You can’t ‘replicate a Celsius’: How the energy drink maker evolved from an unknown to category giant

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When John Fieldly joined Celsius Holdings as CFO in 2012, the fledgling company was a virtual unknown in an energy drink space dominated by Monster and Red Bull. It had almost no market share, was struggling to gain mainstream acceptance for its beverage and sported a market capitalization of $5 million.

Now, more than a decade later, revenue tops $1.3 billion annually and Celsius is mentioned in the same breath as the competitors it once looked up to in the category.

Its market share of the $19 billion energy drink space has soared to about 11% and its products can be found nearly everywhere, from gyms and Dunkin’ Donuts to Walmart and 7-Eleven. Wall Street now values the company at $9 billion.

“I don’t think you can replicate a Celsius,” said Fieldly, who became the company’s CEO in April 2018. “There’s been so many outside forces that have gotten us here, and there’s been so many internal decisions and team members that have helped us get to where we’re at and where we’re going.”

‘Right product at the right time’

Celsius’ ascension into a category juggernaut powerful enough to break the energy drink market’s duopoly is a mix of carefully planned strategy and a little bit of luck.

Energy drinks have garnered a reputation as highly caffeinated beverages consumed by people looking for a pick-me-up, such as construction workers or college students pulling an all-nighter.

In recent years, the products have become associated with health and fitness, refreshing fruit flavors and a wider range of usage occasions that have heightened their appeal to the masses. Arguably, no other energy drink has benefited as much from these changes as Celsius.

The 20-year-old Florida company is maturing as consumer interest in better-for-you and functional offerings — a trend that intensified during the pandemic — has accelerated. Celsius fits squarely into these categories with a drink that lacks sugar and calories but comes loaded with ingredients it claims provide workout and energy benefits without the crash.

“I don’t think you can replicate a Celsius. There’s been so many outside forces that have gotten us here, and there’s been so many internal decisions and team members that have helped us get to where we’re at and where we’re going.”

John Fieldly

CEO, Celsius Holdings

At the same time, Celsius built its portfolio around unique flavor combinations, such as Green Apple Cherry, Kiwi Guava and Mango Passionfruit, that help the company to stand out from its peers.

Celsius has also proven skillful at marketing its beverages and expanding the number of occasions when its drinks are consumed.

The company frequently sponsors music festivals, motorsports teams and college athletes. It also leans on 2,000 brand-loving ambassadors to promote the drink through product sampling and the distribution of Celsius swag. And unlike other energy drink brands that skew heavily male, Celsius’ near-even split between genders opens up a lucrative market for the offering.

“We’re just getting started,” Fieldly said. “The opportunity [for the Celsius brand] is just massive.”

Kaumil Gajrawala, an analyst at Jefferies, said “nobody else has been able to break out in the way that Celsius has” during the last 20 years, regardless of the company’s experience, financial resources at its disposal or the strength of its distribution network.

“Celsius had the right product at the right time,” Gajrawala said. “When it was time to break out, they galvanized it. They got it right.”

Celsius estimated it was responsible for a third of the growth in the energy drink space last year. During the final 12 weeks of 2023, nearly 80% of Celsius’ dollar growth was incremental to energy — a combination of consumers new to the category and those increasing their consumption by purchasing Celsius. The brand also is attracting people from other beverages, such as coffee.

After U.S. retailers reset their shelves during the first half of 2024, Celsius said it picked up an average of seven SKUs from a year ago. It now averages 20 SKUs in all measured channels, the most in the company’s history.

Celsius has “been transformational” for the energy space,” Fieldly said. “We’re driving category growth. We’re innovating the category.”

Jon Andersen, who covers Celsius for William Blair, said he is optimistic the company still has room to evolve into a “multi-billion” brand by sales and could eventually double its existing market share.

The CPG analyst pointed to “compelling proof points” that hint at Celsius’ growth potential, including its market share topping 20% on Amazon as well as in locations where it prioritized growth early in its history. As the brand gets into more stores, expands internationally and benefits from the broader growth in energy drinks, an increase in sales and market share should follow.

“There are just a lot of levers here for Celsius to work with,” Andersen said. “I am pretty bullish because of those proof points that seem to be leading indicators that suggest this brand is still in the fairly early stage in terms of penetration of the category.”

The company’s success has not gone unnoticed. CPG giant PepsiCo, which has its own energy drink brand in Rockstar, signed a distribution agreement and took an 8.5% stake in Celsius in 2022. Analysts have speculated that PepsiCo could eventually decide to purchase the rest of Celsius.

Building brand visibility

Celsius traces its roots to fitness trainers and exercise aficionados at gyms and health clubs. But over time, it has evolved into a lifestyle brand backed its “Live Fit” tagline.

The beverage maker’s main products are an original fruit-forward product; Vibe with amped-up flavors, limited editions and packaging ideally suited for Instagram; and Essentials, larger-sized 16-ounce cans with added aminos and flavors that are more reminiscent of traditional energy drinks. It also offers On The Go energy powders in many of the same flavors as its ready-to-drink beverages.

A big part of its future growth hinges on getting people to drink Celsius across more consumption occasions.

