Good morning, everyone. Welcome to the UBS Global Consumer and Retail Conference here in New York City. My name is Peter Grom. I'm the U.S. Consumer Staples Analyst here at UBS, and we are very excited to have joining us this morning from Celsius, Chairman and CEO John Fieldly, and CFO Jarrod Langhans.
Over the past few years, we've seen a pretty big shift in consumer preference towards functional, zero-sugar, you know, energy drinks, which now comprise the majority of the category. You know, Celsius has been a clear leader in that shift, and, for, you know, that shift into the category growth in general. Even though velocities have slowed of late, the company has still positioned itself as a strong number three in the U.S. energy drink category. I have a number of questions that I plan to run through with the team.
A lot of ground to cover today, so, but, you know, I think you guys all have instructions out there in terms of how to submit a question. That question will then appear on this iPad. Maybe for the last 10 minutes or so of the presentation, we can kinda open it up to audience Q&A if there are, in fact, questions. So yeah, please don't be shy. Before we start, I'm required to read a legal disclaimer. As a research analyst, I'm required to provide certain disclosures relating to the nature of my own relationship and that of UBS with any company on which I express a view on this call today. These disclosures are available at www.ubs.com/disclosures. Alternatively, please reach out to me, and I can provide them to you after this fireside chat here. With that, why don't we get started?
Look, I kinda wanted to start maybe just looking back and maybe just, like, you know, John, I think it'd be helpful to just kinda get your perspective on kinda what's happened over the last year. You know, and I think you weren't—energy drinks weren't alone in this, but I think if we were sitting on this stage last year, I think many of us weren't really anticipating, like, this big slowdown. You know, as time has gone by, I'm sure you have a better perspective in terms of what's actually happening. Can you maybe just understand why you think the category slowed the way it did last year?
Yeah. I mean, thanks for having us. And, you know, I think when you sit, if we were sitting here last year, we were all in a really good position looking at, you know, March. The year was off to a great start for the whole category and, and Celsius, and we were gaining some of the largest distribution gains we've seen in company history. And, you know, you saw this kind of wave into Q2, and then we started to see some category slowdown for the first time. The category went negative for the first time in the third quarter. Some macroeconomic challenges. We saw convenience store traffic slow. There was some shifting in consumer purchasing habits, frequencies. And we felt that we were impacted by that.
You know, we got up I think it was the end of Q1 to beginning of Q2, we had the highest share that we've ever received. It was almost a 12-share in the energy category. Now we're roughly around 11 if you exclude coffees and teas out of that energy category. We've been hovering, you know, right around that number, you know, but off the highs. We woke up the two largest players in the category. We woke them up and believed in sugar-free, launched a ton of innovations, some of the largest innovation coming from the competition that we've ever seen. The good news is the category for the first time shifted to greater sales coming from sugar-free. That sugar-free movement that Celsius has been talking about, and we are the clear, you know, our whole portfolio is sugar-free.
We continue to see those trends and the health and wellness trends. We had some of our innovation come in the beginning of the year. We had some lighter innovation in the back half of the year, and that impacted some of our numbers. We've seen that impact in the first quarter as well. We have some timing of innovation and timing of promotional, promotional, you know, advertising programs within some of the top retailers that are recycling from the first quarter. If you look at the scan data, we're a little bit soft in the last 12 weeks and 4-week reads. We do expect that to continue to improve in opportunities as we're leading into the summer beverage season. I think those are some of the trends that we're seeing. We're confident in the Celsius portfolio.
We made it into, in 2024, we made it into the top 10 of all trademarks in beverage. Celsius is ranked as the number nine beverage brand in all of beverage. It's $2.7 billion in retail sales, 22% growth in retail sales in 2024. There is a lot of great tailwinds, a lot of momentum. We got a lot of great innovation coming, and we're excited what 2025 is gonna offer to us as we continue to build this base. We have additional, the Alani transaction we're working, we're on closing that, and that's gonna open up tons of opportunities for us as well. The Celsius portfolio, we're super bullish on, and we think we're well-positioned.
No, that's super helpful. Maybe just pivoting back to kind of the evolution of market share.
Mm-hmm.
Right? And you kind of alluded to it in your response just there, but, you know, you were at the 12% share, and it kind of moved lower. If we were kind of sitting here a year ago, I think there was a lot of hope out there from you guys, from investors, that, you know, as some of the shelf resets took place, particularly in convenience, that you would see that market share really tick, tick up. You know, I know hindsight's 20/20, but I guess, you know, what do you think ultimately what didn't play out, I guess, as planned? And I think.
Mm-hmm.
You know, another question would be, you know, what could you have actually done differently, if you could?
