Billion-Dollar Vibes Only. But does CELSIUS have what it takes to jump either Red Bull or Monster Energy in the next several years? Celsius has now been fully integrated within the PepsiCo distribution system now for the last year and also fully integrated into PepsiCo’s annual planning cycle. Celsius Holdings (NASDAQ: CELH) had quarterly revenue of $347 million, which was up 95% YoY. More importantly, Celsius Holdings smashed through the billion-dollar mark in its full-year revenue numbers. In 2023, the energy drink brand generated $1.32 billion in revenues…which was up a staggering 102% YoY. According to IRI last 52-week data, Celsius was the number one brand driver of unit and sales growth in the energy drink category. Celsius was responsible for 31% of the category growth, driving $1.09 billion in incremental sales. In addition, according to the trailing 4 weeks of IRI SPINS all tracked channel data for the period ending December 31, 2023, Celsius is now securely the third-largest energy drink brand in the category. Its market share went from 4.9% in the third quarter of last year to 10.5% 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 and also number one energy drink brand on Instacart grocery marketplace. So, it’s safe to say that CELSIUS is the official energy drink of the Internet Generation. Additionally, the early international market development groundwork starting to formalize with CELSIUS forming a new 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. Because while the average items carried per store has increased exponentially since the PepsiCo partnership…it still lags Monster and Red Bull considerably. 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 recall a "called shot" by Celsius Holdings CEO John Fieldly three years ago and explain why I wouldn't bet against his crystal ball predictions as “the energy drink category is now a 3-team race.”

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Sometimes when you’re looking for billion-dollar opportunities…you can easily overlook those little details that can change everything. In last quarter’s Glanbia content, you might have noticed my irritation growing because over the inability of Optimum Nutrition to have a protein RTD offering that’s competing closely with the likes of market leaders…Premier Protein, Fairlife/Core Power, and Muscle Milk. But maybe I was looking at this problem from the wrong angle…maybe the answer to competing in the growing protein beverages market is through ISOPURE. But you might be asking why hasn’t ISOPURE been successful to those massive levels either yet? And in this content I'll explore that...and more! Glanbia Performance Nutrition is one of two wholly-owned segments of Glanbia plc (LON:GLB), a multibillion-dollar global nutrition company. The brands in the Glanbia Performance Nutrition portfolio include; Optimum Nutrition, BSN, think!, Isopure, Amazing Grass, and SlimFast. I'll use the recent earnings report, earnings call, and associated news to update you on how Glanbia Nutritionals and Glanbia Performance Nutrition is performing against the complex operating environment. Glanbia Performance Nutrition had 2023 full-year revenue of $1.8 billion, which was an increase 4.8% compared to last year. The brand portfolio continued to have strong pricing power in the market (with it being up 5.4%), but volume was down 0.6%. Additionally, I'll dive deeper into Glanbia Performance Nutrition geographical and product categorial performance (performance nutrition, healthy lifestyle, and weight management). BTW I’m thinking about the creation of a change.org petition for the Glanbia Performance Nutrition division name to be amended to The Optimum Nutrition Company. This one brand alone now accounts for 62% of the total GPN revenue. In 2023, Optimum Nutrition had 17% growth coming from both pricing and volume gains…and U.S. market retail consumption growth in tracked channels was 13.7% over the 52-week period ending December 31, 2023. Additionally, Optimum Nutrition generated over $1.1 billion in revenue in 2023...which makes it the number one sports nutrition brand in the world and also the top sports nutrition brand in 18 different countries. Finally, I talk through a collection of hot takes or things I’m left pondering about Glanbia at this current time. These include where the struggling legacy brand SlimFast sits inside of an evolving weight management category that has seen huge spikes in GLP-1 drugs (e.g. Ozempic, Wegovy, etc.), the think! protein bar brand (which has regained sales momentum after the “Great Shutdown” period) will see an exciting licensing partnership come sometime later this year, and why I think Glanbia is addressing the growth opportunity within the digital channel in the incorrect manner.

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While “gut health” has transitioned from just another trending topic to an important aspect of health that impacts everything from energy levels to immunity…it also brought with it tons of new market growth and product development within the food, beverage, and supplement CPG categories. Because of this…there’s little doubt in my mind that consumers are certainly more aware and educated than ever about gut health. But even someone that’s been increasingly fascinated (for most of his career) with unlocking the valuable intersection of gut microbiome, technology, and consumer packaged goods, I still get frequently tripped up with the ever-evolving advancements, new marketplace linkages, and gaps in knowledge that those create about the consumer health topic. So, I decided again to ask my good friend Noah Voreades…who’s a scientific researcher and founder of the boutique consulting firm GenBiome that focuses on the intersecting areas of personalized nutrition, gut microbiome, genetic testing, CPG, and digital health. He’s undoubtedly the perfect person to add an exceptional amount of depth to an insightful conversation covering many important trends and disruptive forces that will most-certainly impact the future of microbiome space. Along with catching you up on the evolution of the “gut health” CPG category, we go a step further and talk about some exciting edges of product innovation and explain who might hold the keys to next wave of microbiome ingredient Innovation. We also explain why governmental programs like SNAP and the emergence of “food as medicine” is pushing large retailers to start fully embracing a health/wellness positioning. Additionally, how personalization layers like registered dietitians, wearable data, and artificial intelligence will play a growing role in the category’s future. Plus, we dive into the possible categorical impacts from GLP-1. Finally, we tackle an often-overlooked part of gut health…the small intestine. Which reminds me that I want to quickly show some love to Nimble Science for supporting this piece of content.

