WEBVTT - Celsius CEO Explains How They Win in Energy Drinks 0:00:03.120 --> 0:00:18.440 Bloomberg Audio Studios, Podcasts, radio News. 0:00:20.640 --> 0:00:24.239 Hello and welcome to another episode of The Odd Lots Podcast. 0:00:24.360 --> 0:00:26.760 I'm Joe Wisenthal and I'm Tracy Allaway. 0:00:26.960 --> 0:00:29.840 Tracy, I have to say I've been feeling a little 0:00:30.720 --> 0:00:34.600 lethargic this week, a little bit under the weather. No, no, yeah, 0:00:34.680 --> 0:00:36.280 you know, it's just you know, sometimes you wake up 0:00:36.280 --> 0:00:39.040 on the wrong side of the bed anyway. But uh, 0:00:39.280 --> 0:00:42.279 I'm feeling a little bit better because I've been consuming 0:00:42.280 --> 0:00:43.400 a lot of caffeine today. 0:00:44.320 --> 0:00:46.840 Yes, I'm looking at you in the studio right now, 0:00:46.880 --> 0:00:51.000 and you have with you another Celsius. Yes, what's the 0:00:51.080 --> 0:00:52.200 flavor on your one? 0:00:52.320 --> 0:00:55.680 I am drinking an Arctic Vibe, which is a sparkling 0:00:55.960 --> 0:01:00.000 frozen berry edition. I don't know, I have to I'm not, 0:01:00.000 --> 0:01:02.160 I'm sure like if in a blind taste test out 0:01:02.360 --> 0:01:04.880 go this is berry. But it's very flavorful and it's 0:01:04.920 --> 0:01:06.880 sugar free, and it's perked me up and I feel 0:01:06.959 --> 0:01:09.000 very keyed up and ready to go. You are also 0:01:09.040 --> 0:01:10.440 drinking as Celsius. What are you drinking? 0:01:10.720 --> 0:01:14.720 I have Cosmic Vibe, a sparkling fruit punch and it 0:01:14.760 --> 0:01:17.880 does actually taste like carbonated kool Aid. It's sort of 0:01:17.959 --> 0:01:19.240 nostalgic in some way. 0:01:19.440 --> 0:01:20.080 But the thing that. 0:01:20.200 --> 0:01:23.080 Interests me is, you know, I'm looking at the branding 0:01:23.120 --> 0:01:26.440 and the ads on the can. And we've talked about 0:01:26.440 --> 0:01:28.959 this before. We did a whole episode about Celsius. But 0:01:29.000 --> 0:01:31.080 the interesting thing to me is how this is slightly 0:01:31.120 --> 0:01:34.319 different from other energy drinks. So it talks about obviously 0:01:34.360 --> 0:01:39.080 providing energy, but also accelerating metabolism and burning body fat. 0:01:39.240 --> 0:01:42.679 And I was going through the ingredients earlier and it 0:01:42.720 --> 0:01:45.759 has biotin in it, which is something that I take 0:01:46.080 --> 0:01:49.520 for like hair and skin and nails and stuff. So 0:01:49.560 --> 0:01:51.640 I guess I don't need to take supplements anymore. I 0:01:51.680 --> 0:01:52.800 can just drink Celsius. 0:01:53.200 --> 0:01:56.040 I supposedly you could just drink Celsius. 0:01:56.120 --> 0:01:56.200 No. 0:01:56.440 --> 0:01:58.520 I'm fascinating for this for all reasons, for all kinds 0:01:58.560 --> 0:02:00.800 of reasons. I mean, we've talked about energy drinks for 0:02:00.840 --> 0:02:03.280 a while. We did a story about the incredible rise 0:02:03.280 --> 0:02:06.000 of episode about Monster a few years ago. One of 0:02:06.000 --> 0:02:10.400 the stocks that's actually outperformed Amazon over the same time period. 0:02:10.760 --> 0:02:14.440 And if you go into any local deli or bodega 0:02:14.520 --> 0:02:17.480 or seven to eleven these days, you just see this wall, 0:02:17.680 --> 0:02:22.000 and the wall just keeps getting bigger of drinks, and 0:02:22.080 --> 0:02:25.320 many of them highly caffeinated energy drinks. And it's sort 0:02:25.320 --> 0:02:27.760 of fascinating to me, like, there are all these energy 0:02:27.840 --> 0:02:31.200 drinks out there that exist, how is their room for more? 0:02:31.680 --> 0:02:33.880 It's like they all like right, like you like basically 0:02:33.960 --> 0:02:36.280 want to consume one and you get a jolt of 0:02:36.320 --> 0:02:38.680 caffeine and you go about your day. It's amazing that 0:02:38.800 --> 0:02:40.960 despite this maturity and this size, and we had a 0:02:41.000 --> 0:02:43.880 red Bull and Monster and all there's that, yet somehow 0:02:44.080 --> 0:02:47.000 there could still be room for another competitor to seemingly 0:02:47.440 --> 0:02:49.400 I know it's never coming out of nowhere, but seemingly 0:02:49.440 --> 0:02:50.280 coming out of nowhere. 