Yeah. I mean, we're not happy where we ended 2024 out in share. I think, you know, we were this time, you know, last year, we expected to be at a much higher share number than we are. Competition has leaned in. It could've timed our, our innovation better. And I think we, we've improved that with some of those strategies for 2025. Hence, you see a little bit slower start this year, you know, with, if you look at the scan data, 'cause we made some strategic shifts to better time our innovation throughout the year. So that's a step change that we're making from 2024 to 2025, but you're seeing some initial impact earlier in the beginning of the year. And, you know, we need to continue to, to execute better as an organization.
We've built out this growth department internally to really further synergize the marketing and sales team. We gotta get better with retail execution. Teams have done a great job, but we need to continue to get better. We have great household awareness in certain markets. We've done a lot of research and analytics on that. The household penetration is good. There's awareness, but we need to convince consumers on, you know, what is that inflection point to buy, to try? What's that, how do we further increase purchase consideration and expand consumption throughout our consumers that we do have? Those are some strategies that we've built in for 2025 to leverage and to work on that. Those are some things differently we're doing from 2024 to 2025, which are gonna be a step change for us.
Okay. Maybe picking up on that, I mean, one of the things that we've seen, you know, from a category perspective, exiting 2024 and 2025 has kinda been this nice improvement just in terms of trends. Kinda curious, what do you think's kinda driven that improvement? Obviously, you know, one of your largest competitors took a price increase, so that helps. I would be curious how you know, volume's also improved as well, right?
Yeah.
I'd be curious, what's really driving that? I guess maybe a question for both of you. Look, you're gonna start to cycle that weaker summer, right?
Mm-hmm.
Low single-digit growth. Would you anticipate category growth continuing to accelerate from here, or is this kind of mid to high single-digit range kind of a fair run rate as you think about 2025?
I mean, we anticipate, you know, mid to high single-digit, you know, growth rates through the year. That's what Mintel's saying. That's kind of in our internal numbers as well. We're hoping for more than that, but we wanna be cautiously optimistic, within the, you know, on the category. I think, you know, consumers are coming back. Q3 was a tough time for a lot of folks. There was a lot going on. You saw some of the stimulus, you know, kinda coming off that as well, and some of the shock factors to consumers, interest rates, and there's been a lot of pressure.
I think what you're seeing also, which is really exciting when you look at what's happening in the energy category, is it's evolving from an impulse purchase, and you're seeing a lot more, especially large format and mass and food, and they're adding more space to energy drinks as energy drinks is becoming a greater portion of total liquid, you know, LRB or total beverages. Everyone's adding more shelf space. You're seeing more sales for multi-packs. That really shows you where consumers are going because if you look historically, energy drinks have been an impulse purchase for a specific need state. Now they're being purchased at on off-warm shelf in larger pack sizes in part of the pantry. They're coming home as part of the pantry.
What that means is that once you're part of the pantry, you're part of a daily lifestyle, a daily routine. You're part of the family, part of the household. I think that's a huge opportunity when you start to think of, like, share of liquids throughout the day. That's another strategy we have is increasing that consumption and usage occasion. You're seeing energy drinks, you know, replace coffees. You're seeing them drink as a morning pickup. Lunch pickups is huge. We just expanded into Subway, in up to 18,000 locations. We've done Jersey Mike's. We're partnering with Pepsi within their food service division. You're seeing usage occasions expand. That's another tailwind that we think is a huge opportunity for the Celsius portfolio.
No, that makes a ton of sense. I mean, and then, you know, as you think about that moving forward, and you kind of alluded to this a little bit, right, just in terms of timing of innovation. So you anticipate kinda the core Celsius portfolio to see improvement as we as we move, you know, through the summer here. And then I guess you kinda said this on, on call a couple weeks ago, but you mentioned that you expected to gain, I think it was 15% to 20% more shelf space during the spring's resets. Can you maybe just elaborate on that in, in a bit more detail? Is that broad-based? Is it just channels?
Yeah. Like, not to be sassy, that's a really classic sell-side three-part question.
Please, please.
I just, you know, the velocity numbers in the kind of the core brand have been a bit more challenged. You know, are you seeing any retailers pull back on shelf space in any locations? You know, I think when you, you know, are we gonna, are we happy with our share number where we stand? Are we gonna, you know, no, absolutely not. I mean, we're here to win. We have almost 1,000 team members, dedicated field sales team, marketing sales team. We're here to win. We got an amazing Celsius is an amazing portfolio that's aligned with today's health, mind, and consumer. We got great innovation coming. We got great strategies, great partners, and collaborators. You talk to any of our team members, we're super bullish on where this brand can go.