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While it doesn’t happen often, duality can be a powerful force when considering the impact of a CPG industry trend. As an example, the decline in brain function is most often associated with the final third of your life. So, that’s why you typically see cognitive health supplement commercials featuring testimonials from older consumers. But spin around and you’ll see the other market opportunity. Purchase intent for cognitive health supplements is nearly the same between Millennial consumers and Baby Boomers. The simple fact that something exists that can give consumers a possible mechanism to achieve “more” within their daily lives is highly desirable. So, the next time someone mentions the cognitive health trend…think just as much about me drinking an energy drink containing Cognizin as you do your grandpa taking those jelly fish supplements.

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You’ll hear me lovingly describe Caroline Levy as someone that confidently dances to the beat of their own drum, but what I was referring to was my belief that the most successful people in business have conviction when others don't. Because don’t get it twisted…building conviction isn’t for the faint of heart. Yet, those courageous enough to go through the journey will find that if it’s coupled with passion…the result is electrifying. That statement I think perfectly quantifies Caroline Levy’s renowned career as one of the top equity analysts in the consumer space, trusted board member of brands like CELSIUS Holdings, Health-Ade, and Athletic Brewing, and overall strategic thinker that’s uncovered key consumer trends well before they became mainstream. Sounds right up my alley, right? So, I knew our conversation was going to be electric, but it honestly even exceeded my lofty expectations. Despite covering a ton of categorical ground in a relatively short amount of time…you can expect of deep conversation that spans from the dynamic energy drinks market to the emerging gut health functional beverage space…and even the disruptive non-alcoholic beer category. Moreover, we share our thoughts on why CPG brands should be focusing more on delivering value over volume. Finally, Caroline and I put on our economist hats…look into our CPG crystal balls and share some thoughts around the near-term outlook for beverage deals. But those are just some of the interesting topics we talked about in this episode...

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Amazon continues to expand its market leadership as the number one retailer of supplements ahead of even physical retail chains like Walmart. In the last year, Amazon has generated about $13 billion in categorical sales…up around 15% YoY. But the word "Amazon" also has created such a visceral reaction amongst much of the legacy supplement industry ecosystem. Depending on the person’s perspective you’re asking, you’ll get a slightly different reason for why they blame Amazon for the demise of the supplement industry (or should I say the previous version of the supplement industry they are nostalgic about). See…what I noticed starting in the mid-2010s was a collection of legacy supplement industry stakeholders growing continually more frantic about changing power dynamics. In fact, fear was quickly building that any semblance of yesteryear’s much tighter gatekept supplement industry ecosystem would soon be extinct. So, what do you do if you’re a cash cow generating legacy supplement industry player losing your gatekeeping powers? You utilize those massive internal resources to put leverage on who you believe ruined the “good ole days.” In terms of “how” these legacy supplement industry stakeholders are deploying those massive internal resources against Amazon…it's both backchanneling and then public-facing "compliance marketing" strategy. Regardless, it all rolls up into these previous gatekeepers calling on Amazon to reign in supplement industry bad actors by suggesting the online marketplace implement more and more compliance hurdles. This effort was arguably successful twice in 2021…as Amazon updated its requirements for listing dietary supplements on the platform. But that doesn’t appear to be enough…because there has been an uptick of public-facing pressure towards Amazon by these legacy supplement industry stakeholders. And even if Amazon hasn’t responded yet…this strategy might have done one better by indirectly getting the FDA’s attention, hence the three separate warning letters sent to Amazon from 8/18/23 to 12/20/23. But to help add some depth to the compliance side and balance my business perspective, I asked Brian Yam, who has two decades of regulatory affairs and quality assurance experience across every side of the supplement industry, to join me in a recent conversation. We deeply examined topics such as why the FDA is placing pressure on Amazon, if this could eventually lead to a market-bending precedent across today’s retail models, why FDA might be more effective placing proxy enforcement pressure elsewhere, plus we go talk about the under the radar short- and long-term possible implications to all supplement industry stakeholders.