0:02:50.480 --> 0:02:52.840 Yeah, this is the thing that fascinates me too. So 0:02:53.280 --> 0:02:56.400 we don't just have different brands of energy drinks, like 0:02:56.440 --> 0:03:00.000 within the brands themselves, there are so many different flames 0:03:00.440 --> 0:03:03.799 now and options. It's kind of amazing. And again, when 0:03:03.840 --> 0:03:05.520 you go into the store, you see this sort of 0:03:05.680 --> 0:03:10.040 rainbow of cans on display. The other thing that interests 0:03:10.040 --> 0:03:13.440 me is the distribution question. Yes, so I'm always curious, 0:03:13.480 --> 0:03:16.840 like who makes the decisions of what ends up on 0:03:16.960 --> 0:03:19.720 the shelves in your local seven to eleven or Circle 0:03:19.800 --> 0:03:23.440 K or Dwayne Reid or whatever, like, how do those 0:03:23.520 --> 0:03:28.160 specific flavors get chosen much less even the brands, right, 0:03:28.320 --> 0:03:30.160 And I think this is something that's come up in 0:03:30.200 --> 0:03:34.079 a number of episodes now, just how important distribution can 0:03:34.120 --> 0:03:36.640 actually be to these particular types of products. 0:03:36.960 --> 0:03:39.640 Well, I think we should just jump right into it. 0:03:39.680 --> 0:03:42.880 We really do have the perfect guest because today we're 0:03:42.880 --> 0:03:44.840 going to be speaking with John field Ley. He is 0:03:44.880 --> 0:03:49.280 the president and CEO of Celsia's holdings. He's been CEO 0:03:49.360 --> 0:03:52.360 since twenty seventeen, been with it's the company for twelve years. 0:03:52.480 --> 0:03:55.360 And we're going to ask all these questions about how 0:03:56.200 --> 0:03:58.400 how this all works, how you rise to the top, 0:03:58.440 --> 0:04:00.560 and what is clearly a very out of the field. 0:04:00.600 --> 0:04:03.080 So John, thank you so much for coming on outlots. 0:04:03.640 --> 0:04:06.840 Glad to be here, Joe excited at Tracy. It's exciting. 0:04:07.040 --> 0:04:09.840 I like to tell you brought in our Cosmic five. We 0:04:09.960 --> 0:04:12.520 love the flavors on that fruit punch refreshing. That's what 0:04:12.560 --> 0:04:14.080 it's all about. Glad to be here, all right. 0:04:14.120 --> 0:04:17.120 I have a question. So, like a year ago, I 0:04:17.240 --> 0:04:20.960 started noticing that all the fit and cool looking people 0:04:21.120 --> 0:04:24.000 at my gym were drinking Celsius, and then I was like, well, 0:04:24.000 --> 0:04:25.160 I want to be one of the fit and cool 0:04:25.200 --> 0:04:28.320 looking people at the gym. So I then bought as Celsius. 0:04:28.560 --> 0:04:31.599 What happened? Celsius has been around a long time, but 0:04:31.760 --> 0:04:33.920 suddenly over the last year, year and a half, maybe 0:04:33.960 --> 0:04:36.880 two years, I started seeing it somewhere. What happened a 0:04:36.960 --> 0:04:39.520 year and a half ago? That suddenly was that a 0:04:39.560 --> 0:04:41.520 thing that you guys did? Was it word of mouth? 0:04:41.600 --> 0:04:44.279 What what suddenly happened? That's sort of really like I 0:04:44.279 --> 0:04:45.359 started seeing it everywhere? 0:04:46.560 --> 0:04:48.360 Yeah, I mean when you found us at the gym. 0:04:48.800 --> 0:04:52.000 The brand's been around for over fifteen years. We built 0:04:52.000 --> 0:04:53.960 it in the gyms and health clubs, at Vitamin C 0:04:54.360 --> 0:04:58.120 GNC golds in twenty four hour, those are the likes. 