You know, we've made it into a solid number three player and something that hasn't been done in over the last decade. We've crossed the 10% share mark. How do we get to that 15%? That's our next hurdle. That's what we're working with. You see some of the indicators there. Like, look at the share numbers in South Florida. We've talked about that prior, over 20% share. Look at New York City here. You know, we're very close to a 20% share here as well, 18% share. You go, Baltimore, high double digits. Buffalo, New York, LA, Chicago. There are some really good markets around the country where, you know, we're north of that 15% share. It is possible, and it is probable, and the trends are there.
We just gotta continue to drive purchase consideration, loyalty, and we can do it with a lot of the strategies that we have. Look at Amazon. I mean, Amazon, strong number, you know, one to number two player depending on the day or the week that we're flowing through. This brand can do it. We just gained massive distribution across the country. We're in a lot of pockets in the country that, you know, we have low, low awareness, low purchase consideration. We need to build on that, and that's opportunities for us. We are committed. We are focused. I think there's a huge opportunity to drive share growth and revenue growth within the Celsius portfolio. When you talk about, you know, what was the other question you had? There's three of them there.
Shelf.
Shelf, shelf, shelf.
Right? Listen, 15 to 20.
If we don't, if we can't grow share, and we come up to buyer meetings, you know, if we can't grow, not share, if we can't grow revenue, and we get into meetings at the end of the year, there's gonna be hard decisions, right? Retailers are gonna put the best SKUs on shelf that turn. You know, we're gonna have, we have to get back to share growth and not share, revenue growth, you know, coming out of the year right now. If you look at the last 4 weeks and 12 weeks, we're down. That's because we're cycling with some of the strategies that we did, some step changes for in 2025. We're convinced our strategies are gonna work and continue to overcome those as we start to roll through the year here.
You know, we don't anticipate those conversations. We got great relationships with retailers, and we don't think, you know, we think we're in a good, good place right now, as the year plays out. We gotta get through the next couple months here, and then we feel things will start normalizing, and then we'll start getting back into a continual cycle.
Okay. Just maybe following up on that, the 15% to 20% more, that's coming this, you know, despite kind of more of the recent trends. Is that fair?
Exactly. That was really what was sold in last year.
Yeah.
These are the resets that are coming in. When you look at those, I mean, you look at the expansion, and we're at 15% to 20% share. Look at Subway. That's a new customer, right? Every 18,000. Look at Home Depot, that's a new customer for us. We've been in Lowe's. You go to expansion into Kroger. If you go to a Kroger right now, you're gonna find Celsius at multiple front checkout coolers. Same with Walmart now. You'll start to see us in a variety of front checkout coolers. You know, it's not only number of stores and distribution expansion. It's also the breadth of distribution in a lot of these outlets and retailers. Those are just some great examples of where that 15% to 20% is coming from. Then there's more opportunities. We're dropping coolers.
We have a target of over 15,000 coolers of incremental to place. We wanna be within 6 feet of every checkout cooler. Got great distribution here in New York City. Variety of stores we went through and continue to check on. I mean, it's we gotta be in that path of purchase.
Okay. Maybe just sticking with the distribution question, but just focusing on C- stores. I know the channel has been more challenged, broadly speaking, I guess, but it's very important to the energy drink category. It is k inda similar to the broader market share discussion, shares are also kind of ticking a bit lower here sequentially off the peak last year. What's interesting, there's a gap between kind of your total company share and kinda C store. It's a lower market share.
Yep.
How are you thinking about closing the gap now, particularly as you expand TDPs in that channel?
Yeah. I mean, that was really the last channel Celsius has gone into. When we look at how Celsius portfolio was built, it was really in food and, you know, it was in gyms and health clubs. It was in the food channel. It was in on Amazon. Then we went to large format and drug, and then really gained most recently broader distribution in convenience. There's a lot of work to do in a variety of regional chains around the country. We're partnering and collaborating with all the major retailers in convenience. Casey's, we just did a partnership and collaboration with some of their food pairing opportunities. Same with ampm. There's just a 7-Eleven's been a great partner in collaborations with them. We got more collaborations coming on.
That is a very important channel in the energy drink category, and we need to win there. We are winning in there in certain markets and other markets, we just have lower, you know, we're not there yet. It's a very loyal shopper that's in there. We need to continue to build this awareness, that purchase consideration and trial. We're doing that with a variety of different strategies and tactics and continue to activate consumers. That is a channel we're committed to win on. We know the Celsius portfolio warrants shelf space in convenience, warrants, has a reason to be there, and has a reason to, you know, be a major player there.
