Celsius CEO: Portfolio Growing Faster Than Category

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00:00Before we get to the energy drink culture, I just wanted to go over your results with you because

00:04this week you reported third quarter revenue that beat the average analyst estimate, but not the

00:08highest buy side consensus. And I recognize that there's weakness in the overall market, but you

00:13look at Celsius shares and they're extending yesterday's plunge and now set to close the

00:17week down about 30 percent. What do you think investors are not giving Celsius enough credit

00:23for? Yeah, no, glad to be here. We're really excited where we're at. It's been a transformational

00:28year for Celsius. We just completed an acquisition of Rockstar, which and also Alani knew this

00:34year. So we have a lot going on, you know, and the fundamentals of the business have never

00:38been stronger. One of the we did beat the street, not only on revenue, but also EBITDA came in

00:44at 200 million in revenue and EBITDA. But what we did say is Alani is going to be integrating

00:51at the PepsiCo's distribution system. And we just signed a new deal with Pepsi, which further

00:56enhances our capabilities. And we are the energy lead captain for PepsiCo, which we're really

01:01excited about. But the timing of that and some of the orders that will be transitioning

01:05from Q4 into Q1 of next year. But we're still very disciplined on the execution and how we're

01:13going to bring Alani into the distribution network, which would be majority of those distribution

01:17partners. And our outlook has never looked brighter. We got great innovation and we're really

01:22excited. So I think it's just a mismatch on short term expectations. But we put up solid results and

01:28we're really excited about where we're going. And this is a fast growing category. And we have some

01:31of the best brands in the category. You mentioned the Alani new brand transitioning into PepsiCo's

01:36distribution network. Does that I mean, it's created this distortion, this short term mismatch,

01:40as you put it. Does that extend to other brands as well within the Celsius portfolio?

01:45No, no. Actually, the Celsius portfolio has we're up to about 13 percent growth rate,

01:50growing faster than the category. And inconvenience, which is a really important

01:54channel in the energy category, is also exceeding expectations and the category growth rate. So

01:59we're really excited about that. Celsius is doing well. We just launched a campaign this year

02:04called Live Fit Go, really aspiring people to live a healthy, active lifestyle and really use

02:09Celsius to help you achieve your goals. And then Rockstar is already in the PepsiCo distribution

02:14network. It's been a struggling brand. It's original OG energy. We do see great value in that,

02:19going back to music and culture and having people accomplish to be their inner rock star. So we're

02:23really excited about that brand. Now, John, I'm glad you mentioned some of your push into

02:28the health segment, trying to target more health conscious consumers. Talk to us more about that,

02:34because Carlton and I were just talking about, you know, there's a whole culture around that and

02:38coffee drinking as well that perhaps Celsius could eat into. Would the health conscious consumer

02:44perhaps be your way into creating that sort of culture? Yeah, a hundred percent. And that's

02:49what's unique about Celsius and Alani. They're really multivitamins in a can, really providing

02:54that better for you energy to help you accomplish, go through your day. You talked about afternoon

02:58pickup. What's better than a refreshing Celsius or Alani? Some fun, great flavors. With Celsius,

03:04we just launched a Spritz Vibe. This is actually two weeks ago. It's a variety of fine retailers. It's

03:10great. It's fun. And then with Alani New, we have a winter wonderland flavor that's kicking out in

03:14the retails right now, which is another exciting flavor. They're expanding the category. Health and

03:20wellness is continuing to grow. Consumers are looking for something that's aligned with their

03:25healthy, active lifestyles. And that's in the DNA of Celsius and Alani. Yeah. And what are you

03:30thinking in terms of the consumer outlook, John? Because we know, of course, there's a lot of stories

03:34about consumers coming under pressure, especially heading into the end of the year. But is this

03:40something that spending under health and maybe choosing a healthier drink, is that something

03:45that you think would be a priority for them, despite the fact that their income might be

03:50under pressure from a bunch of other catalysts here? Yeah, I think you're spot on. What we've seen

03:56is really strong growth within the consumer segment, especially in energy. The category continues

04:00to grow double digit. We expect that to continue to 26 and beyond. It's a growing category. Consumers

04:06want more out of the beverages they consume. They want more out of their energy drink. And Celsius

04:10and Alani deliver that with the functional vitamins that are in these products and within

04:14their vitamin blend formulas. So also, as you're heading into the holidays and you're getting ready

04:19for Thanksgiving, you got those turkey trot runs and 5Ks. What's better than to grab a Celsius

04:23or Alani and get going? And if you're going shopping, you're going to need to pick up enough

04:28better. There's no better other product on the market. Well, to Christine's point, I'm sure

04:32you've noticed that earnings from fast casual restaurants show foot traffic stalling, especially

04:36from young people, while fast food restaurants are doing well and continuing to do well because

04:41consumers are seeking value. What's the takeaway for Celsius in terms of offering a breadth, a range

04:46of price points for consumers who are becoming very, very budget conscious? Well, I think when you

04:51look at energy drinks in general, it fills a need state. It's a, you know, it's part of a daily

04:55lifestyle, a daily routine. And you're looking at some of those coffee houses that offer also

04:59refreshing, cold caffeinated beverages. You know, when you look at some of the price point

05:04versus a Celsius and or Alani or a Rockstar, you know, we're highly, we're great value,

05:08great value, great flavor, and great energy as well. So I think we could pick up additional

05:13share from that. Also, Evercore came out with a report that talked about how the energy category

05:18was taking share from cold brews and cold coffees. So that's some, some, that's what we're seeing

05:23in the category. And that's probably why the category continues to grow. Yeah. Well, John,

05:27any insight into perhaps the international market that you may be targeting? I tell you,

05:34I used to live in London. I was there for nine years and I'm sorry to say that Monster has the

05:38market over there, but any plans for potential try and take over the market share there?

05:43A hundred percent. And we're just getting started. The same health and wellness trends we see in the U.S.

05:48are global trends. We actually have a great share presence in Sweden and Finland, very healthy

05:53markets. And then also we've just recently launched in Australia, seeing great results there. We just

05:59launched in the UK and New Zealand. We also France and Benelux. So slow starts, methodical approach,

06:07but we're really excited. And Monster does have a stronghold, but we see great opportunities and

06:11we're going to bring some more refreshing energies to the market. John, great speaking with you. Before I let

06:16you go, I have to ask you about aluminum tariffs. I know they've been a headwind. What do you see

06:20the impact in the fourth quarter? Do you see them increasing? And what does that say about how

06:26things shape up for 2026? Yeah. I mean, we produce locally in the markets, but we do import and

06:32aluminum tariffs have been a challenge, especially with Midwest premium prices on aluminum. So

06:38it's something we're going to have to deal with. We're trying to leverage pricing promotional

06:42strategies as well to offset that. If you saw the gross profits we delivered in the most recent

06:47quarter, we're really focused on discipline here and driving profitable growth and earnings. So

06:52it's a headwind we're going to have to deal with. We do expect it to continue, especially as we FIFO

06:57through some inventory that we have on our balance sheet.

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