0:04:58.360 --> 0:05:00.000 If you're going back only a year and a half 0:05:00.080 --> 0:05:03.120 ago and you were talking about your comments on the 0:05:03.120 --> 0:05:07.520 intro about distribution. We partner with Pepsi a year ago. 0:05:07.720 --> 0:05:12.320 As our distribution projects show that really expanded the availability 0:05:12.320 --> 0:05:15.280 of Celsius to where we are today, which they call 0:05:15.320 --> 0:05:19.120 a ninety eight percent ACV. So there's reporting stores that 0:05:19.160 --> 0:05:23.359 report sales for consumer products into IRI Data or Nielsen 0:05:23.400 --> 0:05:25.920 they call it, and then looking at the total population 0:05:26.000 --> 0:05:28.480 of the stores reporting in Pepsi has been able to 0:05:28.480 --> 0:05:31.159 get us through about ninety eight percent ACV, So we 0:05:31.279 --> 0:05:32.800 still got a lot of work to do on the 0:05:33.000 --> 0:05:35.640 placements in each store, but in general, you should be 0:05:35.640 --> 0:05:38.520 able to find, you know, Celsius probably in almost every 0:05:38.520 --> 0:05:40.720 retailer in the United States ort least ninety eight percent 0:05:40.720 --> 0:05:42.600 of them. So the data says, I. 0:05:42.520 --> 0:05:45.479 Have a really straightforward question before we dig into some 0:05:45.560 --> 0:05:49.320 of the specifics of this particular business. But how much 0:05:49.360 --> 0:05:52.800 caffeine do you need to consume to be CEO of Celsius? 0:05:53.160 --> 0:05:54.760 How much do you drink on a daily They. 0:05:54.680 --> 0:05:59.000 Drink Yeah, you know, I started the warning off. I 0:05:59.040 --> 0:06:01.080 have probably two cans a day. I have a can 0:06:01.120 --> 0:06:04.280 in the morning Celsius in the morning, and then usually 0:06:04.360 --> 0:06:07.240 have all of my lunch. So drinking a watermelon right now? 0:06:07.360 --> 0:06:10.839 So which is dynamite in a great flavor? All right? 0:06:10.960 --> 0:06:14.919 So you mentioned distribution and the deal with Pepsi. My 0:06:15.080 --> 0:06:19.279 understanding from the previous episode we did with Mark ASTERCN 0:06:19.520 --> 0:06:22.720 is that a lot of this business is about distribution, 0:06:22.920 --> 0:06:26.120 and you struck that deal with Pepsi. Monster has a 0:06:26.200 --> 0:06:29.080 deal with Coke. From what I remember, how do those 0:06:29.120 --> 0:06:33.560 distribution deals actually come into being. What are the conversations actually. 0:06:33.360 --> 0:06:37.080 Like, Yeah, well, you know, distribution for consumer product companies 0:06:37.120 --> 0:06:41.560 are extremely key and beverage Joe talking in the beginning 0:06:41.600 --> 0:06:44.360 about you know how competitive the beverage industry is, and 0:06:44.680 --> 0:06:47.440 there's about five thousand new brands in the beverage industry 0:06:47.480 --> 0:06:50.400 that come to market each year. Well about ten percent 0:06:50.440 --> 0:06:52.320 of those will make it to one hundred million in sales, 0:06:52.720 --> 0:06:54.479 and then another ten percent of those will make it 0:06:54.520 --> 0:06:57.200 to like a million dollars and very rare why any 0:06:57.240 --> 0:06:59.200 of them make it to a billion dollars in sales. 0:06:59.279 --> 0:07:03.160 So it's a highly competitive market. And when you look 0:07:03.160 --> 0:07:06.480 at the distribution, that's been a challenge. You know, it's 0:07:06.720 --> 0:07:10.280 definitely a tough conversation because if you have a product, 0:07:10.640 --> 0:07:13.120 you need to be able to have retailer's acceptance, So 0:07:13.320 --> 0:07:15.960 your distributor needs to have a place to put it 0:07:16.120 --> 0:07:18.600 right if they take the distribution, and then you also 0:07:18.640 --> 0:07:21.000 need to have consumers that are buying it. So it's 0:07:21.040 --> 0:07:23.800 like a chicken in the egg, which is very difficult 0:07:23.800 --> 0:07:27.280 to do. So when we go to distribution prior to PEPSI, 0:07:27.280 --> 0:07:29.480 we're in a lot of ab abi and how's it 0:07:29.560 --> 0:07:32.520 Bush independent distributors, and we had a lot of conversation 0:07:32.680 --> 0:07:34.560 with them. You know, it was very difficult for them 0:07:34.560 --> 0:07:36.760 to take a product because they were saying, you know, 0:07:36.800 --> 0:07:39.640 I'll take your product on, but then I just can't 0:07:39.680 --> 0:07:41.480 have it sit in my warehouse. You know, I need 0:07:41.520 --> 0:07:43.840 a product, I need a consumer poll, I need retailers 0:07:43.840 --> 0:07:46.640 that want it. So what we had to do is 0:07:46.680 --> 0:07:49.880 we had to really build a demand at the retailer 0:07:50.280 --> 0:07:54.760 prior to going and really getting these distributors to sign up. 0:07:55.160 --> 0:07:58.240 So we actually had to what they called sell direct, 0:07:58.360 --> 0:08:00.760 So we'd sold direct to a lot of the retailers 0:08:00.800 --> 0:08:03.760 are targeted retailers that we built scale and volume and 0:08:03.800 --> 0:08:07.520 consumers around to create that, you know, that sales channel. 