When you look at, you know, coming out of NACS as well, and you look at all the trends at NACS, listening to all the buyers that are adding more space to energy, talking about the importance of pairing with food and some of their strategies that they have, which is really important. Energy is key to them. It's a large profit center for them. One opportunity is this pairing with food. That's something that we know with Celsius, with some of the great flavor profiles we have from lemon lime, cherry cola. We got a Mango Lemonade that we're launching this summer, which is super refreshing, some really great flavor profiles that you can pair with food. It's a really good alignment there to further drive increased basket ring and more profits.
Okay.
7-Eleven's actually a good example. Where we've been there longer, right? We only got into Circle K in the middle of 2022. We've only been in for anywhere from four months. 7-Eleven, we've been in longer. We're actually the share we have at 7-Eleven is greater than our kind of 11 share, right? That's an example of where we can win in a national convenience chain, that we, we just it's timing and sequencing. It's really getting in there, having that billboard effect, building that brand awareness. 7-Eleven's really helped us do it in their stores. It's really taking that model to, you know, across the U.S. into all the other channels within convenience.
No, that's super helpful.
Mm-hmm.
and I think that's a really good point, Jarrod.
Yeah. I mean, like the ampm and Maverik and a lot of these super regionals, we're just, we've only been in, you know, a short period of time, really, the early days. We haven't, you know, the brand hasn't been around for 20 years. Like, two of the largest players we're being compared with. Just think of all the brand investment behind those two major brands.
Yeah.
I think the Celsius portfolio and trademark is super strong. You know, it's, you know, I think we all, I guess, you know, you look at last year, we all wanted to be a 30-share, ending the year. You know, it's gonna take time. It's, you know, the brand is strong. The DNA's strong. Just the, you know, walking around here, we have Celsius gear on. We're walking around. I mean, people give you high fives. I mean, people are really connecting with the brand and resonating with a much broader consumer. So it's cool.
Kinda tempted to give you a high five here.
There you go.
Maybe, you know, I have a bigger picture question. I would just love some perspective on your core consumer and maybe just comparing and contrasting kind of the consumer preferences for functional beverages today versus maybe the legacy energy drink category. I guess maybe just describe the Celsius consumer in relation to that legacy energy drink category and how they fit within kinda broader LRB. I guess what I'm really trying to understand is what's unique about the Celsius consumer in terms of usage occasions, you know, frequency, brand loyalty, and brand switching, right?
I guess, is today's consumer really a different audience? I guess, does that alter the consistency of growth? I guess, has the consumer become more discretionary in any way versus maybe what is thought of traditional energy or legacy energy as more kinda daily use occasions?
Yeah. I think, I mean, when you look at the Celsius consumer, it's, you know, it's really the core consumer, it's, it's revolving around a daily routine and daily lifestyle. It's, you know, there's a variety of different attributes there. Our consumer wants more out of their energy, out of their energy drink. They want, they want more out of life. They want more out of their food. You're seeing that as a major trend with all health, with all consumers. We want hydration, but we want more. You know, with Celsius, it is, it offers that great energy with no crash, no jitters, with great flavor 'cause flavor is super important for our consumers. Also, the enhanced vitamins. It's, you know, we do have a variety of our consumers that do read labels.
You know, when you look at the Celsius portfolio and look at the ingredients, it's a multivitamin in a can. It's got 2.8 grams of vitamins in it. It's got your B complexes. It's got biotin and chromium and green tea. There are a lot of attributes there that resonate with that consumer base on wanting more out of what they're consuming, want their food and beverages to do more. Fitness is a lifestyle, is aligned for today's consumer. A big portion of our consumers are fitness advocates and athletes and really see themselves as more of a health and wellness, within the DNA of the consumer base. Those trends are going to continue to evolve and continue to grow. Daily consumption is really core. We see a high repurchase rate within our consumers.
And then our consumers historically have been, are loyal. They're loyal to the Celsius portfolio. We do, according to Mintel and Circana, we do see some of our consumers move from, you know, Red Bull to Monster. You know, there is a good portion of the energy drink, just general consumers, that do flow around, you know, between brands. It could be based on promotion, pricing, flavor, or what's taking, you know, what that retailer promotion that's taking place. We do have an extremely loyal following and consumer segment. That's historically true to all energy drink brands. You know, how does the category evolve? How do consumers evolve as energy goes mainstream?
It could, you know, eventually move into more of a CSD kinda category, as it's becoming, you know, moved beyond that specific needs state, "I need an energy drink to accomplish this." It's more becoming that daily household item. You know, that's the evolution of the beverage category that we're gonna see over the next 5 to 10, 20 years.
