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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of The Odd Lots Podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy Allaway.

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Speaker 2: Tracy, I have to say I've been feeling a little

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Speaker 2: lethargic this week, a little bit under the weather. No, no, yeah,

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Speaker 2: you know, it's just you know, sometimes you wake up

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Speaker 2: on the wrong side of the bed anyway. But uh,

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Speaker 2: I'm feeling a little bit better because I've been consuming

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Speaker 2: a lot of caffeine today.

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Speaker 3: Yes, I'm looking at you in the studio right now,

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Speaker 3: and you have with you another Celsius. Yes, what's the

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Speaker 3: flavor on your one?

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Speaker 2: I am drinking an Arctic Vibe, which is a sparkling

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Speaker 2: frozen berry edition. I don't know, I have to I'm not,

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Speaker 2: I'm sure like if in a blind taste test out

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Speaker 2: go this is berry. But it's very flavorful and it's

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Speaker 2: sugar free, and it's perked me up and I feel

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Speaker 2: very keyed up and ready to go. You are also

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Speaker 2: drinking as Celsius. What are you drinking?

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Speaker 3: I have Cosmic Vibe, a sparkling fruit punch and it

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Speaker 3: does actually taste like carbonated kool Aid. It's sort of

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Speaker 3: nostalgic in some way.

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Speaker 1: But the thing that.

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Speaker 3: Interests me is, you know, I'm looking at the branding

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Speaker 3: and the ads on the can. And we've talked about

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Speaker 3: this before. We did a whole episode about Celsius. But

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Speaker 3: the interesting thing to me is how this is slightly

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Speaker 3: different from other energy drinks. So it talks about obviously

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Speaker 3: providing energy, but also accelerating metabolism and burning body fat.

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Speaker 3: And I was going through the ingredients earlier and it

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Speaker 3: has biotin in it, which is something that I take

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Speaker 3: for like hair and skin and nails and stuff. So

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Speaker 3: I guess I don't need to take supplements anymore. I

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Speaker 3: can just drink Celsius.

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Speaker 2: I supposedly you could just drink Celsius.

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Speaker 1: No.

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Speaker 2: I'm fascinating for this for all reasons, for all kinds

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Speaker 2: of reasons. I mean, we've talked about energy drinks for

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Speaker 2: a while. We did a story about the incredible rise

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Speaker 2: of episode about Monster a few years ago. One of

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Speaker 2: the stocks that's actually outperformed Amazon over the same time period.

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Speaker 2: And if you go into any local deli or bodega

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Speaker 2: or seven to eleven these days, you just see this wall,

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Speaker 2: and the wall just keeps getting bigger of drinks, and

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Speaker 2: many of them highly caffeinated energy drinks. And it's sort

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Speaker 2: of fascinating to me, like, there are all these energy

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Speaker 2: drinks out there that exist, how is their room for more?

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Speaker 2: It's like they all like right, like you like basically

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Speaker 2: want to consume one and you get a jolt of

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Speaker 2: caffeine and you go about your day. It's amazing that

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Speaker 2: despite this maturity and this size, and we had a

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Speaker 2: red Bull and Monster and all there's that, yet somehow

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Speaker 2: there could still be room for another competitor to seemingly

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Speaker 2: I know it's never coming out of nowhere, but seemingly

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Speaker 2: coming out of nowhere.

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Speaker 3: Yeah, this is the thing that fascinates me too. So

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Speaker 3: we don't just have different brands of energy drinks, like

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Speaker 3: within the brands themselves, there are so many different flames

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Speaker 3: now and options. It's kind of amazing. And again, when

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Speaker 3: you go into the store, you see this sort of

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Speaker 3: rainbow of cans on display. The other thing that interests

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Speaker 3: me is the distribution question. Yes, so I'm always curious,

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Speaker 3: like who makes the decisions of what ends up on

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Speaker 3: the shelves in your local seven to eleven or Circle

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Speaker 3: K or Dwayne Reid or whatever, like, how do those

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Speaker 3: specific flavors get chosen much less even the brands, right,

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Speaker 3: And I think this is something that's come up in

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Speaker 3: a number of episodes now, just how important distribution can

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Speaker 3: actually be to these particular types of products.

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Speaker 2: Well, I think we should just jump right into it.

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Speaker 2: We really do have the perfect guest because today we're

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Speaker 2: going to be speaking with John field Ley. He is

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Speaker 2: the president and CEO of Celsia's holdings. He's been CEO

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Speaker 2: since twenty seventeen, been with it's the company for twelve years.

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Speaker 2: And we're going to ask all these questions about how

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Speaker 2: how this all works, how you rise to the top,

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Speaker 2: and what is clearly a very out of the field.

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Speaker 2: So John, thank you so much for coming on outlots.

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Speaker 4: Glad to be here, Joe excited at Tracy. It's exciting.

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Speaker 4: I like to tell you brought in our Cosmic five. We

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Speaker 4: love the flavors on that fruit punch refreshing. That's what

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Speaker 4: it's all about. Glad to be here, all right.

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Speaker 2: I have a question. So, like a year ago, I

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Speaker 2: started noticing that all the fit and cool looking people

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Speaker 2: at my gym were drinking Celsius, and then I was like, well,

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Speaker 2: I want to be one of the fit and cool

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Speaker 2: looking people at the gym. So I then bought as Celsius.

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Speaker 2: What happened? Celsius has been around a long time, but

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Speaker 2: suddenly over the last year, year and a half, maybe

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Speaker 2: two years, I started seeing it somewhere. What happened a

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Speaker 2: year and a half ago? That suddenly was that a

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Speaker 2: thing that you guys did? Was it word of mouth?

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Speaker 2: What what suddenly happened? That's sort of really like I

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Speaker 2: started seeing it everywhere?

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Speaker 4: Yeah, I mean when you found us at the gym.

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Speaker 4: The brand's been around for over fifteen years. We built

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Speaker 4: it in the gyms and health clubs, at Vitamin C

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Speaker 4: GNC golds in twenty four hour, those are the likes.

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Speaker 4: If you're going back only a year and a half

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Speaker 4: ago and you were talking about your comments on the

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Speaker 4: intro about distribution. We partner with Pepsi a year ago.

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Speaker 4: As our distribution projects show that really expanded the availability

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Speaker 4: of Celsius to where we are today, which they call

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Speaker 4: a ninety eight percent ACV. So there's reporting stores that

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Speaker 4: report sales for consumer products into IRI Data or Nielsen

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Speaker 4: they call it, and then looking at the total population

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Speaker 4: of the stores reporting in Pepsi has been able to

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Speaker 4: get us through about ninety eight percent ACV, So we

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Speaker 4: still got a lot of work to do on the

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Speaker 4: placements in each store, but in general, you should be

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Speaker 4: able to find, you know, Celsius probably in almost every

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Speaker 4: retailer in the United States ort least ninety eight percent

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Speaker 4: of them. So the data says, I.

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Speaker 3: Have a really straightforward question before we dig into some

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Speaker 3: of the specifics of this particular business. But how much

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Speaker 3: caffeine do you need to consume to be CEO of Celsius?

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Speaker 3: How much do you drink on a daily They.

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Speaker 4: Drink Yeah, you know, I started the warning off. I

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Speaker 4: have probably two cans a day. I have a can

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Speaker 4: in the morning Celsius in the morning, and then usually

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Speaker 4: have all of my lunch. So drinking a watermelon right now?

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Speaker 4: So which is dynamite in a great flavor? All right?

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Speaker 3: So you mentioned distribution and the deal with Pepsi. My

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Speaker 3: understanding from the previous episode we did with Mark ASTERCN

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Speaker 3: is that a lot of this business is about distribution,

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Speaker 3: and you struck that deal with Pepsi. Monster has a

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Speaker 3: deal with Coke. From what I remember, how do those

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Speaker 3: distribution deals actually come into being. What are the conversations actually.

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Speaker 4: Like, Yeah, well, you know, distribution for consumer product companies

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Speaker 4: are extremely key and beverage Joe talking in the beginning

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Speaker 4: about you know how competitive the beverage industry is, and

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Speaker 4: there's about five thousand new brands in the beverage industry

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Speaker 4: that come to market each year. Well about ten percent

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Speaker 4: of those will make it to one hundred million in sales,

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Speaker 4: and then another ten percent of those will make it

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Speaker 4: to like a million dollars and very rare why any

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Speaker 4: of them make it to a billion dollars in sales.

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Speaker 4: So it's a highly competitive market. And when you look

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Speaker 4: at the distribution, that's been a challenge. You know, it's

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Speaker 4: definitely a tough conversation because if you have a product,

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Speaker 4: you need to be able to have retailer's acceptance, So

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Speaker 4: your distributor needs to have a place to put it

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Speaker 4: right if they take the distribution, and then you also

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Speaker 4: need to have consumers that are buying it. So it's

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Speaker 4: like a chicken in the egg, which is very difficult

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Speaker 4: to do. So when we go to distribution prior to PEPSI,

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Speaker 4: we're in a lot of ab abi and how's it

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Speaker 4: Bush independent distributors, and we had a lot of conversation

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Speaker 4: with them. You know, it was very difficult for them

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Speaker 4: to take a product because they were saying, you know,

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Speaker 4: I'll take your product on, but then I just can't

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Speaker 4: have it sit in my warehouse. You know, I need

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Speaker 4: a product, I need a consumer poll, I need retailers

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Speaker 4: that want it. So what we had to do is

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Speaker 4: we had to really build a demand at the retailer

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Speaker 4: prior to going and really getting these distributors to sign up.

