What does a famous scene in Goodfellas and a renegotiation of the PepsiCo and Celsius distribution deal have in common? Celsius Holdings (NASDAQ: CELH) had quarterly revenue of $356 million, which was up 37% YoY. During the trailing twelve months, Celsius Holdings smashed through the billion-dollar mark…with the energy drink brand generating $1.41 billion in revenues over that period. According to Circana last 13-week data, Celsius was the number one brand driver of unit and sales growth in the energy drink category. In addition, according to the trailing 4 weeks of Circana all tracked channel data for the period ending March 31, 2024, Celsius is now securely the third-largest energy drink brand in the category. Its market share grew about four percentage points YoY to 11.5% now. And I don’t want gloss over this accomplishment…because it’s the first time in over a decade that an energy drink not named Red Bull or Monster Energy has had a 10% share in the U.S. market. Celsius energy drinks saw massive growth in convenience stores, foodservice (e.g. fast food restaurants), mass retailers like Walmart, the club channel in retailers like Costco, and the Amazon marketplace. CELSIUS is now the best-selling energy drink on Amazon. Additionally, the early international market development groundwork starting to formalize with CELSIUS extending its relationship with Suntory Beverage & Food and also saw the first major international market expansion under the PepsiCo umbrella, as sales and distribution activity in Canada began in December 2023. It's my opinion that international expansion presents significant opportunity for incremental growth over the next three to five years. With Celsius at basically full distribution now…the TDP growth will have to come from increased items carried per store. In this quarter, average SKUs per retailer increased to 20.6 from 13.5 in the prior-year period…causing TDP growth of 55% YoY and 27% sequentially. Going forward, Celsius will increase items per store through a combination of product strategies like flavor expansion, scaling the new Essentials lineup, and reintroducing iterated line extensions like fizz-free. Additionally, they will seek more store placements like leveraging cold display activity in Celsius-branded coolers. Finally, I connect the dots between one of the greatest movies of all-time, Goodfellas...and a recent 8-K report about the amended PepsiCo and Celsius distribution deal. In return for extra incentives on sales of Celsius with adjustments for promotions, John Fieldly likely asked for some extra non-compete coverage in the energy drink category. There’s been some speculation that PepsiCo was interested in trying to unravel the mess of a structure that is Congo Brands/Alani Nu/PRIME (most likely get a share of Alani Nu), but it looks like that option is being put in witness protection (at least for the near-term).

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