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14 months after co-founding the private equity firm Skky Partners, Kim Kardashian finally took a bit of her own advice to "get your f*cking azz up and work." It was recently announced that the first capital investment for Skky Partners will be to acquire a “significant minority stake” in truffle-infused hot sauce and condiment brand TRUFF. Now…stick with me here for a moment because I’m going to connect some dots that will lead to a future Kim K investment. Skky Partners notes that food and beverage CPG won’t be its exclusive investment focus, but this TRUFF deal got me thinking about how Oprah loves truffles. Oprah also has her annual “favorite things” list, but this is about Kim K. So, what’s one of her favorite things from this year? In a Vogue interview, she shouted out Mid-Day Squares.

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In my world, hearing about (this or that) successful brand or person launching a new energy drink has become an almost weekly occurrence. I could understand how a casual market observer could easily get desensitized to it…or maybe even a bit dismissive like some pundits seem to have gotten about the trending functional beverage category. But I’ve tried to pride myself on deciphering what’s noise from who’s actually making music. When the energy drink brand Juvee launched in October 2022, I could tell there was some intent behind pairing the right audience and right product…plus choosing to launch with (and continue to support early) instant delivery partners like GoPuff. Additionally, what I believed was the smart decision to not make Juvee explicitly about the esports/gaming market despite having unique provenance within the hardcore of that growing niche market. But it was after an industry friend in common connected me with Sam Keene, Co-Founder of Juvee…that all my earlier thoughts started to make a lot more sense. In our conversation, Sam and I cover everything from how his early years at Red Bull had an outsized impact on the creation of Juvee a handful of years later. We also share insights about the growing importance of having an established audience/community when building within the CPG industry. Additionally, we talked through the interesting details behind last month’s acquisition of Juvee by the beverage portfolio Sprecher Brewing. Moreover, we explore what Sam’s most excited about post-deal…from the Juvee growth plan to his new CMO role being able to bring stories to life for each of the Sprecher brands. But those are just some of the interesting topics we talked about in this episode...

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Goodbye activewear brands just selling apparel and/or footwear. Hello activewear brands that are no longer constrained by their original categorical boundaries. From Nike to lululemon to Alo, these activewear brands aren’t just selling apparel…they’re selling a lifestyle. But I’ve started to pay closer attention to the strategic decisions at Alo of late because the brand keeps moving further into my domain…which is the emerging and intersecting categories of functional food, beverage, and nutritional supplements. I’m not going to provide all the product extension breadcrumbs here, but Alo reportedly started to originally develop a line of ingestible beauty and wellness supplements in 2019. With the pandemic-aided “work-from-home athleisure fashion trend” powering those next few years, Alo smartly put that project on the proverbial focus back burner. Then, in August 2023…Alo officially launched its Stackable Wellness System. The initial three ingestible beauty and wellness supplement SKUs were all utilizing a single-serving gel pack format…containing vitamins, minerals, and “hormone-balancing” adaptogens that addressed daily needs in skincare, immunity, and physical recovery. Along with the fact that most of these products sold out on Day 1, Alo also created a retail partnership with Sephora to sell its beauty and wellness segment. Feeling good from early feedback on its product extension strategy, Alo decided to double-down on the Stackable Wellness System last month by introducing five more SKUs…this time in the traditional capsule format. Those now eight SKUs of the Alo Stackable Wellness System (great or not) are only the entry fee to compete in the market. Instead, winners/losers in the broader consumer goods space (let alone CPG) are largely determined by what you build off those great products. This is why the smartest companies are focused less on product-based differentiation, as they know that competing on that alone will only provide a transient advantage. With today’s fast-follower low barriers-to-entry supplement business landscape, your best product features are too easy to copy and an insufficient defensible moat. The solution is having a bold strategic narrative…because that enables brands to create a unique story that will guide their entire internal and external business activity. Alo is a brand with a bold strategic narrative. In today’s marketplace, younger consumers are increasingly looking for visionary brands that are radically and bravely changing both our individual and global cultures with exciting and bold new lifestyle choices. It’s that strategic narrative boldness that attracts these younger consumers, but also provides a distinctiveness that’s highly defensible from competitive landscape perspective. By continually and almost gradually changing shape to predict its customers’ needs, Alo seeks to seamlessly become truly essential, visible, and celebrated parts of its customers’ lives without them even realizing it.

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When legacy CPG brands hear about trending movements like leveraging upcycled ingredients, I imagine all the oldheads sitting in a conference room acting like a scene from The Office. Oh…but then there’s the 117-year-old family-owned Spangler Candy Company, that’s headquartered in the great state of Ohio. See...the candy maker must have recently instituted “bring your Gen Z granddaughter or grandson to workday” because it just invented the perfect circularity strategy. The Spangler Candy Company produces arguably the most beloved Valentine’s Day product…those candy conversation hearts. Sweethearts are individually stamped with phrases using specialized but antiquated equipment. This printing process often creates mistakes like blurry or splotchy words. This year, the brand is spinning those mistakes as intentional, upcycling those unreadable candies into their own dedicated “Situationships” box so that young people can “give the gift as blurry as their relationships.”

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