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Speaker 4: So we actually had to what they called sell direct,

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Speaker 4: So we'd sold direct to a lot of the retailers

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Speaker 4: are targeted retailers that we built scale and volume and

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Speaker 4: consumers around to create that, you know, that sales channel.

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Speaker 4: So then we could go to the distributor and show

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Speaker 4: the distributor we had there's a reason why we should

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Speaker 4: be in their distribution network, and that's constantly reinforcing and

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Speaker 4: then collaborating with them to build out the distribution, build

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Speaker 4: a consumer awareness, and ultimately work to get a loyal

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Speaker 4: consumer around the brand within that given market. Yeah.

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Speaker 2: No, I mean that makes a ton of sense, right,

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Speaker 2: So that whether it's the independent anhyder Bush distributors, whether

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Speaker 2: it's pepsi. They're not going to pick it up unless

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Speaker 2: their own end retailers are going to actually devote shelf space.

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Speaker 2: They're not going to devote shelf space unless they see

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Speaker 2: that there is some evidence that if they devote shelf

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Speaker 2: space that someone's going to buy it. What did you do? Like,

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Speaker 2: you know, different energy drinks seem to have different audiences

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Speaker 2: or different so you know, like I think some like

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Speaker 2: are probably more for the gamer space and some are

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Speaker 2: more for like sort of like euro types who like

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Speaker 2: go to clubs and listen to DJs do some want

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Speaker 2: to be associated with extreme sports, and some are associated

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Speaker 2: with construction sites and maybe more blue collar workers or

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Speaker 2: truck drivers, et cetera. How do you pick a lane?

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Speaker 4: Well, that's the other thing you need to put. You

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Speaker 4: really need to have a target audience. You need to

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Speaker 4: have a retailer story, you need to have a distributor story,

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Speaker 4: you need to have a consumer story. So that's one

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Speaker 4: thing that we've been able to work on over the years.

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Speaker 4: The same retailer story and your distributor story or sales

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Speaker 4: pitch might you know needs to be different than potentially

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Speaker 4: the consumer pitch. When you look at it, it's really

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Speaker 4: understanding your customer. You have to be customer centric. You

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Speaker 4: have to understand why does your customer needs your product,

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Speaker 4: what is the reason, what is the void and maybe

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Speaker 4: their portfolio and at the end of the day, how

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Speaker 4: can they make more money on your product. So as

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Speaker 4: an example to your point, there's different segments. So Celsius

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Speaker 4: is really essential energy. So Celsius is Celsius Live fits

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Speaker 4: our mantra. We have over two point eight grams of

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Speaker 4: vitamin you mentioned by it's in traces in the product,

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Speaker 4: and we have a variety. We have green tea and

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Speaker 4: ginger chromium. We have vitamin C and your B complexes,

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Speaker 4: so a lot of great vitamin's in there. It's almost

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Speaker 4: like a multi vitamin within a can. And that really

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Speaker 4: positions us as this healthy, better for you energy segment,

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Speaker 4: and that's really what we when we speaking with our distributors,

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Speaker 4: they had a void because historically it's been sugary energy

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Speaker 4: drinks that they've had within their portfolio, and we were

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Speaker 4: offering this different offering for them to sell for this

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Speaker 4: better for you consumer, which is especially coming out of

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Speaker 4: a post COVID world. Everyone's thinking about health and wellness

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Speaker 4: and fitness, which is a key and a DNA component

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Speaker 4: of who we are. We originally started off as a

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Speaker 4: pre workout, but now we're aligned with today's health minded

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Speaker 4: consumer with our attributes of accelerating metabolism and helping burn

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Speaker 4: body fat so really help you achieve your health and

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Speaker 4: wellness goals. So that allowed us to position ourselves within

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Speaker 4: the distributors as a unique offering within their portfolio. And

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Speaker 4: that was our go to market strategy with our distributed

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Speaker 4: and also with our retailers to be able to carve

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Speaker 4: that space out within those precious resell volts or you

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Speaker 4: know planograms that retailers have. So it's a multifaceted approach

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Speaker 4: to gain planogram approval at your retailer and then get

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Speaker 4: that distributor to actually get it on the shelf.

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Speaker 3: Oh wait, what's a planogram? You've never heard that word before.

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Speaker 4: So you mentioned how how do your products get included

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Speaker 4: on your retail shelf? So when you go to your

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Speaker 4: retailer and you go to these chains, all those products

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Speaker 4: are mainly orchestrated or designed based on planograms. So the

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Speaker 4: products are pre selected by a buyer at the corporate

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Speaker 4: office almost like think of them as portfolio managers. Or

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Speaker 4: you know, like a mutual fund manager or so on,

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Speaker 4: that's picking investments within their shared space to maximize their

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Speaker 4: retail maximize revenue for that retailer. So they're picking the

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Speaker 4: right they're picking the particular products for their consumer base

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Speaker 4: to drive the highest return for that retailer. And that's

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Speaker 4: all driven based on planograms. That's what buyers set and

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Speaker 4: then those those get provided to the store levels to

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Speaker 4: be able to set the shelves for the right strategy.

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Speaker 4: And those strategies get reviewed multiple times a year. There's

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Speaker 4: big annual reviews that happen usually in October and November,

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Speaker 4: depending on the retailer. And then they we'll do retailers

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Speaker 4: will do like a mini cut in or a reset

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Speaker 4: or a review right around mid year historically, where they'll

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Speaker 4: make some changes to their plantgrams to really kind of

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Speaker 4: dial in to maximize the opportunity. So example, if a

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Speaker 4: certain brand or certain flavors aren't working within the initial

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Speaker 4: few months, they'll maybe get cut and they'll try new

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Speaker 4: opportunities that come in. So one thing in a retail space,

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Speaker 4: especially in the energy category, you really only have in

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Speaker 4: some cases up to forty five days to perform on

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Speaker 4: shelf otherwise you're out so highly competitive, highly difficult, and

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Speaker 4: it's really hard to compete in today's energy during category

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Speaker 4: and in beaverage just because it's dominated by really strong

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Speaker 4: brands that are out there. And Celsius has been able

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Speaker 4: to really rise to the top as we are the

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Speaker 4: third largest energy drink brand right now in the United States,

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Speaker 4: so we have over over a ten share in the

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Speaker 4: energy category for the first time, and just getting one

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Speaker 4: share is practically near impossible.

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Speaker 3: So from your perspective, how do you fight for that

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Speaker 3: shelf space or that space in the planogram? And I'm

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Speaker 3: looking at some images of this now.

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Speaker 4: They look like this.

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Speaker 2: They're like a visual representation of what a deli looks like.

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Speaker 3: Yeah, yeah, it's basically the rainbow wall that I mentioned before.

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Speaker 3: I'm looking at one for Detergent and it's extremely colorful.

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Speaker 3: But how do you convince companies that you deserve that space?

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Speaker 3: And going back to the chicken and egg issue that

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Speaker 3: you kind of described before and the idea that you

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Speaker 3: only have forty five days or so to prove yourself,

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Speaker 3: how do you actually go about demonstrating that there is demand,

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Speaker 3: especially when you're unveiling something that's still relatively new in

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Speaker 3: the market.

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Speaker 4: Yeah, that's the highly difficult, that difficult thing to do.

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Speaker 1: Now.

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Speaker 4: Usually it starts off certain retailers are able to make

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Speaker 4: regionalize or localized buying decisions. So those planograms you're looking

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Speaker 4: at for the clorox or the detergent set that you're

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Speaker 4: looking at, those will be mandated down from corporate, but

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Speaker 4: then on a localized level, let's say maybe ten percent,

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Speaker 4: maybe fifteen percent of those plantograms can be adjusted for

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Speaker 4: local store manager level customization. So what we did is

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Speaker 4: we were able to work locally with a few managers

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Speaker 4: at some of these key retailers to really focus on

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Speaker 4: building a story, so you know, gaining trial, working with

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Speaker 4: the retailers, building a loyal consumer in that outlet, and

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Speaker 4: then kind of scaling that to two to three stores,

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Speaker 4: then eventually going to a region, so you start to

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Speaker 4: build a sales story on why you need to be

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Speaker 4: in that retailer and why you weren't maybe a larger

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Speaker 4: regional or national rollout within the retailer. So it's really

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Speaker 4: starting those grassroots stories and then being able to get

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Speaker 4: that buyer meeting, which is so difficult to do it

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Speaker 4: corporate headquarters for their annual reviews, and then convincing the

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Speaker 4: buyer why they need to bet on your product. I mean, ultimately,

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Speaker 4: at the end of the day, you're trying to get

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Speaker 4: the buyer at these retailers to invest in you as

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Speaker 4: a as a brand, as a company. So it's those

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Speaker 4: type of strategies and you're going to have to convince

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Speaker 4: a lot of it's emotion too, right, So in your

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Speaker 4: early brand the argument is, well, the brand doesn't travel,

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Speaker 4: maybe it's a certain community segment, certain income level demographics,

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Speaker 4: so there's a lot of negativity, but you have to

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Speaker 4: convince that buyer to believe. Once you convince that buyer

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Speaker 4: to believe, you get the opportunity, then it's on you

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Speaker 4: to perform. And if you can perform, then you continue

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Speaker 4: to build the brand based on data that shows results.

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Speaker 4: It shows that you need to get better placement in

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Speaker 4: that plantgram shows that you need to get additional flavors

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Speaker 4: because you're offering a variety an opportunity, and the billboard

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Speaker 4: effect is super critical. You need to get a billboard effects.