0:08:07.560 --> 0:08:09.680 So then we could go to the distributor and show 0:08:09.720 --> 0:08:12.480 the distributor we had there's a reason why we should 0:08:12.520 --> 0:08:16.160 be in their distribution network, and that's constantly reinforcing and 0:08:16.200 --> 0:08:19.800 then collaborating with them to build out the distribution, build 0:08:19.800 --> 0:08:22.800 a consumer awareness, and ultimately work to get a loyal 0:08:22.800 --> 0:08:25.960 consumer around the brand within that given market. Yeah. 0:08:26.040 --> 0:08:27.960 No, I mean that makes a ton of sense, right, 0:08:28.040 --> 0:08:31.680 So that whether it's the independent anhyder Bush distributors, whether 0:08:31.720 --> 0:08:34.120 it's pepsi. They're not going to pick it up unless 0:08:34.160 --> 0:08:37.520 their own end retailers are going to actually devote shelf space. 0:08:37.880 --> 0:08:40.200 They're not going to devote shelf space unless they see 0:08:40.200 --> 0:08:42.440 that there is some evidence that if they devote shelf 0:08:42.480 --> 0:08:45.320 space that someone's going to buy it. What did you do? Like, 0:08:45.520 --> 0:08:49.959 you know, different energy drinks seem to have different audiences 0:08:50.040 --> 0:08:53.040 or different so you know, like I think some like 0:08:53.080 --> 0:08:55.480 are probably more for the gamer space and some are 0:08:55.520 --> 0:08:58.120 more for like sort of like euro types who like 0:08:58.160 --> 0:09:01.240 go to clubs and listen to DJs do some want 0:09:01.320 --> 0:09:05.960 to be associated with extreme sports, and some are associated 0:09:06.000 --> 0:09:08.559 with construction sites and maybe more blue collar workers or 0:09:08.600 --> 0:09:11.079 truck drivers, et cetera. How do you pick a lane? 0:09:11.480 --> 0:09:13.680 Well, that's the other thing you need to put. You 0:09:13.760 --> 0:09:16.920 really need to have a target audience. You need to 0:09:16.920 --> 0:09:19.480 have a retailer story, you need to have a distributor story, 0:09:19.640 --> 0:09:22.360 you need to have a consumer story. So that's one 0:09:22.440 --> 0:09:24.320 thing that we've been able to work on over the years. 0:09:24.480 --> 0:09:28.000 The same retailer story and your distributor story or sales 0:09:28.040 --> 0:09:30.199 pitch might you know needs to be different than potentially 0:09:30.280 --> 0:09:34.000 the consumer pitch. When you look at it, it's really 0:09:34.080 --> 0:09:37.080 understanding your customer. You have to be customer centric. You 0:09:37.120 --> 0:09:40.040 have to understand why does your customer needs your product, 0:09:40.360 --> 0:09:42.200 what is the reason, what is the void and maybe 0:09:42.240 --> 0:09:44.640 their portfolio and at the end of the day, how 0:09:44.720 --> 0:09:47.040 can they make more money on your product. So as 0:09:47.080 --> 0:09:51.000 an example to your point, there's different segments. So Celsius 0:09:51.840 --> 0:09:56.320 is really essential energy. So Celsius is Celsius Live fits 0:09:56.360 --> 0:09:58.760 our mantra. We have over two point eight grams of 0:09:58.840 --> 0:10:01.880 vitamin you mentioned by it's in traces in the product, 0:10:02.000 --> 0:10:04.920 and we have a variety. We have green tea and 0:10:05.000 --> 0:10:09.080 ginger chromium. We have vitamin C and your B complexes, 0:10:09.120 --> 0:10:11.040 so a lot of great vitamin's in there. It's almost 0:10:11.040 --> 0:10:13.880 like a multi vitamin within a can. And that really 0:10:13.880 --> 0:10:16.840 positions us as this healthy, better for you energy segment, 0:10:17.160 --> 0:10:20.439 and that's