Yeah. Makes sense. You know, maybe, you know, shifting to kinda Pepsi, a big part of the company's success has been kinda the, the distribution partnership there. Can you maybe just discuss how you're working to strengthen that relationship? You last year, you had some changes in the incentive structure. You know, you there were some unexpected inventory dynamics.
Yeah.
So.
Yeah.
You know, just any thoughts on the high level on the partnership? And then maybe, you know, Jarrod, any color on, on kinda the inventory optimization going forward? Anything that we need to kinda be aware of?
Yeah. I'll just talk about the partnership in general. And Jarrod, get in details on the inventory movements and also some of the way we've tied in with IT and some of the synergies within our data and analytics. But we have great relationships with Pepsi. I was with Ramon, you know, two weeks ago at CAGNY. Ram, we have great relationships with him. We were in the field. We're working with their, we're tied in with their priority periods. We're tied into their strategic planning. We go through the same process as their own brands on making sure we have our strategic focus and collaborations. They're expanding us in food service. We're leveraging over 30,000 sales reps across the country. There's always opportunities to improve, right? And how do you better tie in?
How do we become that better supplier to Pepsi? We just hired, starting on the 24th, Eric Hanson, 27-year vet of PepsiCo in a variety of leadership positions. You know, that's just to further enhance that partnership and collaboration and unlock synergies and opportunities. We work extremely closely. A lot of our team members on the sales side have worked at Pepsi. I think the relationship is as solid as it's ever been. It's gonna continue to get even solider with Eric joining the team in the next two weeks. The organization, we work closely on strategies. They want us to win just as bad as we wanna win. We all need to sell more cans and more cases and bring new consumers in and drive more incrementality.
Wanna talk about some of the, you know, data and, tie-in and software and some of the inventory. I mean, we've done some great things in the organization to really maximize the PepsiCo partnership in 2025.
Yeah. So our sales guys are fully wired in now. So if, you know, we've got 400 to 500 strong out on the street that are kind of incremental to the Pepsi sales force. So we've got our apps that are wired into their apps now. So for ordering and building displays and selling in additional cases, that's tied in. Also, our supply chain is tied in even tighter to their supply chain in terms of forecasts and looking out. So if you if we look today, you know, as we monitor depletions, our depletions are consistent with what you're seeing on the scanner data. So we're in good shape. There's always kind of that end of quarter where you could always have a little bit of timing, but that's more noise than any kind of structural thing. So we're in good shape.
This quarter, we were in good shape last quarter. As we continue to track, we think we're, you know, from an inventory optimization, if we see anything, we'll call it out. At the moment, as we're looking at the depletions and as we're working with them on forecasting, no issues to call out today. I think, you know, overall, last year, they did have a pretty significant optimization across their entire footprint. I believe a couple weeks ago at CAGNY, they did talk about how they were moving the Frito program into their mixing centers. They, you know, we weren't the only ones that got kinda caught up in the optimization.
There was a lot of space they had to free up in order to be able to bring those products and that brand into the mixing centers to further drive optimization within their system. That is behind us, and, you know, I think where things stand today, like you said, we've got Eric coming on board in a week and a half or so, and, you know, he'll just further strengthen our relationship and our partnership with Pepsi.
We're really looking at all aspects of the business, right? Looking at, you know, Jarrod mentioned, like, supply chain. How do we improve procurement, logistics? How do we get more efficient, right, on our side? How do we better leverage their infrastructure? We're, teams are working very closely with them. You also look at, as Jarrod, the supply chain, the sales organization. We're collaborating in a variety of parts of the country where we're actually working on a collaborative approach, selling the energy portfolio for them. Those are things we're working on. Also, tied in these suggested orders is a major opportunity to unlock. We're able to, our team has, when they go into a store, they know the store manager. They know the location. They know the planogram. They know the displays that are up, the incrementality.
We can place suggested orders that go straight to that rep that's managing that store. So you're pre-selling in. We've been working on our timing and sequencing within the sales organization so we can get even much more efficient, drive more efficiency out of those trucks so we can get better stops, better execution, and better displays. The only way to win, we gotta win. We gotta win by disrupting the path to purchase. We can do top funnel, mid-funnel, and lower funnel to increase that consideration to purchase. But those retail execution is extremely important to win in this game. That's where we really need to get and continue to improve on. This is a big unlock, having these suggested orders with them. Just shows you the relationship there.
I mean, to have that, just think of the commitment and the trust that's required in order to do a suggested order for a customer because that does not happen once and one fail, you'll be blocked from that customer and ever doing that again. That shows you how great the organizations are really working together and the trust that is built between these organizations. I think, and then on a marketing side, we're starting to work with them as well. Some marketing opportunities and in-store collaboration, cooler placements. You see us in a lot, almost all of the Pepsi energy coolers, we're there. Everyone probably traveled, you saw us at a lot of the airports and partnerships, food service, and I think partnership's strong.