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Speaker 4: So when we started, I'll take Target as an example.

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Speaker 4: When we first got listed nationally. In Target, we only

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Speaker 4: had two flavors authorized that was on the warm shelf,

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Speaker 4: and almost every year after that we were able to

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Speaker 4: because of the increase in sales and working with local managers,

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Speaker 4: we were able to build that and get authorized for

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Speaker 4: an additional flavor to be added into the Target sets. Well.

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Speaker 4: Once we got to about five flavors at Target, we

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Speaker 4: were able to create this like a billboard or Celsia's

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Speaker 4: brand on shelf, which started to be incremental. So when

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Speaker 4: we added another flavor, it didn't cannibalize our sales. It

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Speaker 4: actually increased our sales because more consumers can see the

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Speaker 4: product because you create the billboard. Just think of it

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Speaker 4: last time, and just think last week, how many new

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Speaker 4: brands you tried, and the last seven days, and the

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Speaker 4: last fourteen days and thirty days. It's really difficult to

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Speaker 4: get a consumer to try a new product. You really

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Speaker 4: only have about thirty seconds at best at retail, at

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Speaker 4: that retail shelf to convince that consumer to try your

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Speaker 4: product for the first time.

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Speaker 2: Wait, you mentioned you started at Target on the warm shelf.

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Speaker 2: I assume now you're in the refrigerated section of Target.

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Speaker 4: Yeah, today we're we have a warm availability and the

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Speaker 4: energy set and a variety of stores around the country

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Speaker 4: or in the front checkout coolers and additional cold placements

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Speaker 4: throughout the store.

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Speaker 2: Yeah, I noticed it at my local deli. I think

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Speaker 2: I said this last time we talked about you guys.

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Speaker 2: I remember, like I was looking for the Celsius and

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Speaker 2: I didn't see you, and then it was only because

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Speaker 2: I realized that there wasn't. My local bodega now has

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Speaker 2: an entire Celsius devoted refrigerator. That it's just Celsius so

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Speaker 2: well done on that. Let's talk about the distribution relationship.

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Speaker 2: I have to imagine, like you know, Tracy and I

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Speaker 2: were starting an energy drink, we would be desperate to

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Speaker 2: get like on part of like Pepsi's distribution network early on.

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Speaker 2: But then if we grew really big and with the

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Speaker 2: odd Loot's Energy Drink were huge, then I imagined that

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Speaker 2: power relationship between us and Pepsi might change, and maybe

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Speaker 2: in a few years we say, hey, Pepsi, you know what,

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Speaker 2: maybe we want to check the terms of our contract.

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Speaker 2: I'm sure you have a great relationship with Pepsi, so

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Speaker 2: I don't want to say anything. You know, I'm not

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Speaker 2: trying to close any trouble, but can you talk to

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Speaker 2: us about how that relationship with the distributor changes or

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Speaker 2: evolves as you grow bigger and have your own form

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Speaker 2: of leverage.

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Speaker 4: Yeah, I think that's we're still in the early phases,

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Speaker 4: so call it the honeymoon with Pepsi because really we're

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Speaker 4: only one year in. So we gained distribution, we're gaining

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Speaker 4: additional displays. We're working with them collaboratively for the first

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Speaker 4: time this year because it's really our first time that

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Speaker 4: we've had a full year of planning. You can imagine Pepsi,

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Speaker 4: a company so large, is that they're planning cycles. You know,

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Speaker 4: they're planning like two years in advance, versus you know,

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Speaker 4: at Celsius, we're very nimble and quick. We've had to

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Speaker 4: adjust our planning cycles to really align with their planning cycle.

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Speaker 4: On execution, innovation, and retailer marketing programs, those are the likes.

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Speaker 4: But what we've been able to do this year, we're

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Speaker 4: really excited for the first time to really be able

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Speaker 4: to harness Pepsi's resources and planning so we can be

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Speaker 4: included on like national priorities and national execution programs. So

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Speaker 4: I would say we're still in the you know, the

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Speaker 4: early phase. We're really excited about the opportunities we're gaining

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Speaker 4: cold placements. You mentioned the deli that you went to

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Speaker 4: and saw Celsius dedicated coolers. We've placed over ten thousand

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Speaker 4: coolers together, the the amount of displays together. So we're

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Speaker 4: really excited at this partnership is just getting started. You

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Speaker 4: know what we say in the beverage industry, especially in energy,

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Speaker 4: you know, if it's cold, it's sold, and then snack

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Speaker 4: it high and watch it fly with displays. So we

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Speaker 4: say that all the time internally and it's been great

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Speaker 4: with our Pepsi partnership.

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Speaker 2: Do beverage brands, however, like dream of owning more of

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Speaker 2: their distribution over time? Like I mean eventually again, I

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Speaker 2: understand you're in the honeymoon phase. You're probably going to

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Speaker 2: be working with Pepsi for a long time, but just conceptually,

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Speaker 2: does a beverage company eventually try to own more as

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Speaker 2: much of their own distribution capacity as they can?

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Speaker 4: Well, you know, that's an interesting question, and it's like

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Speaker 4: when you go to think about that, you know, it's

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Speaker 4: what type of business are you and what type of

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Speaker 4: business do you want to become? So there has been

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Speaker 4: a successful company that's did it on their own which

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Speaker 4: is Red Bull. I mean Red Bull owns their own distribution.

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Speaker 4: They're phenomenal, they do a great job, great executors, and

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Speaker 4: it's worked extremely well. There's been other regional brands that

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Speaker 4: have tried that, and it's just it's if you don't

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Speaker 4: have the right amount of scale. Until they get that

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Speaker 4: scaling point, it could be an extreme, extremely costly strategy

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Speaker 4: if you think about all the trucks and warehouses and

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Speaker 4: people and resources you're going to need to manage that.

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Speaker 4: So when you look at Monster as an example, they

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Speaker 4: use the back end of coke and they're really focused

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Speaker 4: on what they do best is portfolio management within sales

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Speaker 4: and marketing teams. So you know that's our strategy. Our

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Speaker 4: strategy is to leverage the PepsiCo distribution network and their

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Speaker 4: resources and team members to further bring our brand to

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Speaker 4: more people and more consumers and do what we do best,

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Speaker 4: which is the sales and marketing component really bringing great tasting,

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Speaker 4: innovative energy drinks to market. Tracy's drinking that Cosmic Vibe

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Speaker 4: which is out of this world, and we're launching a

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Speaker 4: trilogy and going intergalactic with Galaxy Vibe and Astro Vibe

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Speaker 4: as two new flavors this year.

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Speaker 3: Oh man, I have a slightly different distribution question, which is,

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Speaker 3: if I go on Amazon right now and I type

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Speaker 3: in Celsius, the second result I get is a sponsored

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Speaker 3: ad for Monster Energy. How annoyed does that make you?

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Speaker 4: I think we're flattered. I think you know, that's quite

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Speaker 4: flattering that we've gotten to the point that monsters buying

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Speaker 4: ads against our consumers and fans searching for Celsius, so

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Speaker 4: we do not see our consumers really trading between brands.

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Speaker 4: So Monster is a great brand, Rebels a great brand,

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Speaker 4: But that's really flattering. It's a highly competitive environment. The

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Speaker 4: category continues to grow. Celsius is actually bringing new consumers

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Speaker 4: into the category, so we're one of the true growth drivers,

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Speaker 4: largest growth driver there's not only in dollars but units

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Speaker 4: to the category. So highly competitive, highly competitive.

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Speaker 3: Yeah, that's right. First it's a Celsius and then it's

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Speaker 3: that Swedish fish flavored energy drink. That's like the transition.

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Speaker 3: But actually, on a more serious note, the thing I'm

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Speaker 3: really getting at is like how much does the algorithm

433
00:22:39,359 --> 00:22:43,520
Speaker 3: of something like an Amazon affect your sales? And how

434
00:22:43,600 --> 00:22:46,320
Speaker 3: much how much control do you have over something like

435
00:22:46,359 --> 00:22:47,960
Speaker 3: the results that actually show up.

436
00:22:48,880 --> 00:22:53,000
Speaker 4: I think the algorithm is based on the user preferences.

437
00:22:53,000 --> 00:22:55,960
Speaker 4: But one thing, we're the number one selling energy drink

438
00:22:56,080 --> 00:22:58,920
Speaker 4: on Amazon the most recent read, and we've been roughly

439
00:22:58,960 --> 00:23:02,200
Speaker 4: around twenty share of the whole energy category on Amazon

440
00:23:02,240 --> 00:23:05,480
Speaker 4: and perform extremely well. I think when you look at Amazon,

441
00:23:05,880 --> 00:23:09,199
Speaker 4: you know, that's a really really loyal consumer base. You know,

442
00:23:09,320 --> 00:23:12,480
Speaker 4: it's someone that's spending you know, over twenty dollars to

443
00:23:12,600 --> 00:23:16,280
Speaker 4: purchase a twelve pack of warm beverage, that's going to

444
00:23:16,359 --> 00:23:18,680
Speaker 4: take it home, have it shipped to their house, put

445
00:23:18,720 --> 00:23:20,879
Speaker 4: it in a refrigerator, chill it, and then drink it as

446
00:23:20,920 --> 00:23:25,080
Speaker 4: a daily routine or daily lifestyle. So I think that's

447
00:23:25,119 --> 00:23:28,320
Speaker 4: a you know, a really loyal consumer base that's on there,

448
00:23:28,560 --> 00:23:31,439
Speaker 4: and it's been a It really just shows you the

449
00:23:31,480 --> 00:23:34,800
Speaker 4: loyalty that we have with the Celsia's portfolio that even

450
00:23:34,800 --> 00:23:37,879
Speaker 4: with the distribution gains and the increased availability with our

451
00:23:37,920 --> 00:23:41,000
Speaker 4: Pepsi partnership, we've been pretty much able to maintain our

452
00:23:41,040 --> 00:23:45,040
Speaker 4: share numbers and growth trajectory on the Amazon. So it's

453
00:23:45,080 --> 00:23:49,200
Speaker 4: like all tides are rising as we're distribution gains, showing

454
00:23:49,200 --> 00:23:52,800
Speaker 4: that Celsius is aligned with today's health minded consumer that

455
00:23:53,240 --> 00:23:56,280
Speaker 4: continues to evolve, looking for better for you, wants more

456
00:23:56,720 --> 00:24:00,760
Speaker 4: at their lives, and most importantly about Celsius, our DNA

457
00:24:00,880 --> 00:24:03,360
Speaker 4: is all about it helping you accomplish your goals and objectives.