really what we when we speaking with our distributors, 0:10:20.720 --> 0:10:23.520 they had a void because historically it's been sugary energy 0:10:23.559 --> 0:10:27.079 drinks that they've had within their portfolio, and we were 0:10:27.120 --> 0:10:30.480 offering this different offering for them to sell for this 0:10:30.520 --> 0:10:33.079 better for you consumer, which is especially coming out of 0:10:33.160 --> 0:10:36.079 a post COVID world. Everyone's thinking about health and wellness 0:10:36.160 --> 0:10:39.160 and fitness, which is a key and a DNA component 0:10:39.200 --> 0:10:41.480 of who we are. We originally started off as a 0:10:41.520 --> 0:10:44.400 pre workout, but now we're aligned with today's health minded 0:10:44.440 --> 0:10:48.280 consumer with our attributes of accelerating metabolism and helping burn 0:10:48.360 --> 0:10:50.640 body fat so really help you achieve your health and 0:10:50.640 --> 0:10:53.640 wellness goals. So that allowed us to position ourselves within 0:10:53.679 --> 0:10:57.360 the distributors as a unique offering within their portfolio. And 0:10:57.400 --> 0:11:00.000 that was our go to market strategy with our distributed 0:11:00.200 --> 0:11:02.439 and also with our retailers to be able to carve 0:11:02.480 --> 0:11:07.040 that space out within those precious resell volts or you 0:11:07.040 --> 0:11:11.880 know planograms that retailers have. So it's a multifaceted approach 0:11:11.920 --> 0:11:15.080 to gain planogram approval at your retailer and then get 0:11:15.120 --> 0:11:17.000 that distributor to actually get it on the shelf. 0:11:17.280 --> 0:11:20.280 Oh wait, what's a planogram? You've never heard that word before. 0:11:20.360 --> 0:11:23.080 So you mentioned how how do your products get included 0:11:23.120 --> 0:11:24.760 on your retail shelf? So when you go to your 0:11:24.760 --> 0:11:28.080 retailer and you go to these chains, all those products 0:11:28.120 --> 0:11:33.040 are mainly orchestrated or designed based on planograms. So the 0:11:33.080 --> 0:11:36.560 products are pre selected by a buyer at the corporate 0:11:36.600 --> 0:11:41.360 office almost like think of them as portfolio managers. Or 0:11:41.480 --> 0:11:44.560 you know, like a mutual fund manager or so on, 0:11:44.600 --> 0:11:48.360 that's picking investments within their shared space to maximize their 0:11:48.400 --> 0:11:52.319 retail maximize revenue for that retailer. So they're picking the 0:11:52.400 --> 0:11:55.400 right they're picking the particular products for their consumer base 0:11:55.720 --> 0:11:58.400 to drive the highest return for that retailer. And that's 0:11:58.440 --> 0:12:01.240 all driven based on planograms. That's what buyers set and 0:12:01.240 --> 0:12:05.040 then those those get provided to the store levels to 0:12:05.160 --> 0:12:08.040 be able to set the shelves for the right strategy. 0:12:08.360 --> 0:12:12.120 And those strategies get reviewed multiple times a year. There's 0:12:12.160 --> 0:12:15.239 big annual reviews that happen usually in October and November, 0:12:15.320 --> 0:12:18.360 depending on the retailer. And then they we'll do retailers 0:12:18.400 --> 0:12:21.080 will do like a mini cut in or a reset 0:12:21.240 --> 0:12:24.600 or a review right around mid year historically, where they'll 0:12:24.600 --> 0:12:27.240 make some changes to their plantgrams to really kind of 0:12:27.280 --> 0:12:31.000 dial in to maximize the opportunity. So example, if a 0:12:31.040 --> 0:12:34.520 certain brand or certain flavors aren't working within the initial 0:12:34.800 --> 0:12:37.880 few months, they'll maybe get cut and they'll try new 0:12:37.920 --> 0:12:41.199 opportunities that come in. So one thing in a retail space, 0:12:41.320 --> 0:12:44.960 especially in the energy category, you really only have in 0:12:44.960 --> 0:12:47.400 some cases up to forty five days to perform on 0:12:47.520 --> 0:12:52.719 shelf otherwise you're out so highly competitive, highly difficult, and 0:12:53.160 --> 0:12:56.440 it's really hard to compete in today's energy during category 0:12:56.480 --> 0:12:59.560 and in beaverage just because it's dominated by really strong 0:12:59.600 --> 0:13:02.280 brands that are out there. And Celsius has been able 0:13:02.320 --> 0:13:05.000 to really rise to the top as we are the 0:13:05.120 --> 0:13:07.920 third largest energy drink brand right now in the United States, 0:13:08.000 --> 0:13:10.160 so we have over over a ten share in the 0:13:10.240 --> 0:13:12.400 energy category for the first time, and just getting one 0:13:12.400 --> 0:13:14.000 share is practically near impossible. 