How is the stock up 6,546% in 5 years?
Celsius. The New Disruptor! Equity Research! Part 1/3.
This energy drink company came seemingly out of nowhere and has caught the world by surprise.
Massive sales growth has allowed them to gain a cult following with a plethora of fitness enthusiasts and everyday people alike.
Meanwhile, huge commercial success has enabled the stock of Celsius to become a darling of capital markets.
With a market cap of $21B, in just 5 years, the stock is up 6,546%!
Now that Celsius is no longer playing in the junior leagues, can the company continue its magnificent run, or is Celsius a boom-and-bust story?
Let us explore!
1. The Story of Celsius
2. Products
3. Manufacturing
4. Marketing Strategy
5. Parts 2 and 3
1. The Story of Celsius
Celsius is a beverage company based in Florida, USA. While the company is around 20 years old, the bulk of its success has come in the last 5 years. The energy drink industry is very competitive, with many brands fighting for customers.
There is a massive demand for caffeinated, uplifting, and refreshing drinks, while at the same time, people and governments are getting more concerned about the negative health effects of addictive, highly caloric sugary beverages. Energy drinks, being the primary culprit, have a reputation for not being the healthiest option. Celsius saw a gap in the market and tackled it head-on.
Celsius has chosen a specific sub-niche, the “better-for-you” fitness energy drink market!
This was a great market entry strategy. In the fast-moving consumer goods (FMCG) industry marketing determines one’s success. If we are being honest, a lot of the FMCG brands sell the same stuff, just packaged and marketed differently. Customers choose one product over another because of its message. The message Celsius wants its customers to know is:
Celsius is hip, healthy, and functional, while other energy drinks are unhealthy sugar bombs!
2. Products
One of the company’s main products is its flagship 12oz Celsius energy drink can.
Through the years as the company tried to become more mainstream, the packaging went through a complete redesign. In 2008 Celsius drinks were primarily sold in niche stores to fitness enthusiasts. As you can see in the left picture, the design was quite cluttered, emphasizing its calorie-burn-enhancing qualities. Such design and messaging would only appeal to a certain subset of the fitness community. It’s night and day to how the cans look today.
Understanding the importance of packaging in FMCG was one of the main drivers behind Celsius success!
People shop with their eyes. The redesigned can is not a cluttered ugly mess, rather it’s clean, bright, and inviting. Instead of telling its customers what their drink does, Celsius invites you to “feel” what it does. Clean white can, with bright pictures of fruits, small text with claimed health benefits, and 3 little icons.