458
00:24:03,880 --> 00:24:06,520
Speaker 2: Let's talk about the branding element some more.

459
00:24:06,760 --> 00:24:06,840
Speaker 1: So.

460
00:24:07,040 --> 00:24:10,160
Speaker 2: Obviously you want to continue to grow and find new

461
00:24:10,320 --> 00:24:14,280
Speaker 2: consumers of the beverage, but also like you have this lane,

462
00:24:14,480 --> 00:24:17,200
Speaker 2: you have this sleek like sort of like pretty well defined.

463
00:24:17,359 --> 00:24:20,000
Speaker 2: Can the fit people at the gym? How do you

464
00:24:20,080 --> 00:24:23,439
Speaker 2: think about growing the brand? I looked in your recent

465
00:24:23,520 --> 00:24:26,720
Speaker 2: quarterly call and you're talking about something with a Jake

466
00:24:26,800 --> 00:24:32,200
Speaker 2: poll Fight, something with the MLS F one partnership. Talk

467
00:24:32,240 --> 00:24:35,359
Speaker 2: to us about like that process of deciding like what's

468
00:24:35,440 --> 00:24:37,760
Speaker 2: in the brand and what would be sort of like

469
00:24:38,240 --> 00:24:42,199
Speaker 2: growth that might be costly because perhaps it's outside of

470
00:24:42,240 --> 00:24:44,880
Speaker 2: what people know celsiusas.

471
00:24:44,359 --> 00:24:46,199
Speaker 4: Yeah, I think when you mentioned Jake Paul and you

472
00:24:46,240 --> 00:24:50,280
Speaker 4: mentioned MLS, we just also also partnered with Ferrari with

473
00:24:50,440 --> 00:24:53,200
Speaker 4: that F one. I think you know, as we gain

474
00:24:53,240 --> 00:24:56,360
Speaker 4: broader distribution and we're building out a broader consumer base,

475
00:24:57,240 --> 00:25:00,480
Speaker 4: we're really important to us is keeping true to our DNA,

476
00:25:00,560 --> 00:25:03,760
Speaker 4: which is fitness and we were just at the Arnold Classic.

477
00:25:03,880 --> 00:25:07,000
Speaker 4: Familiar with that. It's the largest fitness show in the US,

478
00:25:07,440 --> 00:25:11,320
Speaker 4: big supporters of that show. We had Arnold drinking a

479
00:25:11,359 --> 00:25:13,960
Speaker 4: Galaxy Vibe at the event. It was a lot of fun.

480
00:25:14,320 --> 00:25:16,960
Speaker 4: A ton of athletes were all about the athletes and

481
00:25:16,960 --> 00:25:19,280
Speaker 4: the inner athletes. And I think when you look at

482
00:25:19,280 --> 00:25:23,439
Speaker 4: like Jake Paul, Yes, he's massive influencer on social media,

483
00:25:23,760 --> 00:25:27,720
Speaker 4: but he's also an athlete. He's boxing, He's going to

484
00:25:27,760 --> 00:25:30,560
Speaker 4: be involved with the Olympics, he wants to be the

485
00:25:30,640 --> 00:25:34,240
Speaker 4: number one boxer world champion. So really, CELSUS is there

486
00:25:34,280 --> 00:25:37,440
Speaker 4: supporting him achieve his health and wellness goals. And then

487
00:25:37,600 --> 00:25:41,159
Speaker 4: MLS is a great partnership for US. You got the

488
00:25:41,160 --> 00:25:44,080
Speaker 4: World Cup coming to North America, so the timing of

489
00:25:44,080 --> 00:25:47,400
Speaker 4: that could be great. You also have a young consumer

490
00:25:47,480 --> 00:25:50,439
Speaker 4: base of fans and followers that are gen Z eighteen

491
00:25:50,440 --> 00:25:54,360
Speaker 4: to twenty four and growing, and soccer you definitely need

492
00:25:54,400 --> 00:25:58,160
Speaker 4: some essential energy. There are complete athletes that are always

493
00:25:58,200 --> 00:26:00,800
Speaker 4: on the go, so we felt that was really aligning.

494
00:26:00,880 --> 00:26:03,800
Speaker 4: We do align with health and wellness so that we

495
00:26:03,840 --> 00:26:06,800
Speaker 4: will not run away from that or go in other areas.

496
00:26:06,840 --> 00:26:10,480
Speaker 4: But to your point, maintaining the brand's authenticity is extremely

497
00:26:10,520 --> 00:26:14,119
Speaker 4: important to us in order to stay relevant with our consumers.

498
00:26:15,080 --> 00:26:18,399
Speaker 3: So I'm still on Amazon actually flipping through all the

499
00:26:18,400 --> 00:26:22,359
Speaker 3: different Celsius offerings, and I see one thing that kind

500
00:26:22,400 --> 00:26:25,879
Speaker 3: of catches my eye, which is a huge bulk pack

501
00:26:26,119 --> 00:26:30,320
Speaker 3: of Celsius with fifteen flavors. And You've touched on this

502
00:26:30,400 --> 00:26:33,119
Speaker 3: a number of times now, but you guys have an

503
00:26:33,119 --> 00:26:38,840
Speaker 3: extraordinary array of flavors and different options nowadays, and you've

504
00:26:38,880 --> 00:26:43,960
Speaker 3: managed to do that, it seems like, without cannibalizing existing sales.

505
00:26:44,200 --> 00:26:48,159
Speaker 3: And I'm genuinely curious how that works because in my mind,

506
00:26:48,600 --> 00:26:52,960
Speaker 3: I'm buying one energy drink a day if that to

507
00:26:53,080 --> 00:26:57,720
Speaker 3: be honest, And you know, I'll try new flavors, but

508
00:26:57,880 --> 00:27:00,560
Speaker 3: like my volume of consumption just is isn't going to

509
00:27:00,600 --> 00:27:03,840
Speaker 3: go up based on the availability of new types and

510
00:27:03,880 --> 00:27:06,520
Speaker 3: flavors to me, So how does that exactly work? And

511
00:27:06,600 --> 00:27:09,320
Speaker 3: I guess how do you weigh the opportunities at the

512
00:27:09,359 --> 00:27:14,040
Speaker 3: benefits and the costs of launching and developing these new offerings.

513
00:27:15,160 --> 00:27:17,400
Speaker 4: Yeah, I think when you look at the fifteen pack

514
00:27:17,440 --> 00:27:20,399
Speaker 4: you're talking about, it's a variety pack. What we're seeing

515
00:27:20,440 --> 00:27:23,879
Speaker 4: is our Celsius consumer is increasing their consumption, so you

516
00:27:23,920 --> 00:27:27,119
Speaker 4: know a can or to a day, and you know

517
00:27:27,280 --> 00:27:29,600
Speaker 4: to your point. You know some consumers you know like

518
00:27:29,640 --> 00:27:32,119
Speaker 4: the watermelon or like the Cosmic Vibe, and we'll be

519
00:27:32,160 --> 00:27:34,920
Speaker 4: loyal to a single flavor. But we're also seeing, especially

520
00:27:34,920 --> 00:27:37,639
Speaker 4: with gen z As, they're looking for an experience. So

521
00:27:37,840 --> 00:27:40,160
Speaker 4: we do have our Fruit Forward line with great, great

522
00:27:40,160 --> 00:27:43,120
Speaker 4: fruit forward flavors, and then we have our Vibe line,

523
00:27:43,160 --> 00:27:45,399
Speaker 4: which is an experience in every sip or a journey

524
00:27:45,400 --> 00:27:48,520
Speaker 4: in every sip. We try to experience with the consumer.

525
00:27:48,880 --> 00:27:51,440
Speaker 4: But when you look at flavors, I mean, flavor innovation

526
00:27:51,640 --> 00:27:54,320
Speaker 4: is really exciting, so it's one thing we lean on.

527
00:27:54,680 --> 00:27:57,840
Speaker 4: We do see our consumers stay within the portfolio, so

528
00:27:57,880 --> 00:27:59,840
Speaker 4: we try to harmonize the flavors. So we do have

529
00:28:00,000 --> 00:28:03,440
Speaker 4: similiarity within the lines our Core and our Vibe as

530
00:28:03,440 --> 00:28:06,280
Speaker 4: well as our Celsius Essential line. So when you look

531
00:28:06,320 --> 00:28:09,199
Speaker 4: at the flavor profiles, some of them will be in

532
00:28:09,280 --> 00:28:13,000
Speaker 4: and out gaining trial and bringing new consumers into the portfolio.

