America’s Energy Drink Obsession is Supercharging Celsius, the Country’s Third-Largest Beverage Company – The Average Joe
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    America’s Energy Drink Obsession is Supercharging Celsius, the Country’s Third-Largest Beverage Company

    Noah Weidner

    March 12, 2024

    Dunkin’ in the morning, energy drink in the afternoon. That’s the formula many Americans use to power themselves through the day. But for some, it’s straight energy drinks through the day — a love affair that churns out $21.1B annually in the US. However, health concerns are leading people to seek out healthier options, which has given birth to a rising king of energy drinks.

    Energy gauge: After years of clawing market share from beverage giants like Coca-Cola ($KO) and PepsiCo ($PEP), Celsius Holdings ($CELH) has become America’s third-largest beverage company by sales, fueled by demand for its energy drinks. In a highly competitive market, the brand positioned itself as a healthier energy drink in contrast to its sugary competitors.

    • Its meteoric rise made it one of the greatest stories in US market history — with its stock returning over 7,100% over the past five years.
    • Since then, the company has gone from just $1.7M in quarterly revenue to $347.4M, a 20,400% increase over 21 quarters — with sales doubling for three years straight.

    Drink to the duopoly

    Celsius’ growth still pales in comparison to Monster Energy’s ($MNST) 73,850% run since 1985 — making Monster one of the best-performing stocks of all time. Celsius is also caught in the middle of a long-time rivalry between Coca-Cola, who has a minority stake in Monster, and PepsiCo — who decided to back Celsius.

    • In 2022, PepsiCo invested $550M in Celsius, becoming its distributor and largest shareholder, which could help it pick up market share in the low-sugar, high-energy drink market.
    • For brands, getting prime shelf space can make or break a brand, and PepsiCo’s investment gave Celsius a massive distribution network of retailers.

    Forward-looking: The price tag is high for investors eyeing Celsius, with a steep 80x price-to-earnings ratio — significantly higher than the S&P 500’s 23.2x. Nevertheless, analysts foresee another year of banner growth for Celsius. Stifel analysts upgraded the stock to $95 (11% upside) yesterday, citing the company’s fast-growing market share and expectations for Celsius to capture 14% of the beverage market by June.

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