Great. Jarrod, maybe, sticking with you for a second here, and kinda building on that, I would just love some perspective on just how we should be thinking about the U.S. top line growth from a core Celsius perspective. Obviously, category growth, demand, market share, all those will play a role. You are lapping, you know, a pretty outsized impact as it relates to inventory desocking, impacts from promotional allowances, etc.
That also kinda follows a year in 2023 where it seems like there was a little bit of an inventory build. It's been harder for us, my peers, I think some in the room, you know, how to figure out how much of this inventory promotional impact will normalize as we think about the year ahead. I know you don't give guidance, but maybe conceptually talk through how we should be thinking about lapping these impacts.
Yeah. So from a high level, just looking at this year, obviously, the first half of the year is gonna be a tougher comp than the back half of the year from our numbers, right? If you look last year, we were roughly 22% at retail. So good solid growth. It was a little stronger in the front half, as you talked about. The whole energy category got a little soft in Q3 and then kinda picked back up in Q4. We still have the same kinda path. We do have some significant inventory movement that happened in Q3. So we'll have a big pickup there. If you look at through the rest of the year, John did talk about with innovation launches happening more in mid-April instead of mid-January and some of our promotional calendar kinda being skewed more towards the back end of Q1 and into Q2.
There's a little bit of comp pressure that you'll see in the first quarter. You'll see it get a little less so in the second. And then kind of what we talked about with kinda when you got to, I guess, like May, sometime between beginning to end of May, there's definitely some comps that we'll be rolling over that are, call it easier, from a reported perspective. I think, you know, you'll see the softness we talked about in the first half, and you'll start to see us pick up as we get through the second quarter, much more so in the third quarter. We've got a little bit in the fourth quarter as well. That's kinda the cadence.
That kinda goes with some of the movements you've seen and also kinda some of the trajectory you've seen with the whole category in general where you're expected to see a little bit of building across the year, right, where the second half's expected to be stronger than the first half. Part of that's comps. Some of our soft comps happen to just coincide with some of the energy category soft comps, right? Q3 being the main one.
Okay. No, that's really helpful. Maybe rounding out kind of the, or sorry, two last questions, just kind of the core portfolio. I mean, you know, you touched on the shelf space opportunity. Can you just talk about what you, what's planned from an innovation perspective? You launched the hydration sticks a short while ago. Can you just talk about the opportunity there? I think this was your first real move outside of kind of the core energy drink category. Do you see opportunities for the Celsius brand to kind of expand into other adjacent categories as well?
Yeah. I think, you know, when you look at this year, we're it really, when you look at our core Vibe and Essentials, it's gonna be flavor, innovation. That's our that's our big bets for this year. When you look at, Mango Lemonade, for summer, you got Retro Vibe and Playa Vibe. We have a, a Grape Slush we're launching with the Essentials line. We got a few other flavors. We're excited about, an LTO we'll be launching in the back half of this year. More to come on that. When you look at the first foray into, like a, a subcategory and adjacencies, it's hydration. It's something we've talked about, a lot. A lot of our consumers have asked for more, opportunities to consume Celsius throughout the day. Hydration pairs perfectly for our portfolio being a fitness, health, and wellness brand.
Initially, it's launched on Amazon, just rolling out. It'll be on walmart.com and a variety of other retailers, coming soon. It's really too early to tell, on the, you know, how, how large that would be. We do have a really large powder business that continues to grow. We see a lot of opportunities in powders. More retailers are taking our powder, sticks on-the-go, energy sticks on. I think that's a, that is definitely a business we're focused on growing. I mean, it's over a h almost $100 million business for us. Sizable and growing. Retailers are leaning in. Great flavors there. This hydration is a huge unlock. I think there's other opportunities. We wanna be careful on how far we stretch the brand. Very cognizant on that with the team.
There potentially is other opportunities along the way that we'll evaluate. Timing and sequencing is really, really critical. At the end of the day, we gotta win in energy. Like, that's our number one priority. We're learning with the hydration, but we are committed to winning in energy.
Okay. That makes sense. Maybe rounding out here, can you just talk about the brand's opportunity to kind of expand internationally? You moved into several new markets this year.
Yep.
What have you learned about the brand in those markets? As you think about growth from here, is it more about new markets, or do you see an opportunity to expand distribution within those new markets that you wanted to over the last year?