533
00:28:13,400 --> 00:28:16,600
Speaker 4: We do have about a top five flavors. Actually orange

534
00:28:16,680 --> 00:28:18,800
Speaker 4: is our number one flavor and when you go into

535
00:28:18,800 --> 00:28:21,000
Speaker 4: the vibes, our Peach Vibe is one of our top

536
00:28:21,040 --> 00:28:22,800
Speaker 4: flavors as well as tropical vibe.

537
00:28:23,400 --> 00:28:24,960
Speaker 2: What's your favorite flavor.

538
00:28:25,280 --> 00:28:28,960
Speaker 4: My flavorite flavor. I just had a lemon lime flavor.

539
00:28:29,600 --> 00:28:33,760
Speaker 4: I had that with lunch. It was super refreshing. It's crisp,

540
00:28:33,880 --> 00:28:38,200
Speaker 4: tastes like a starry or sprite. Really. That's one thing

541
00:28:38,200 --> 00:28:40,960
Speaker 4: we see with Celsius which is interesting, is there's a

542
00:28:41,040 --> 00:28:44,600
Speaker 4: usage occasion historically for energy drinks, right it's a specific

543
00:28:44,720 --> 00:28:47,960
Speaker 4: need state. It's usually early in the morning or right

544
00:28:48,000 --> 00:28:51,680
Speaker 4: in the afternoon after lunch. But what we're seeing with Celsius,

545
00:28:52,000 --> 00:28:55,160
Speaker 4: especially with the Pepsi partnership, further opened up this opportunity.

546
00:28:55,400 --> 00:28:59,000
Speaker 4: They've expanded us into food service, so we launched into

547
00:28:59,120 --> 00:29:03,120
Speaker 4: Jersey mics just went into actual dun Dunkin Donuts as well,

548
00:29:03,200 --> 00:29:06,040
Speaker 4: almost three thousand stores at Dunkin Donuts. But what we're

549
00:29:06,080 --> 00:29:10,040
Speaker 4: seeing is the Celsius consumer is consuming Celsius with a

550
00:29:10,080 --> 00:29:12,320
Speaker 4: meal as well during lunchtime, so that could be a

551
00:29:12,360 --> 00:29:15,960
Speaker 4: sandwich of salad and so on. And what we also

552
00:29:16,040 --> 00:29:18,800
Speaker 4: see especially at retailers, and retailers love to hear that

553
00:29:19,160 --> 00:29:21,640
Speaker 4: you know, you're not an appetite suppressant, and what you

554
00:29:22,000 --> 00:29:25,320
Speaker 4: historically have seen with energy drinks traditional is that it's

555
00:29:25,320 --> 00:29:28,040
Speaker 4: more like an appetite suppressant. They're not buying other items

556
00:29:28,040 --> 00:29:32,520
Speaker 4: with your food items traditionally with their energy product. But

557
00:29:32,600 --> 00:29:35,000
Speaker 4: what we see with Celsius, we are also seeing it

558
00:29:35,040 --> 00:29:38,200
Speaker 4: paired with foods and snacks. So we're really incremental to

559
00:29:38,240 --> 00:29:42,000
Speaker 4: the retailers offering additional dollar ring and items per basket.

560
00:29:42,760 --> 00:29:46,840
Speaker 3: Wait, wasn't there a rumor that Celsius contains like a

561
00:29:46,880 --> 00:29:50,560
Speaker 3: weight loss chemical that you also find in nozepic. Didn't

562
00:29:50,600 --> 00:29:55,120
Speaker 3: that like start like there is a perception that this

563
00:29:55,360 --> 00:29:59,000
Speaker 3: is in fact an appetite suppressing beverage.

564
00:30:00,040 --> 00:30:02,000
Speaker 4: Yeah, I'm not sure where that came from. There was

565
00:30:02,080 --> 00:30:04,760
Speaker 4: some chatter on TikTok or something around that line, but

566
00:30:04,800 --> 00:30:07,280
Speaker 4: I will say on exempit when you're on that way

567
00:30:07,280 --> 00:30:10,280
Speaker 4: loss product, you really you know, you're not taking in

568
00:30:10,320 --> 00:30:13,000
Speaker 4: as much calories, so you really need some energy and

569
00:30:13,000 --> 00:30:16,400
Speaker 4: there's probably no other better energy drink to consume than Celsius.

570
00:30:16,440 --> 00:30:20,000
Speaker 4: Because of the zero sugar, we're low in the glycemic index.

571
00:30:20,520 --> 00:30:22,440
Speaker 4: We also there's an additional vitamin sup.

572
00:30:38,760 --> 00:30:41,360
Speaker 2: There's a form of commodities that we never talk about

573
00:30:41,400 --> 00:30:43,720
Speaker 2: on the show, and that is like the commodity market

574
00:30:43,720 --> 00:30:46,480
Speaker 2: for all these vitamins, vitamin getting, vitamin B twelve or

575
00:30:46,560 --> 00:30:49,440
Speaker 2: vitamin C or touring or whatever it else. Can you

576
00:30:49,480 --> 00:30:52,840
Speaker 2: talk about pricing on the input side right now and

577
00:30:53,320 --> 00:30:56,280
Speaker 2: at the same time that all the other industrial commodities surge,

578
00:30:56,600 --> 00:30:59,880
Speaker 2: What has been the trajectory of like inquiring these ingreded

579
00:31:00,000 --> 00:31:03,200
Speaker 2: acquiring these ingredients for the drink And where do things

580
00:31:03,240 --> 00:31:04,840
Speaker 2: stand right now from your perspective?

581
00:31:05,520 --> 00:31:08,080
Speaker 4: You know, now it's much better than it was during COVID,

582
00:31:08,120 --> 00:31:10,040
Speaker 4: that was for sure. But when you look at our

583
00:31:10,120 --> 00:31:13,720
Speaker 4: Vitamin pact, you know we're gaining more scale and volume,

584
00:31:14,280 --> 00:31:17,600
Speaker 4: so we're gaining more leverage. So although pricing has gone

585
00:31:17,640 --> 00:31:20,320
Speaker 4: up because of the increase in volume, we're able to

586
00:31:20,360 --> 00:31:23,320
Speaker 4: offset some of that based on scale. The biggest challenge

587
00:31:23,360 --> 00:31:27,480
Speaker 4: we had prior was actually the cans because of the aluminum.

588
00:31:27,560 --> 00:31:30,520
Speaker 4: As an example, during COVID, there was basically a can

589
00:31:30,600 --> 00:31:34,120
Speaker 4: shortage because everyone moved away I guess from fountain drinks

590
00:31:34,640 --> 00:31:37,320
Speaker 4: and just started buying more cans. I guess, you know,

591
00:31:37,480 --> 00:31:39,800
Speaker 4: no more I guess draft beer and you know whatever

592
00:31:39,840 --> 00:31:42,040
Speaker 4: else we were buying at restaurants. Now we had to

593
00:31:42,040 --> 00:31:44,400
Speaker 4: buy can products and have it at our house, so

594
00:31:44,440 --> 00:31:47,360
Speaker 4: that put a major constraint on the can manufacturing to

595
00:31:47,400 --> 00:31:50,920
Speaker 4: the point that can manufacturers were basically over sold and

596
00:31:50,960 --> 00:31:53,760
Speaker 4: couldn't produce our cans. We actually had to work with

597
00:31:53,880 --> 00:31:56,520
Speaker 4: some of our partners in Europe and around the world

598
00:31:56,560 --> 00:31:59,280
Speaker 4: to source cans and actually wound up having to import

599
00:31:59,320 --> 00:32:03,360
Speaker 4: cans United States, which is a something that we weren't

600
00:32:03,360 --> 00:32:08,000
Speaker 4: ready for. When you start to deal with importing charges

601
00:32:08,240 --> 00:32:10,720
Speaker 4: and de merge charges, which I didn't even know what

602
00:32:10,760 --> 00:32:13,240
Speaker 4: that is, but that's when your product has to sit

603
00:32:13,280 --> 00:32:15,880
Speaker 4: at port and if you if for some reason it

604
00:32:15,960 --> 00:32:18,760
Speaker 4: was shipped with a non union worker, then the barge

605
00:32:18,840 --> 00:32:21,480
Speaker 4: or container you had couldn't get loaded on a truck.

606
00:32:21,560 --> 00:32:24,040
Speaker 4: It was we learned so much or so I feel

607
00:32:24,360 --> 00:32:26,280
Speaker 4: really bad for our supply chain. They went through a

608
00:32:26,320 --> 00:32:29,680
Speaker 4: lot of all the dues and don'ts, and we mainly

609
00:32:29,720 --> 00:32:32,160
Speaker 4: learned a lot of don'ts on what you do when

610
00:32:32,200 --> 00:32:35,520
Speaker 4: you're importing product, which is materials, which is extremely difficult.