0:13:14.679 --> 0:13:17.360 So from your perspective, how do you fight for that 0:13:17.480 --> 0:13:20.920 shelf space or that space in the planogram? And I'm 0:13:20.920 --> 0:13:22.560 looking at some images of this now. 0:13:22.840 --> 0:13:23.640 They look like this. 0:13:23.840 --> 0:13:26.680 They're like a visual representation of what a deli looks like. 0:13:26.960 --> 0:13:31.079 Yeah, yeah, it's basically the rainbow wall that I mentioned before. 0:13:31.120 --> 0:13:34.320 I'm looking at one for Detergent and it's extremely colorful. 0:13:34.600 --> 0:13:39.080 But how do you convince companies that you deserve that space? 0:13:39.160 --> 0:13:42.360 And going back to the chicken and egg issue that 0:13:42.400 --> 0:13:44.800 you kind of described before and the idea that you 0:13:44.840 --> 0:13:47.560 only have forty five days or so to prove yourself, 0:13:48.000 --> 0:13:51.440 how do you actually go about demonstrating that there is demand, 0:13:51.559 --> 0:13:54.920 especially when you're unveiling something that's still relatively new in 0:13:54.960 --> 0:13:55.400 the market. 0:13:56.000 --> 0:13:59.679 Yeah, that's the highly difficult, that difficult thing to do. 0:14:00.120 --> 0:14:00.200 Now. 0:14:00.360 --> 0:14:04.560 Usually it starts off certain retailers are able to make 0:14:04.760 --> 0:14:08.760 regionalize or localized buying decisions. So those planograms you're looking 0:14:08.840 --> 0:14:11.679 at for the clorox or the detergent set that you're 0:14:11.720 --> 0:14:14.920 looking at, those will be mandated down from corporate, but 0:14:14.960 --> 0:14:18.000 then on a localized level, let's say maybe ten percent, 0:14:18.360 --> 0:14:22.040 maybe fifteen percent of those plantograms can be adjusted for 0:14:22.200 --> 0:14:27.320 local store manager level customization. So what we did is 0:14:27.360 --> 0:14:29.800 we were able to work locally with a few managers 0:14:29.840 --> 0:14:32.480 at some of these key retailers to really focus on 0:14:32.520 --> 0:14:35.920 building a story, so you know, gaining trial, working with 0:14:35.960 --> 0:14:39.720 the retailers, building a loyal consumer in that outlet, and 0:14:39.760 --> 0:14:42.120 then kind of scaling that to two to three stores, 0:14:42.440 --> 0:14:44.880 then eventually going to a region, so you start to 0:14:44.880 --> 0:14:47.120 build a sales story on why you need to be 0:14:47.160 --> 0:14:50.160 in that retailer and why you weren't maybe a larger 0:14:50.200 --> 0:14:54.200 regional or national rollout within the retailer. So it's really 0:14:54.240 --> 0:14:57.560 starting those grassroots stories and then being able to get 0:14:57.560 --> 0:14:59.880 that buyer meeting, which is so difficult to do it 0:15:00.120 --> 0:15:03.800 corporate headquarters for their annual reviews, and then convincing the 0:15:03.800 --> 0:15:07.800 buyer why they need to bet on your product. I mean, ultimately, 0:15:07.840 --> 0:15:09.680 at the end of the day, you're trying to get 0:15:09.720 --> 0:15:13.600 the buyer at these retailers to invest in you as 0:15:13.680 --> 0:15:16.800 a as a brand, as a company. So it's those 0:15:16.840 --> 0:15:19.360 type of strategies and you're going to have to convince 0:15:19.400 --> 0:15:22.400 a lot of it's emotion too, right, So in your 0:15:22.400 --> 0:15:25.880 early brand the argument is, well, the brand doesn't travel, 0:15:26.240 --> 0:15:30.160 maybe it's a certain community segment, certain income level demographics, 0:15:30.480 --> 0:15:32.680 so there's a lot of negativity, but you have to 0:15:32.680 --> 0:15:36.000 convince that buyer to believe. Once you convince that buyer 0:15:36.080 --> 0:15:39.080 to believe, you get the opportunity, then it's on you 0:15:39.160 --> 0:15:42.240 to perform. And if you can perform, then you continue 0:15:42.280 --> 0:15:45.400 to build the brand based on data that shows results. 