Yeah. I mean, the same health and wellness trends we see in the U.S. are global trends, and everything's one click away. We do have a really good distribution and share in Sweden. We're, you know, right around a 13 to 14% share in Sweden. We've been there a while. Been there over, you know, 10 years. That's a great market for us. Actually, one of our first markets expanding internationally. Two individuals found Celsius back then, in Miami and bought a container and took it back and built it. That's why we landed there. You know, we've always been focused on the U.S. We do have high single digits in Finland, only there a few years. The major markets we just launched that you're referencing are the U.K., Ireland, Australia, New Zealand, and France.
Those five markets rolled out, started to roll out in 2020, back half of 2024 and 2025. We're taking a very methodical approach. We picked English-speaking, great partners, build great brands as well. We partner with Suntory for the international expansion in these markets. They have great distribution, been really great on collaboration. We're targeting specific retailers and building a loyal consumer base before we expand into further distribution. Keep in mind, you only have six months, maybe three months at best at retail, to make it. If you don't make it, you're out. We want to be very methodical in our approach. We're also being cognizant on profitability, so it's a balanced approach. Now, we have seen initial success. It's been very promising. In Australia, we partnered with 7-Eleven for the lead launch. It's been really well.
They referenced it as one of the best launches they've seen in the last, you know, five, seven years. It's been really successful. We're starting to roll out in further distribution. That has gone much better than we initially anticipated. We're really excited about that market. The U.K., we partnered with Tesco, Metro Mart first and now have been expanding and rolling out to other markets. Really early in the early phases there. In France, the same. Everything is promising, but we don't wanna over, you know, we don't wanna get too excited. You wanna be, it's timing and sequencing. Let's let these revenues, you know, come through. Let's see how we continue to build upon this consumer base. We know the flavor profiles, the brand positioning is resonating with those consumers in these markets. We're really excited about the opportunity.
We do not want people to get ahead of their skis here. We are going to continue to add more resources in these markets as we gain more revenue and more profitability. We are going to go as fast as the brand continues to grow. We have great strategies coming this summer, more distribution coming internationally. Where we go from there, I think you are probably looking at expansion in 2026 and 2027. We want to keep everyone super focused. You know, Jarrod and I have spoken about this. It is very important. We do not want to go too thin, too broadly. We are hyper-focused on these key launches within these markets. We are going to continue to build scale there.
Okay. Now, we only have a few minutes left here. I wanna talk about Alani Nu.
Mm-hmm.
Maybe, John, just broader question, just give us some high-level thoughts on the brand and maybe.
Yeah.
How it's positioned in the energy drink category?
We're really excited about Alani Nu. Admired that brand for many years. We know the founders over the years. The brand is resonating with a very unique consumer segment. It's, you know, going after that female Gen Z, new to category. It is a growing segment within the energy market. It has a great loyal following. It has some great innovations, standing, you know, student health and wellness as well. Really look at those mega trends in food and beverage. The Alani portfolio's tailwinds are strong behind that brand for that female shopper. You look at the distribution, you look at where the infrastructure we have at Celsius and how, you know, one plus one can even, you know, is gonna be even stronger working together and collaborating.
This puts Celsius as over a 16 and a half share in the energy category, makes it a mega number three player. It allows pricing promotional strategy on locks with a multiple portfolio strategy. It is very typical to play at this high level with a singular brand 'cause you're always being leaned on unless you're on deal every day of the week. There's a variety of opens up pricing promotional strategies, supplier synergies, infrastructure synergies, and just continues to put Celsius now has a modern energy portfolio for today's consumer. We're excited about it. Their brand team's amazing. This is just gonna be a great opportunity to continue to, it's accretive to revenue in year one, accretive to EPS, and puts us well-positioned for today, tomorrow, and what we see in the future.
Given that both brands are kinda rooted in that health and wellness, I mean, is there a bit of a brand overlap in your core consumer?
When you look at the, you know, that's a lot of questions we get from investors is that, you know, you're 50/50, approximately 50/50 male-female with the Celsius shopper. Now, you know, the Alani Nu portfolio is cannibalizing. That's not the case. You look at the Celsius consumer, you look at the Mintel data and some of the panel data, we're seeing that we have about 15% of our Celsius consumers are also buying Alani Nu. Actually, it's even a higher number for Red Bull and Monster. It's not as high as individuals' perception is.
You know, it's a growing segment. There's this female shopper is massive out there. There's a variety of different need states. Both these brands deliver different need states and attributes and have a reason to be in the coolers and a reason to exist together. We see it as incremental.
Okay. That's helpful. Jarrod, maybe one overview. Can you just talk on the potential integration, how you plan to bring these two brands together and kind of maybe where you see the biggest opportunity for synergies looking ahead?