611
00:32:35,640 --> 00:32:37,200
Speaker 4: So a lot of key learnings there, but that was

612
00:32:37,200 --> 00:32:40,800
Speaker 4: probably the most difficult time we did source cans. We

613
00:32:40,800 --> 00:32:43,200
Speaker 4: were in a position where we could that kept us

614
00:32:43,240 --> 00:32:45,320
Speaker 4: to have that allowed us to have product on shelf

615
00:32:45,360 --> 00:32:48,760
Speaker 4: when many of our competitors were wrapping cans. I don't

616
00:32:48,800 --> 00:32:52,520
Speaker 4: know if you saw even some some cans today. If

617
00:32:52,520 --> 00:32:54,280
Speaker 4: you're out and about and you look, you'll see some

618
00:32:54,360 --> 00:32:57,160
Speaker 4: cans have like a plastic wrap around them. Number One,

619
00:32:57,160 --> 00:32:59,000
Speaker 4: there you can't recycle them, so that's not good for

620
00:32:59,040 --> 00:33:02,360
Speaker 4: the environment. But number too as well is they're really

621
00:33:02,400 --> 00:33:05,920
Speaker 4: expensive to produce. So that was a really difficult challenge

622
00:33:05,920 --> 00:33:09,080
Speaker 4: in time for a lot of companies, and pretty strategically

623
00:33:09,320 --> 00:33:11,000
Speaker 4: with our partners, were able to find cans so we

624
00:33:11,040 --> 00:33:13,240
Speaker 4: didn't have to deal with the wrap cans that were

625
00:33:13,280 --> 00:33:15,600
Speaker 4: out there during COVID. You still see like smaller brands

626
00:33:15,600 --> 00:33:17,840
Speaker 4: do it today just because they don't have to scale

627
00:33:17,840 --> 00:33:18,760
Speaker 4: for the large runs.

628
00:33:19,320 --> 00:33:22,320
Speaker 3: Since you brought up packaging and the cans themselves, I

629
00:33:22,360 --> 00:33:25,000
Speaker 3: did notice in your most recent results you talked about

630
00:33:25,040 --> 00:33:30,440
Speaker 3: profit margins being up primarily because packaging costs have gone

631
00:33:30,480 --> 00:33:33,880
Speaker 3: down since the crisis. So supply chains starting to normalize,

632
00:33:33,880 --> 00:33:37,400
Speaker 3: maybe some commodity prices are starting to normalize as well.

633
00:33:38,000 --> 00:33:41,560
Speaker 3: When do you decide to pass those savings on to

634
00:33:41,720 --> 00:33:45,920
Speaker 3: consumers and more generally, I'm always just very very interested

635
00:33:46,080 --> 00:33:49,800
Speaker 3: in how these pricing decisions get made, like, what are

636
00:33:49,800 --> 00:33:53,240
Speaker 3: the factors going into them? Is price something that you

637
00:33:53,320 --> 00:33:56,560
Speaker 3: have to negotiate with distributors as well. I imagine they

638
00:33:56,600 --> 00:33:58,520
Speaker 3: take some sort of cut, so if they want more,

639
00:33:58,600 --> 00:34:01,040
Speaker 3: maybe you're tempted to raise price, says, But how does

640
00:34:01,080 --> 00:34:01,720
Speaker 3: that all work?

641
00:34:02,520 --> 00:34:05,920
Speaker 4: Well, you know, it's really difficult environment because costs are

642
00:34:06,000 --> 00:34:08,960
Speaker 4: going up, but then we're trying to offset them strategically

643
00:34:09,000 --> 00:34:11,960
Speaker 4: as well, so it's a constant battle. You have gas prices,

644
00:34:12,080 --> 00:34:15,040
Speaker 4: aluminum prices, labor costs as we all know, have gone

645
00:34:15,080 --> 00:34:18,520
Speaker 4: up as well, and then also you know a lot

646
00:34:18,560 --> 00:34:22,040
Speaker 4: of times inefficiencies within our supply chain is difficult as well.

647
00:34:22,360 --> 00:34:25,160
Speaker 4: We have a model that we are building out as

648
00:34:25,160 --> 00:34:28,600
Speaker 4: we further scale, and we're calling it an orbit model.

649
00:34:29,040 --> 00:34:31,400
Speaker 4: And what that orbit model means is that we'll produce

650
00:34:31,440 --> 00:34:35,240
Speaker 4: the product in a region, we'll source the product materials

651
00:34:35,239 --> 00:34:37,720
Speaker 4: in a region, we'll build the product in a region,

652
00:34:37,800 --> 00:34:40,000
Speaker 4: and then we'll sell the product within the region. And

653
00:34:40,040 --> 00:34:42,000
Speaker 4: what that does that allows you to be more efficient

654
00:34:42,000 --> 00:34:44,560
Speaker 4: in your freight rates. That's probably the biggest area we

655
00:34:44,600 --> 00:34:46,640
Speaker 4: have in savings is really being able to be more

656
00:34:46,640 --> 00:34:51,080
Speaker 4: strategic with our freight and trucks and shipping versus as

657
00:34:51,120 --> 00:34:54,520
Speaker 4: an example, when you're smaller you're shipping from say North

658
00:34:54,560 --> 00:34:57,160
Speaker 4: Carolina all the way to la right just because you

659
00:34:57,239 --> 00:35:00,400
Speaker 4: just you can't produce the product in multiple market just

660
00:35:00,480 --> 00:35:04,120
Speaker 4: due to the limited run sizes that require that you

661
00:35:04,160 --> 00:35:07,040
Speaker 4: know that are just you can't run. You need to

662
00:35:07,080 --> 00:35:10,080
Speaker 4: have a certain size run of product in order for

663
00:35:10,120 --> 00:35:12,880
Speaker 4: it to be advantageous for co packers. So those are

664
00:35:12,960 --> 00:35:15,880
Speaker 4: things we're working on in regardless to pricing. You know,

665
00:35:15,920 --> 00:35:19,960
Speaker 4: that's a a channel strategy, it's pricing promotional strategies. The

666
00:35:20,000 --> 00:35:24,240
Speaker 4: categories is are very promotional, so it's twenty six weeks

667
00:35:24,280 --> 00:35:27,840
Speaker 4: on a year on average, is you're on deal or

668
00:35:27,880 --> 00:35:31,120
Speaker 4: on promo. So it's really trying to work strategically to

669
00:35:31,200 --> 00:35:33,800
Speaker 4: be able to be at the right price to maintain

670
00:35:33,880 --> 00:35:37,880
Speaker 4: your your distributors' margins, your retailer's margins, and still be

671
00:35:37,920 --> 00:35:41,920
Speaker 4: attractive for the overall consumer based on the pricing architecture

672
00:35:41,960 --> 00:35:44,279
Speaker 4: within the category and space and channel you're operating in.

673
00:35:44,719 --> 00:35:47,719
Speaker 2: So you mentioned copacking, so right now, do you have

674
00:35:47,800 --> 00:35:50,399
Speaker 2: your own canning facilities or do you Well, how does

675
00:35:50,480 --> 00:35:50,960
Speaker 2: that work?

676
00:35:51,960 --> 00:35:54,319
Speaker 4: No, we don't. We use some of the best can

677
00:35:54,400 --> 00:35:57,840
Speaker 4: manufacturers in the US, which is some of the largest

678
00:35:57,840 --> 00:36:00,680
Speaker 4: brands in the US are producing at those same facilities.

679
00:36:00,840 --> 00:36:03,520
Speaker 2: At what point do does it make sense for a

680
00:36:03,560 --> 00:36:07,600
Speaker 2: beverage company to own its own canning operation? Like when

681
00:36:07,640 --> 00:36:09,680
Speaker 2: does does Red Bull do they do their own can

682
00:36:09,800 --> 00:36:11,359
Speaker 2: Like at what point does that kick in?

683
00:36:11,920 --> 00:36:16,279
Speaker 4: Each brand's somewhat different on manufacturing, so, you know, I

684
00:36:16,280 --> 00:36:18,640
Speaker 4: think that needs to be made up by each brand

685
00:36:18,719 --> 00:36:22,040
Speaker 4: individually based on where your volume is. Also, you know,

686
00:36:22,200 --> 00:36:25,440
Speaker 4: running a plan is a totally different animal as well, right,

687
00:36:25,520 --> 00:36:28,000
Speaker 4: I mean that's there's a lot more involved. You know,

688
00:36:28,040 --> 00:36:30,520
Speaker 4: they run three shifts, twenty four hours a day, seven

689
00:36:30,600 --> 00:36:33,440
Speaker 4: days a week. It's a different margin profile as well.

690
00:36:33,800 --> 00:36:36,000
Speaker 4: So I think you need to really look at who

691
00:36:36,040 --> 00:36:38,480
Speaker 4: you want to be, what are the margin requirements of

692
00:36:38,520 --> 00:36:41,520
Speaker 4: your investors with the margin requirements of your business, and

693
00:36:42,239 --> 00:36:45,279
Speaker 4: and really make those strategic decisions accordingly. So when we

694
00:36:45,320 --> 00:36:48,600
Speaker 4: look at our model, our model is an asset light model,

695
00:36:49,000 --> 00:36:52,839
Speaker 4: so we don't currently own, you know, any manufacturing facilities

696
00:36:53,040 --> 00:36:55,920
Speaker 4: or really truly a sales and marketing machine.

697
00:36:56,360 --> 00:36:59,399
Speaker 3: So one other thing that's happened recently is you've been

698
00:36:59,400 --> 00:37:04,360
Speaker 3: expanding in to international markets and specifically Canada in recent months.

699
00:37:04,360 --> 00:37:07,319
Speaker 3: But how do you decide what markets to enter and

700
00:37:07,360 --> 00:37:10,719
Speaker 3: what are the considerations that you think about there.

701
00:37:11,480 --> 00:37:14,279
Speaker 4: Well, you know, we operate in the energy category, so

702
00:37:14,719 --> 00:37:17,640
Speaker 4: number one, we're going to look at markets on size

703
00:37:17,640 --> 00:37:20,359
Speaker 4: a price, so you know, how big is the category,

704
00:37:20,480 --> 00:37:24,239
Speaker 4: what is the opportunity, what is the strategic path to

705
00:37:24,360 --> 00:37:27,600
Speaker 4: distribution and to the retailer? What is the you know,

706
00:37:27,640 --> 00:37:30,920
Speaker 4: the right margin profiles? Is there is there an opportunity

707
00:37:31,000 --> 00:37:34,000
Speaker 4: to make the required margins we need as an overall business.

