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Celsius Reports Strong Reception for Natural, Heat Launches; Rethinks Marketing Alignments; Now a NASDAQ Stock

Celsius Holdings has gotten off to brisk start with new all-natural and Heat extensions even as it rethinks role of some of marketing partnerships put in place by prior ceo Gerry David and takes more deliberate approach to DSD distribution.  Also a priority is improving consistency of pricing across channels, with Fla-based co even going so far as to line-price its core and natural entries rather than taking premium for latter, in interest of averting any confusion at retail.

Those were some of highlights gleaned from conversation with cfo and interim ceo John Fieldly and sales and marketing evp Vanessa Walker following bell-ringing ceremony at Times Square MarketSite of NASDAQ, to which CELH was recently upgraded.  Move, John explained, should improve liquidity and enhance co’s ability to raise capital, tho with $20 mil in cash in till none is currently needed.  “Ultimately, it’s all about our shareholders, and building overall shareholder value,” John said.  Listing comes as CELH has completed frenetic round of activities, including major repositioning and rebranding, launch of natural extension and Heat entry and “transitioned Gerry into his retirement,” as Vanessa put it.  For NASDAQ ceremony, CELH brought along entire exec team as well as core investor and Rexall Sundown founder Carl DeSantis, whose continued financial support enabled co to weather early missteps, and several reps of more recent investor, Hong Kong-based Horizon Ventures.  Walker joined co a little over a year ago, after strong run on La Croix essence water brand at National Beverage.

Good Early Signs on Key Extensions   Naturally formulated extension launched just 60 days ago has proved “pleasant surprise,” Vanessa said:  Tho Sprouts chain had committed to entry prior to launch, extension has since added Fresh Market chain, which has put it in both warm and cold sections and has endcap program about to hit.  One challenge is that, in natural channel where conventional energy brands don’t pass muster, Celsius is often competing vs range of tea-based brands like Guayaki.  New sales team has been recruited to push natural extension, led by Austin-based former Kind Bar exec Paula Burke.  Meanwhile, more intense Heat extension aims to challenge Bang brand offered by Redline marketer VPX in fitness channel, serving as entry point to Celsius brand for influencers who work out there.  Heat is packed in 16-oz can vs 12-oz can for core line and natural extension, and packs heavier ingredient wallop.

Rethinking Prior CEO David’s Marketing Alignments: Flo Rida a Keeper but NASCAR May Go  While abruptly announced departure of prior ceo Gerry David earlier this year was attributed by both sides by desire of longtime turnaround expert to lighten workload and travel sked, it’s clear now that divergent views on strategy, particularly on marketing side, were factor.  Tho David was widely praised for having brought back co from brink after founding team overspent and underdelivered on sales, some of his marketing affiliations had prompted head-scratching among trade partners and bev watchers and are now being reconsidered.  One is NASCAR and driver Blake Koch.  “If we continue at all, it would be with our brand Heat,” Walker indicated, referring to more male-oriented, intensive formula.  That said, were core brand to land c-store chain in heavy NASCAR territory, then affiliation might make more sense and be worth retaining.  Koch himself loves brand and has been excellent partner, execs stressed.  Another key affiliation has been with clean-living Florida-based rapper Flo Rida, whose presence co has worked to leverage more effectively.  Given musician’s penchant to work out twice a day, it made sense to put him at center of 2-month competition at Gold’s Gym that afforded winner a 2-hour workout with rap star.  (His song “Going Down for Real” has been voted best workout anthem at gym chain, attesting to relevance of tie if handled right, Walker noted.)  Some outside co had also wondered why another investor, hiphop mogul Russell Simmons, doesn’t play larger role in building awareness.  Given his current involvements and lifestyle, Def Jam chief is more likely to be steered to supporting natural line extension, Walker indicated.  

Special Marketing Challenges for Brand that Straddles Bev Segments, Retail Channels   In conversation, Fieldly and Walker described special challenges of brand.  For one, it serves as “Swiss Army knife” that straddles range of functions, including calorie burning and energy, and range of retailers, from Vitamin Shoppe to 7-Eleven.  That can result in overcomplicated messaging unless marketers are ruthless about keeping message crisp.  “The (range of) benefits were an extreme challenge for the prior management team,” she said.  Under Walker, strategy is to set brand at cusp of energy and functional brands, under “Live Fit” lifestyle umbrella.  At $2.49 in c-stores (promoted at 2 for $4), it’s priced vs core Red Bull and Monster packages, with view to winning over consumers who may be ready to move away from conventional energy drinks.  For another, it’s seeking to expand in some retail accounts from comfortable nest in health & beauty aisle – where it doesn’t have to brook any opposition from larger bevcos – to general bev set, particularly cooler.  So it would be hollow victory to win bev placement at cost of losing spot in HBC.  Ideally, Celsius keeps its 4-packs and powders in HBC aisle while adding single cans of core or natural line to cooler.  Harris Teeter is one retailer that just added bev placement for Celsius while retaining spot in HBC.  Challenges are compounded by brand’s use of supplement rather than nutrition panel, which some bev buyers bridle at, despite Celsius formula being backed by range of clinical studies that set it apart from functional rivals.  Meanwhile, co is being disciplined about moving into mass merch or club channels until awareness is further developed.  “If you don’t know who we are, you don’t need 48 at a discount,” Walker noted drily.

Tilting Away from DSD as Channel Presence Broadens    Celsius also has been quietly backing off once extensive reliance on DSD distributors, as its increasing presence in online and specialty retail channels runs up against distributors’ dislike for ceding channels from their own coverage.  So new team is being highly selective, Walker indicated, recently recruiting Lenore in San Diego to complement coverage in LA area of Haralambos.  Other key DSD partners include Polar in New England, Bernick’s in Minn, Eagle in Neb and Golden in Utah.

Publishing Info

  • Year: 2017
  • Volume: 14
  • Issue #: 76
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