Yeah. I mean, the biggest thing is really taking the infrastructure that we've built across the sales force, 4,500 people. We've got a large key accounts team. We've got great relationships with sellers, really bringing them into that sales system. Also our supply chain, we've got a Center of Excellence we created last year. We built up and scaled our supply chain team so that we can onboard them pretty seamlessly, get them into our orbit structure, get them into our contracts from a raw materials packaging rate perspective, and really take kind of where we were 24 months ago and kind of accelerate that up, over a 24-month period.
If you go back two years and kinda look what we've been able to do to our system, through our sales force, through our supply chain, we're looking to do the same thing to them and really accelerate that and drive the synergies through our system with the scale that we've built. You know, a lot of it's gonna be workforce and supply chain, but then also savings across procurement and things like that, some back shop savings as well. Really, a lot of it is kind of known cost that we can really put a line in the sand on.
Okay. Maybe keep sticking with you for a second, Jarrod, and, you know, shifting and talking about profitability for a second was kind of one of the bright spots here as we exited the year. Gross margin north of 50%, similar position for the full year. Can you just talk about how you see gross margin and profitability more broadly evolving from here as you look out over the next 12 months? Obviously, aluminum and Midwest Premium have been pretty topical across all beverages. Curious how you see those cost buckets kind of impacting your trajectory, just based on where things stand today.
Yeah. I mean, from a short-term perspective, we've got some price locks and things in place. So we're comfortable from 2024. I think we mentioned that a couple weeks or a month ago, where we're in pretty good shape for this year now. You know, depending upon where tariffs and things like that go, we do see with Big Beverage, the plant we bought and with some scale that we've done, some upside opportunity on that 50% margin. Could tariffs and things like that drive some downside? You know, we've kinda circled that 50% as a good number for us this year. There is some upside. There could be some downside. Kinda net-net, that's kinda where we are. I think from a tariff perspective, it's hard to say 'cause it changes every other day, right?
I try not to do too much modeling on the tariff stuff. With the 25% that just got put in place, we're still in good shape. And we mentioned that about a month ago. You never know. Things change. We do have, with our Center of Excellence opportunities and different channels to bring things in and different ingredients providers, so different routes into market. We do have different strategies we can utilize if we need to. You know, we're pretty comfortable where things stand today.
Okay.
We continue to have a variety of strategies to drive more leverage out of the system. Talk about Big Beverage, the acquisition we made in Q4. That's gonna continue to unlock and just really continue to optimize our raw material and ingredient routes and big opportunities.
Okay. And maybe just, you know, one final one here, just sticking with, with, margins, but on more of the selling and marketing side, right? I mean, it was 26% in 2024. I know a component of that wasn't really just, you know, a stepped-up investment. Part of it was the, the deleverage that you saw. But just as we think about 2025, Jarrod, what, what do you think's kind of a reasonable target?
Yeah. I mean, historically, we've probably been closer to kinda 2022 to 20 23. We did spike up to the 2026. I think if we do see opportunity to invest behind the brand, then we will. There could be some, you know, depending upon total revenues, quarter by quarter, you could see it a little higher, a little lower. Obviously, Q2, Q3 tend to have a little higher revenue. Q1, Q4 could be a little bit higher from the sales and marketing as a percentage of revenue. We will take the opportunity to invest behind that if we see opportunity to. I think we'll just have to kinda communicate that throughout the year. We do, John has talked about, we do wanna grow market share.
We do really wanna make sure that the 15% to 20% expansion is successful, really build that brand awareness, especially in some of those areas, Pacific Northwest, Midwest, where we don't have the brand awareness that we have. To really drive that, sometimes it does take a little bit more to get there. You can kind of scale back from there. There are pockets that we'll see opportunities, and we'll just communicate that throughout the year.
We did talk about, CAGNY We have a really a summer program. We're gonna be kicking off really a healthy halo marketing program. We didn't have that last year. We do have that, as Jarrod mentioned, heading in with 10 to 15, you know, 15 to 20% space increases. You know, we have some broader distribution. We got some great innovation coming in. You know, based on how revenues turn out, it could be at the higher end because of some of these initiatives we're taking advantage of. Right now is the time to really invest behind this brand. It's got huge opportunities. The ACV is at, you know, an all-time peak. You're coming off of a greater reset. You got retailers leaning in.
Like I mentioned, some of those front checkout coolers at Kroger and Walmart and 7-Eleven and, expansion to 7-Eleven and just some of the collaborations. We're really excited about the summer. You know, we got some great marketing programs that are planned.
All right. That is a perfect place to stop, I think. John, Jarrod, thank you so much for joining us today. We wish you nothing but the best of luck moving forward.
All right. I'll thank you for having us. Cheers.