708
00:37:34,400 --> 00:37:37,279
Speaker 4: So you're looking at, you know, market data understanding what

709
00:37:37,320 --> 00:37:39,359
Speaker 4: type of market it is, how much share can you

710
00:37:39,440 --> 00:37:43,520
Speaker 4: potentially source in the category, how many new consumers potentially

711
00:37:43,600 --> 00:37:46,239
Speaker 4: with our Celsius position can we bring in a more

712
00:37:46,600 --> 00:37:49,680
Speaker 4: size of prize, What is the route to market? How

713
00:37:49,760 --> 00:37:52,800
Speaker 4: is you know, the retailers acceptance of the product, Do

714
00:37:52,840 --> 00:37:55,360
Speaker 4: you have the right distribution partner and the acceptance there?

715
00:37:55,760 --> 00:37:58,799
Speaker 4: So that's kind of that We constantly go through those

716
00:37:58,840 --> 00:38:02,200
Speaker 4: processes internally on identifying markets. And you look at the

717
00:38:02,280 --> 00:38:04,960
Speaker 4: energy drink markets, you know, you're really it's the US,

718
00:38:05,040 --> 00:38:08,560
Speaker 4: it's the U, it's UK, it's going to be Australia,

719
00:38:08,680 --> 00:38:11,359
Speaker 4: it's going to be Japan, Germany. So those are some

720
00:38:11,400 --> 00:38:13,360
Speaker 4: of the biggest energy drink markets in the world.

721
00:38:14,320 --> 00:38:18,200
Speaker 2: John Fieldley, CEO and President of Celsius, thank you so

722
00:38:18,320 --> 00:38:21,120
Speaker 2: much for coming on and helping us continue our journey

723
00:38:21,120 --> 00:38:24,439
Speaker 2: of understanding this market. Really appreciate you taking your time

724
00:38:24,520 --> 00:38:25,480
Speaker 2: to break things down.

725
00:38:26,400 --> 00:38:28,560
Speaker 4: Excellent. Thank you very much. Guys, glad to be here.

726
00:38:30,680 --> 00:38:32,400
Speaker 2: No, I'm not gonna have to I had my I

727
00:38:32,440 --> 00:38:34,319
Speaker 2: had my Celsia today. I'm not having a second one.

728
00:38:34,400 --> 00:38:36,960
Speaker 3: I'm already on a cosmic journey, so i only need

729
00:38:37,040 --> 00:38:37,560
Speaker 3: one today.

730
00:38:50,520 --> 00:38:54,680
Speaker 2: Tracey, I really, I really enjoyed that conversation. It's interesting

731
00:38:54,760 --> 00:38:57,040
Speaker 2: to think, you know, there's actually a lot in there

732
00:38:57,120 --> 00:38:59,720
Speaker 2: that speaks to the things we care about. It's interesting

733
00:38:59,719 --> 00:39:02,839
Speaker 2: to think about, like the idea of like freight and scale, right,

734
00:39:02,920 --> 00:39:06,480
Speaker 2: and so if you and I started an energy drink company,

735
00:39:06,640 --> 00:39:09,839
Speaker 2: we probably would just be working with like one copacker

736
00:39:10,080 --> 00:39:13,200
Speaker 2: right somewhere in the Carolina is. We would be paying

737
00:39:13,239 --> 00:39:14,920
Speaker 2: a lot in freight if we wanted to sell to

738
00:39:14,920 --> 00:39:15,959
Speaker 2: the Los Angeles market.

739
00:39:16,120 --> 00:39:16,359
Speaker 4: Yeah.

740
00:39:16,400 --> 00:39:16,960
Speaker 2: Absolutely.

741
00:39:17,000 --> 00:39:19,160
Speaker 3: The other thing I think about is just the importance

742
00:39:19,200 --> 00:39:23,160
Speaker 3: of the distribution channel, especially in something as competitive as this.

743
00:39:23,239 --> 00:39:25,520
Speaker 3: And I'm sure if we did start our own energy

744
00:39:25,640 --> 00:39:29,560
Speaker 3: drink we would be begging Pepsi or Coke to be

745
00:39:29,680 --> 00:39:33,239
Speaker 3: our distributors. And I'm still I still wonder how those

746
00:39:33,280 --> 00:39:36,439
Speaker 3: conversations go, because, as John described it, you know, there

747
00:39:36,520 --> 00:39:38,759
Speaker 3: is that chicken and egg problem where you want to

748
00:39:38,800 --> 00:39:42,279
Speaker 3: be able to prove that you can sell a lot

749
00:39:42,280 --> 00:39:45,359
Speaker 3: of volume, but then in order to do that you

750
00:39:45,480 --> 00:39:48,120
Speaker 3: do need the distribution channel, it sounds like, and it

751
00:39:48,200 --> 00:39:50,839
Speaker 3: was interesting also to hear him kind of describe that

752
00:39:51,400 --> 00:39:54,080
Speaker 3: they go about it in an almost grassroots way, where

753
00:39:54,120 --> 00:39:57,160
Speaker 3: you start out kind of local in order to prove yourselves,

754
00:39:57,520 --> 00:40:00,960
Speaker 3: then you build up. I hadn't realized just how I

755
00:40:01,000 --> 00:40:04,040
Speaker 3: guess specific some of those decisions and relationships.

756
00:40:04,040 --> 00:40:07,160
Speaker 2: Are everyone listening, You should just google the word planning.

757
00:40:07,200 --> 00:40:10,080
Speaker 2: Oh yeah, because as soon as you see it, it's like,

758
00:40:10,160 --> 00:40:13,600
Speaker 2: oh it suddenly it clicks that these huge walls of

759
00:40:13,640 --> 00:40:19,160
Speaker 2: whatever product, whether it's beverages, whether it's detergent, whether it's toothpaste,

760
00:40:19,160 --> 00:40:23,000
Speaker 2: whether it's chewing gum, et cetera. It's like, that's not

761
00:40:23,200 --> 00:40:26,000
Speaker 2: thereby accident. And I guess that's obvious because nothing is

762
00:40:26,040 --> 00:40:28,759
Speaker 2: by accident in business or the corporate world or what's

763
00:40:28,760 --> 00:40:31,359
Speaker 2: on the But still it's like a reminder, like all

764
00:40:31,440 --> 00:40:34,960
Speaker 2: of those things like down to down to like the

765
00:40:35,040 --> 00:40:37,440
Speaker 2: height at where it is and decide. I think you

766
00:40:37,560 --> 00:40:40,439
Speaker 2: use that term like billboarding with in target, it's one

767
00:40:40,440 --> 00:40:43,600
Speaker 2: thing like if you have two types of Celsius flavors

768
00:40:43,640 --> 00:40:45,480
Speaker 2: in the target, you just walk right by it, right,

769
00:40:45,800 --> 00:40:49,440
Speaker 2: But if you have five, and if you have five

770
00:40:49,680 --> 00:40:51,640
Speaker 2: in a road, that's like, oh oh, there's something here

771
00:40:51,680 --> 00:40:55,120
Speaker 2: that actually catches my eye within the wall of colors.

772
00:40:55,160 --> 00:40:58,040
Speaker 2: And so the fact that like you like fight that

773
00:40:58,040 --> 00:41:00,600
Speaker 2: that each one of those actually like expand your ability

774
00:41:00,600 --> 00:41:03,040
Speaker 2: as well as like is really fascinating and not something

775
00:41:03,080 --> 00:41:05,320
Speaker 2: I had thought about. But I guess I'm not surprised

776
00:41:05,360 --> 00:41:07,239
Speaker 2: that there are people that are like, this is their

777
00:41:07,320 --> 00:41:09,040
Speaker 2: job to think about exactly this question.

778
00:41:09,239 --> 00:41:12,320
Speaker 3: Well that's also I guess why the market keeps growing

779
00:41:12,520 --> 00:41:16,120
Speaker 3: and not self cannibalizing, because you see these massive displays,

780
00:41:16,239 --> 00:41:19,680
Speaker 3: or you have one fridge that's full of just Celsius,

781
00:41:20,200 --> 00:41:22,960
Speaker 3: and while I do not personally decide to pick up

782
00:41:23,040 --> 00:41:26,719
Speaker 3: like three different cans or flavors, maybe someone else does.

783
00:41:26,760 --> 00:41:30,239
Speaker 3: So you grab one and another one looks interesting, whether

784
00:41:30,239 --> 00:41:32,279
Speaker 3: it's cosmic vibe or something else, so you just grab

785
00:41:32,280 --> 00:41:32,680
Speaker 3: a bunch.

786
00:41:33,160 --> 00:41:36,440
Speaker 2: Tracy, if we launch an energy drink. I volunteer to

787
00:41:36,480 --> 00:41:39,560
Speaker 2: be that person and just like with like give out

788
00:41:39,600 --> 00:41:42,600
Speaker 2: free Dixie cups or you know, like stand there at

789
00:41:42,600 --> 00:41:44,719
Speaker 2: the grocery store with like a little like wearing a

790
00:41:44,760 --> 00:41:47,600
Speaker 2: little like odd Lots apron. I thought you were going

791
00:41:47,680 --> 00:41:49,239
Speaker 2: to say, I want to try it. I thought you

792
00:41:49,360 --> 00:41:49,839
Speaker 2: could do that.