0:15:45.680 --> 0:15:47.920 It shows that you need to get better placement in 0:15:47.960 --> 0:15:50.960 that plantgram shows that you need to get additional flavors 0:15:50.960 --> 0:15:54.640 because you're offering a variety an opportunity, and the billboard 0:15:54.680 --> 0:15:58.120 effect is super critical. You need to get a billboard effects. 0:15:58.160 --> 0:16:01.600 So when we started, I'll take Target as an example. 0:16:02.000 --> 0:16:04.440 When we first got listed nationally. In Target, we only 0:16:04.480 --> 0:16:07.880 had two flavors authorized that was on the warm shelf, 0:16:08.320 --> 0:16:10.520 and almost every year after that we were able to 0:16:10.680 --> 0:16:14.280 because of the increase in sales and working with local managers, 0:16:14.280 --> 0:16:16.360 we were able to build that and get authorized for 0:16:16.440 --> 0:16:20.440 an additional flavor to be added into the Target sets. Well. 0:16:20.440 --> 0:16:23.320 Once we got to about five flavors at Target, we 0:16:23.320 --> 0:16:26.920 were able to create this like a billboard or Celsia's 0:16:27.000 --> 0:16:31.160 brand on shelf, which started to be incremental. So when 0:16:31.200 --> 0:16:35.200 we added another flavor, it didn't cannibalize our sales. It 0:16:35.240 --> 0:16:38.040 actually increased our sales because more consumers can see the 0:16:38.080 --> 0:16:40.600 product because you create the billboard. Just think of it 0:16:40.880 --> 0:16:43.960 last time, and just think last week, how many new 0:16:44.000 --> 0:16:47.920 brands you tried, and the last seven days, and the 0:16:47.960 --> 0:16:51.080 last fourteen days and thirty days. It's really difficult to 0:16:51.080 --> 0:16:53.480 get a consumer to try a new product. You really 0:16:53.480 --> 0:16:56.760 only have about thirty seconds at best at retail, at 0:16:56.800 --> 0:16:59.920 that retail shelf to convince that consumer to try your 0:17:00.000 --> 0:17:00.960 product for the first time. 0:17:01.400 --> 0:17:04.240 Wait, you mentioned you started at Target on the warm shelf. 0:17:04.280 --> 0:17:06.639 I assume now you're in the refrigerated section of Target. 0:17:07.440 --> 0:17:10.399 Yeah, today we're we have a warm availability and the 0:17:10.520 --> 0:17:13.679 energy set and a variety of stores around the country 0:17:13.760 --> 0:17:16.560 or in the front checkout coolers and additional cold placements 0:17:16.600 --> 0:17:17.280 throughout the store. 0:17:17.600 --> 0:17:20.000 Yeah, I noticed it at my local deli. I think 0:17:20.040 --> 0:17:22.040 I said this last time we talked about you guys. 0:17:22.040 --> 0:17:25.080 I remember, like I was looking for the Celsius and 0:17:25.119 --> 0:17:26.879 I didn't see you, and then it was only because 0:17:26.880 --> 0:17:30.280 I realized that there wasn't. My local bodega now has 0:17:30.320 --> 0:17:34.840 an entire Celsius devoted refrigerator. That it's just Celsius so 0:17:35.320 --> 0:17:39.000 well done on that. Let's talk about the distribution relationship. 0:17:39.040 --> 0:17:41.199 I have to imagine, like you know, Tracy and I 0:17:41.280 --> 0:17:44.240 were starting an energy drink, we would be desperate to 0:17:44.320 --> 0:17:47.399 get like on part of like Pepsi's distribution network early on. 0:17:47.640 --> 0:17:49.359 But then if we grew really big and with the 0:17:49.359 --> 0:17:52.760 odd Loot's Energy Drink were huge, then I imagined that 0:17:52.960 --> 0:17:56.040 power relationship between us and Pepsi might change, and maybe 0:17:56.040 --> 0:17:58.400 in a few years we say, hey, Pepsi, you know what, 0:17:58.440 --> 0:18:01.159 maybe we want to check the terms of our contract. 