“It’s a huge marketing opportunity to get brand visibility in every avenue of people’s everyday life,” said Kyle Watson, chief marketing officer at Celsius. “We really have a lot going on where we haven’t even scratched the surface.”

Last year, Celsius signed on as a sponsor for Major League Soccer, a connection that drives the brand’s relevance with younger shoppers and Hispanic consumers who tend to purchase more energy drinks per person than other demographics.

The company followed the soccer deal with a partnership in February with a Formula 1 racing team, riding the sport’s growing popularity in the U.S. and gaining a foothold in a premium, global marketing platform it plans to leverage as Celsius expands internationally. Celsius, which reported record international sales during its second quarter, plans to enter Australia, New Zealand and France later this year.

Celsius also is branching out beyond its energy drink roots to promote its versatility as an ingredient in mocktails and as an alcohol substitute for the sober-curious consumer. Some concert venues offer it for music-goers who want a beverage but don’t want alcohol or would like to cut back. These channels are less about generating meaningful sales for Celsius and more about building brand awareness.

A lucrative opportunity for growth, however, is built on positioning Celsius as a mealtime drink to replace morning coffee or as part of a lunchtime ritual.

Jersey Mike’s 2,000-plus sandwich stores sell Celsius’ Orange, Tropical and Peach flavors, which the drinks company said pair well with sandwiches. It recently introduced a Cherry Cola-flavored energy drink that complements savory and indulgent foods, such as hamburgers and pizza.

At a 7-Eleven store in Boca Raton, just a few miles from Celsius’ Florida headquarters, a barrel-shaped cooler near the checkout is filled with ice and Celsius. It’s strategically positioned adjacent to a chilled display featuring pasta salads, grapes, egg croissants, cookies and sandwiches that shoppers can grab on their way out.

The display not only helps snag a spontaneous purchase and an association with food, but it helps drive trial; the next time a consumer might decide to purchase a multi-pack of Celsius.

Just a few steps away from where the single-serve cans can be found at 7-Eleven, the same store prominently features those multi-packs near the parking lot window that is adorned with Celsius decals.

There were other places in the 7-Eleven convenience store to find Celsius, too: Close to two dozen single-serve cans were stocked inside refrigerators next to other energy drinks, waters, teas, sodas and coffees.

Consumer, innovation slowdown weighing on Celsius

Even as Celsius looks for growth opportunities, it remains squarely focused on its core energy offering.

Fieldly said while Celsius has looked at “adjacent categories” such as food or hydration, it would be several years before the company would seriously consider them. Celsius still has ample opportunity to grow its presence in convenience stores, boost sales of its energy powders, expand internationally and innovate through its existing beverage portfolio.

Gajrawala, the Jefferies analyst, underscored the importance of Celsius keeping a close watch on its core U.S. energy drinks business even as it explores other growth channels. This comes as Celsius faces an ever-evolving set of challenges in how it goes about marketing and innovating after expanding so quickly during the last five years.

“We haven’t seen many instances of them making mistakes so far, but it’s hard,” Gajrawala said. “You have to add hundreds of millions of dollars to grow, and that is very different than when you’re at a much smaller revenue base.”

Recent data has indicated that Celsius may be losing popularity, at least with some consumers. During its second-quarter earnings last week, Celsius posted record revenue but also noted that it lost market share in July.

Information collected from 8,000 consumer responses by data analytics firm HundredX found Celsius’ purchase intent has fallen 14% during the past few months, more than other top energy drinks and soda brands. While customers liked Celsius’ “healthiness” versus its competitors, more people have started to question its ingredients, most notably its high caffeine content and artificial ingredients.

This comes as the energy drink sector as a whole has seen growth slow as consumers cut back on spending. Celsius has been among the hardest hit.

In a research note, Bank of America analyst Jonathan Keypour said Celsius’ demographic appeal and positioning for new usage occasions “have led to outsized exposure to [the] category-wide slowdown, threatening [its] market share.”

He also questioned the company’s “unproven innovation muscles” — citing a limited pool of base flavors Celsius’ products use and a “tepid performance” of its Essentials line — that could pose “a risk to a meaningful expansion” in shelf space in 2025.

“With US distribution completed via the Pepsi partnership, CELH will need to source growth from shelf expansion despite flagging velocity and mounting competition,” Keypour said. “We still see strong sales and [earnings before interest, taxes, depreciation and amortization] potential but wait for stronger velocity to signal a resumption of momentum in market share gains.”

Andersen with William Blair said that Celsius so far has avoided any meaningful missteps during its ascension. The biggest challenge for the company will be to keep, and eventually expand, the shelf space it has gained from retailers. This will place further pressure on Celsius to launch innovations that resonate with shoppers while successfully continuing to market the brand in ways that encourage trial and boost consumer awareness.

Tony Guilfoyle, chief commercial officer at Celsius, said some beverage brands get ahead of themselves “by trying to be everything to all people.” The decision can weaken a brand, either by creating confusion on what the product stands for with consumers or by forcing employees to take their attention away from the core area of strength that made it successful.

“We do a good job of going really deep with the products that we have and driving responsible, steady, well-founded growth and focusing on what really works for us,” Guilfoyle said. “You start to dilute the brand and your credibility in doing so too quickly. We never lose our focus on the core DNA of what this brand is.”