793
00:41:49,880 --> 00:41:51,440
Speaker 3: I thought you were going to say that you volunteer

794
00:41:51,600 --> 00:41:54,400
Speaker 3: to try all the different flavors and be the guinea pig. No,

795
00:41:54,480 --> 00:41:55,759
Speaker 3: I was gonna say, I don't do that.

796
00:41:56,000 --> 00:41:57,880
Speaker 2: I just want to be the person standing there's like, oh,

797
00:41:57,880 --> 00:42:00,440
Speaker 2: would you like to try this new odd Lot flavored

798
00:42:00,680 --> 00:42:03,359
Speaker 2: y because you gotta figure like it's got to start somewhere, right,

799
00:42:03,400 --> 00:42:04,640
Speaker 2: And I was like, oh, it's pretty good, and then

800
00:42:04,640 --> 00:42:06,160
Speaker 2: you smile and move on, and maybe one out of

801
00:42:06,320 --> 00:42:07,520
Speaker 2: twenty people actually buys one.

802
00:42:07,719 --> 00:42:10,719
Speaker 3: Amanda, you know the other thing I was thinking about.

803
00:42:10,800 --> 00:42:15,200
Speaker 3: You asked about the sort of relatively lesser known commodity

804
00:42:15,480 --> 00:42:19,319
Speaker 3: prices and specifically vitamins, And that's something I have thought

805
00:42:19,320 --> 00:42:22,640
Speaker 3: about ever since I read this book way back in

806
00:42:22,680 --> 00:42:24,920
Speaker 3: the day. And the reason I remember is because it

807
00:42:24,960 --> 00:42:28,200
Speaker 3: was the first book I ever read on Kindle, and

808
00:42:28,280 --> 00:42:31,680
Speaker 3: it was called Twinkie deconstructed that sounds good. And it

809
00:42:31,719 --> 00:42:34,160
Speaker 3: was so interesting because it basically went through all the

810
00:42:34,320 --> 00:42:37,560
Speaker 3: ingredients in a twinkie and did like a whole chapter

811
00:42:37,800 --> 00:42:43,160
Speaker 3: on specific chemicals or minerals or obviously more generic ingredients

812
00:42:43,200 --> 00:42:46,400
Speaker 3: like wheat or whatever goes into it. And it was

813
00:42:46,440 --> 00:42:49,600
Speaker 3: so interesting because like you kind of just assume vitamins

814
00:42:49,719 --> 00:42:52,319
Speaker 3: like appear in pill form, but of course there's this

815
00:42:52,360 --> 00:42:54,480
Speaker 3: whole industry attached to it. There's a lot of debate

816
00:42:54,560 --> 00:42:57,360
Speaker 3: about where they come from, whether or not the absorption

817
00:42:57,719 --> 00:43:01,600
Speaker 3: process actually works, and that's something that I kind of

818
00:43:01,680 --> 00:43:04,319
Speaker 3: wonder about as I'm drinking the celsius, like how much

819
00:43:04,360 --> 00:43:07,960
Speaker 3: of these vitamins am I actually absorbing? But that would

820
00:43:08,000 --> 00:43:10,760
Speaker 3: be a whole other episode. I think the vitamin industry.

821
00:43:10,560 --> 00:43:13,400
Speaker 2: Absolutely and we've never done a vitamin episode as far

822
00:43:13,400 --> 00:43:15,120
Speaker 2: as I know. I just think, like, you know, there's

823
00:43:15,200 --> 00:43:19,040
Speaker 2: just a lot of market power questions in this whole conversation,

824
00:43:19,280 --> 00:43:22,680
Speaker 2: and so, for example, like I am interested in it's

825
00:43:22,719 --> 00:43:26,040
Speaker 2: like okay, like you sign a deal with Pepsi and

826
00:43:26,080 --> 00:43:29,440
Speaker 2: then they're one term under some set of terms, and

827
00:43:29,480 --> 00:43:31,480
Speaker 2: then ten years later or whatever it is, you're a

828
00:43:31,520 --> 00:43:34,080
Speaker 2: much bigger company and you're much bigger brand, and maybe

829
00:43:34,120 --> 00:43:36,200
Speaker 2: you can like play like you know, Pepsi and coke

830
00:43:36,320 --> 00:43:39,360
Speaker 2: off of each other or Pepsian whoever else. And so

831
00:43:39,520 --> 00:43:41,840
Speaker 2: it's interesting to think about like these sort of market

832
00:43:41,880 --> 00:43:44,520
Speaker 2: power questions. And then there's the power of like who

833
00:43:44,640 --> 00:43:48,239
Speaker 2: has the co packing facility to actually make cans and

834
00:43:48,280 --> 00:43:51,440
Speaker 2: fill beverages. It's sort of interesting to think about, like, Okay,

835
00:43:51,520 --> 00:43:53,640
Speaker 2: like I don't know how much I paid for this Celsius.

836
00:43:53,640 --> 00:43:55,400
Speaker 2: If I pay like a dollar forty nine or a

837
00:43:55,400 --> 00:43:58,359
Speaker 2: dollar ninety nine for a can of Celsius, like how

838
00:43:58,440 --> 00:44:00,360
Speaker 2: much is Pepsi's cut, and how much which is the

839
00:44:00,360 --> 00:44:03,319
Speaker 2: copackers cut? And how much is the pure marketing And

840
00:44:03,400 --> 00:44:05,640
Speaker 2: it's interesting that like, you know, for now, Celsia is

841
00:44:05,680 --> 00:44:08,760
Speaker 2: like they really just want to be a marketing company,

842
00:44:08,760 --> 00:44:12,160
Speaker 2: but presumably at some point or assuming at some point

843
00:44:12,360 --> 00:44:15,360
Speaker 2: there is value in like owning your distribution and charging

844
00:44:15,360 --> 00:44:18,239
Speaker 2: others rent on your distribution network and so forth. And

845
00:44:18,280 --> 00:44:20,280
Speaker 2: so I think there's just a lot of very interesting,

846
00:44:20,400 --> 00:44:24,440
Speaker 2: uh sort of market concentration and market power questions that

847
00:44:24,520 --> 00:44:27,360
Speaker 2: arise of thinking of like of that you can examine

848
00:44:27,400 --> 00:44:29,080
Speaker 2: through on specific category totally.

849
00:44:29,120 --> 00:44:31,480
Speaker 3: And we touched on this in the previous episode with

850
00:44:31,560 --> 00:44:33,960
Speaker 3: Mark aster Can where we asked, well, why don't Pepsi

851
00:44:34,000 --> 00:44:35,920
Speaker 3: and Coke just start their own energy drip?

852
00:44:36,080 --> 00:44:36,279
Speaker 4: Yeah?

853
00:44:36,320 --> 00:44:39,359
Speaker 3: Right, right, because they have lots of money, presumably they

854
00:44:39,400 --> 00:44:44,200
Speaker 3: have entire departments devoted to developing new products. It seems

855
00:44:44,239 --> 00:44:46,480
Speaker 3: like they could theoretically do it. But I believe his

856
00:44:46,600 --> 00:44:48,920
Speaker 3: answer was that while a lot of these products are

857
00:44:48,960 --> 00:44:51,959
Speaker 3: extremely specialized, and it's easier just to strike a deal

858
00:44:52,320 --> 00:44:54,200
Speaker 3: and then take a cut. But again it goes to

859
00:44:54,239 --> 00:44:57,400
Speaker 3: those sort of like concentration and power points that you

860
00:44:57,520 --> 00:45:00,600
Speaker 3: just brought up. All right, well, we have had a

861
00:45:00,600 --> 00:45:02,680
Speaker 3: lot of caffeine. Should we leave it there?

862
00:45:02,760 --> 00:45:04,680
Speaker 2: Yeah, let's leave it there, because I made it through

863
00:45:04,680 --> 00:45:07,040
Speaker 2: this whole episode so far without spilling on my keyboard,

864
00:45:07,080 --> 00:45:07,959
Speaker 2: so let's leave it there.

865
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Speaker 3: Congratulations, Thank you. All right, this has been another episode

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Speaker 3: of the Audlots podcast. I'm Tracy Alloway. You can follow

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Speaker 3: me at Tracy Alloway.

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Speaker 2: And I'm Joe wysnant Thal. You could follow me at

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Speaker 2: the Stalwart. Follow our producers Carmen Rodriguez at Carmen Erman,

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00:45:22,160 --> 00:45:25,680
Speaker 2: dash O Bennett at Dashbot and Kilbrooks at Kilbrooks. Thank

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00:45:25,719 --> 00:45:28,840
Speaker 2: you to our producer Moses On. For more Oddlots content,

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00:45:28,880 --> 00:45:31,120
Speaker 2: go to Bloomberg dot com slash odd Lots, where you

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Speaker 2: have transcripts, a blog, and a newsletter and you can

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00:45:34,400 --> 00:45:37,400
Speaker 2: chat about these topics twenty four to seven in the discord,

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Speaker 2: one of my favorite places to hang out on the Internet.

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Speaker 2: Chat with fellow the listeners Discord dot gg slash.

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Speaker 3: Odd Lots And if you enjoy odd Lots, if you

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Speaker 3: like it when we do deep dives into the energy

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Speaker 3: drink market, then please leave us a positive review on

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Speaker 3: your favorite podcast platform. And remember, if you are a

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Speaker 3: Bloomberg subscriber, you can listen to all of our episodes

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Speaker 3: absolutely ad free. All you need to do is connect

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Speaker 3: your Bloomberg account to Apple Podcast. Thanks for listening.