0:18:01.240 --> 0:18:03.040 I'm sure you have a great relationship with Pepsi, so 0:18:03.040 --> 0:18:05.359 I don't want to say anything. You know, I'm not 0:18:05.359 --> 0:18:07.480 trying to close any trouble, but can you talk to 0:18:07.560 --> 0:18:11.560 us about how that relationship with the distributor changes or 0:18:11.600 --> 0:18:14.760 evolves as you grow bigger and have your own form 0:18:14.760 --> 0:18:15.480 of leverage. 0:18:16.080 --> 0:18:18.920 Yeah, I think that's we're still in the early phases, 0:18:19.000 --> 0:18:21.960 so call it the honeymoon with Pepsi because really we're 0:18:22.000 --> 0:18:26.359 only one year in. So we gained distribution, we're gaining 0:18:26.359 --> 0:18:30.280 additional displays. We're working with them collaboratively for the first 0:18:30.280 --> 0:18:32.560 time this year because it's really our first time that 0:18:32.600 --> 0:18:36.080 we've had a full year of planning. You can imagine Pepsi, 0:18:36.200 --> 0:18:39.359 a company so large, is that they're planning cycles. You know, 0:18:39.359 --> 0:18:42.159 they're planning like two years in advance, versus you know, 0:18:42.160 --> 0:18:44.840 at Celsius, we're very nimble and quick. We've had to 0:18:44.880 --> 0:18:48.000 adjust our planning cycles to really align with their planning cycle. 0:18:48.040 --> 0:18:52.920 On execution, innovation, and retailer marketing programs, those are the likes. 0:18:53.160 --> 0:18:54.760 But what we've been able to do this year, we're 0:18:54.800 --> 0:18:57.120 really excited for the first time to really be able 0:18:57.119 --> 0:19:01.000 to harness Pepsi's resources and planning so we can be 0:19:01.000 --> 0:19:05.320 included on like national priorities and national execution programs. So 0:19:06.000 --> 0:19:07.760 I would say we're still in the you know, the 0:19:07.840 --> 0:19:11.080 early phase. We're really excited about the opportunities we're gaining 0:19:11.160 --> 0:19:14.240 cold placements. You mentioned the deli that you went to 0:19:14.320 --> 0:19:17.359 and saw Celsius dedicated coolers. We've placed over ten thousand 0:19:17.359 --> 0:19:21.040 coolers together, the the amount of displays together. So we're 0:19:21.080 --> 0:19:24.680 really excited at this partnership is just getting started. You 0:19:24.720 --> 0:19:27.439 know what we say in the beverage industry, especially in energy, 0:19:27.560 --> 0:19:29.639 you know, if it's cold, it's sold, and then snack 0:19:29.680 --> 0:19:31.600 it high and watch it fly with displays. So we 0:19:31.640 --> 0:19:33.960 say that all the time internally and it's been great 0:19:34.000 --> 0:19:35.280 with our Pepsi partnership. 0:19:51.240 --> 0:19:55.199 Do beverage brands, however, like dream of owning more of 0:19:55.240 --> 0:20:00.399 their distribution over time? Like I mean eventually again, I 0:20:00.520 --> 0:20:02.919 understand you're in the honeymoon phase. You're probably going to 0:20:02.920 --> 0:20:06.000 be working with Pepsi for a long time, but just conceptually, 0:20:06.720 --> 0:20:10.280 does a beverage company eventually try to own more as 0:20:10.359 --> 0:20:12.880 much of their own distribution capacity as they can? 0:20:13.720 --> 0:20:16.560 Well, you know, that's an interesting question, and it's like 0:20:16.920 --> 0:20:18.840 when you go to think about that, you know, it's 0:20:19.520 --> 0:20:21.919 what type of business are you and what type of 0:20:21.920 --> 0:20:24.560 business do you want to become? So there has been 0:20:24.600 --> 0:20:26.800 a successful company that's did it on their own which 0:20:26.840 --> 0:20:29.200 is Red Bull. I mean Red Bull owns their own distribution. 0:20:29.640 --> 0:20:32.639 They're phenomenal, they do a great job, great executors, and 0:20:33.040 --> 0:20:36.240 it's worked extremely well. There's been other regional brands that 0:20:36.280 --> 0:20:38.920 have tried that, and it's just it's if you don't 0:20:38.920 --> 0:20:40.879 have the right amount of scale. Until they get that 0:20:40.920 --> 0:20:47.040 scaling point, it could be an extreme, extremely costly strategy 0:20:47.119 --> 0:20:49.480