 --> 0:15:41.960 they go out and find the next one? Is it 0:15:42.000 --> 0:15:44.920 a sort of mutual bidding thing where like the small 0:15:45.040 --> 0:15:48.000 upstart energy drink companies like try to fill that spot, 0:15:48.400 --> 0:15:51.280 Like how does how does that process work? Do they 0:15:51.280 --> 0:15:53.880 look for like a brand that seems to have something 0:15:54.000 --> 0:15:55.800 like talk to us about where that how that works. 0:15:56.000 --> 0:15:58.120 I think it's it's all of the above, okay, And 0:15:58.120 --> 0:16:00.680 I don't think there's any special secrets here. I think 0:16:00.680 --> 0:16:02.880 you can kind of arrive at the same answer in 0:16:02.880 --> 0:16:05.280 a lot of different ways. Remember, you have all these 0:16:05.360 --> 0:16:07.160 these companies that are going in and out of stores 0:16:07.280 --> 0:16:09.920 all the time that they're talking to distributors, talking to companies, 0:16:09.960 --> 0:16:11.320 and so they have some idea of what's selling and 0:16:11.360 --> 0:16:13.280 what's not selling. They have some idea of where consumer 0:16:13.280 --> 0:16:16.200 tastes are evolving to, and so some of it is 0:16:16.280 --> 0:16:18.560 you're just trying to find the next big thing, even 0:16:18.600 --> 0:16:21.800 though there are various examples where you've tried and failed 0:16:21.840 --> 0:16:23.440 and you've moved on to the next thing. And so 0:16:24.080 --> 0:16:25.840 from their standpoint, you can put a whole bunch of 0:16:25.840 --> 0:16:28.240 stuff on the truck, and what works you stick, and 0:16:28.680 --> 0:16:30.480 the rest you kind of move on with. And I 0:16:30.480 --> 0:16:32.080 think there's a lot of examples of that. I think 0:16:32.080 --> 0:16:35.040 people talk about the big winners over time and forget 0:16:35.040 --> 0:16:37.320 some of the smaller brands at the same time that 0:16:37.360 --> 0:16:39.640 have tried and fail. I mean, gosh, remember the Jolt 0:16:39.680 --> 0:16:42.320 brand in the eighties, right that that was an energy 0:16:42.360 --> 0:16:45.680 drink before it's time, and yet it never really took 0:16:45.720 --> 0:16:46.920 off just to drink serge. 0:16:47.160 --> 0:16:48.800 When I was in high school, it was another one 0:16:48.800 --> 0:16:50.680 that we used to we used to get I mean 0:16:50.720 --> 0:16:53.880 obviously like a distribution and just sort of the pure 0:16:53.960 --> 0:16:57.080 muscle of the trucks and everything, and shelf space is important, 0:16:57.520 --> 0:17:00.800 But like what about like the role of and so 0:17:00.920 --> 0:17:03.800 you know, Celsius seems to have like an athletic like 0:17:03.840 --> 0:17:06.600 I mentioned, like I saw the people of my gym drinking. 0:17:06.720 --> 0:17:08.960 They're like, oh, what's that? And like it seems like 0:17:08.960 --> 0:17:11.800 they've like sort of like branded themselves as like kind 0:17:11.840 --> 0:17:13.600 of the one for like athletes, and they have this 0:17:13.680 --> 0:17:16.159 like fat burning plane, which, like I said, I'm skeptical of. 0:17:16.520 --> 0:17:19.600 But like how significant is that is that in terms 0:17:19.600 --> 0:17:22.240 of the staying power for these companies? 0:17:22.280 --> 0:17:25.320 Olnnie Knew is supposed to have vitamins as well, right. 0:17:25.080 --> 0:17:28.320 They all have vitamins. Oh really, Monster. 0:17:28.600 --> 0:17:30.439 Vitro Monster has vitamins. 0:17:30.480 --> 0:17:33.040 Of course, you can get your B twelve fixed anytime 0:17:33.040 --> 0:17:33.360 you want. 0:17:34.520 --> 0:17:36.119 No more flintstones vitamins for. 0:17:36.200 --> 0:17:41.080 Me, something like that. I think it's it's it's it 0:17:41.160 --> 0:17:44.200 evolves into a question of who's drinking. This in brand positioning, 0:17:44.240 --> 0:17:47.359 right if you go back fifteen twenty years ago and 0:17:47.400 --> 0:17:51.000 maybe even longer, Red Bull created this category in most 0:17:51.040 --> 0:17:53.280 of the world, but it evolved into a product that 0:17:53.400 --> 0:17:56.080 was consumed or still is consumed by eighteen to thirty 0:17:56.080 --> 0:18:00.440 five year old, largely white collar males, more can assumed 0:18:00.520 --> 0:18:03.320 on premise than any other brand, meaning bars and restaurants. 0:18:04.320 --> 0:18:08.560 Monster decided that they wanted to go after a different clientele. 0:18:08.680 --> 0:18:12.119 They offered a sixteen ounce can. They geared it on 0:18:12.200 --> 0:18:17.879 a more value oriented proposition, selling essentially twice the volume 0:18:17.920 --> 0:18:20.600 for the same price as Red Bull. It evolved into 0:18:20.640 --> 0:18:24.280 more of a blue collar construction workers sort of not 0:18:24.560 --> 0:18:28.439 on premise, not bar and restaurant business that was still 0:18:28.600 --> 0:18:32.520 is the core consumer of Monster today. Rockstar was a 0:18:32.560 --> 0:18:34.960 brand around fifteen twenty years ago that did kind of 0:18:35.000 --> 0:18:37.560