Okay, we'll go ahead and get started. Mr. Besencheck, good to see you. Good morning. My name is Jon Anderson. I'm the research analyst at William Blair that covers consumer products and Celsius. We are pleased to have Celsius Chief of Staff, Toby David, with us today to present. As most of you know, Celsius is a leader in the energy drink category and now has two very complementary brands in Celsius and Alani Nu, which align well with consumer trends towards better-for-you fitness and functional beverages. Celsius has helped reinvent the energy drink category with its healthier ingredient set, unique flavors, and broad demographic appeal. They recently acquired Alani Nu, which is a female-focused brand with strong health and wellness credentials, expands the TAM even further and provides an opportunity to scale the business over the next several years.
This year, we expect the company to gain additional shelf space and drive demand through enhanced marketing. I'm sure we'll hear more about that from Toby. As such, we think this is going to be a pivotal year for the company's journey. Before we get going, a couple of housekeeping items. Immediately following the presentation, there will be a breakout session in the Maher room, M-A-H-E-R room. Join us for that for Q&A. Lastly, I just want to inform you that a complete list of research disclosures or potential conflicts of interest can be found on the William Blair website. With that, I'll toss it over to Toby. Thanks.
All right. Pleasure to be here. Love coming to Chicago, getting this great weather coming from Florida. Appreciate that. Yeah, let's talk some Celsius Holdings today. I'm just going to, you know, clear some things up right off the bat. I'm going to talk about Celsius Holdings, which is the portfolio company, Celsius, the brand, and Alani Nu. I'll refer to that as Celsius Holdings today. When I talk about just Celsius, that's the brand Celsius. And then when I talk about Alani Nu, that speaks for itself. There's going to be four key themes that I touch on today regarding Celsius Holdings. The first category, disruption. This is a portfolio of disruptive premium brands driving functional beverage category with unparalleled innovation capabilities. Both Celsius and Alani Nu are clearly the category disruptors.
Fifty percent of the energy category growth last year came from Celsius Holdings between these two brands. Number two, large and growing TAM, attractively positioned for expansion as an innovative leader in the large growing functional beverage category. Not just energy. You're starting to see these lines blur between energy and beverage. You're seeing that with both Celsius and Alani Nu as consumers are pivoting back and forth between CSDs and energy. Number three, compelling growth strategy. We have an effective strategy and innovation to reach more people, more places, and more often. I'm going to touch on that a little bit later. Number four, strong cash generation profile. We're going to deploy through disciplined capital allocation, driving continued growth and higher returns. All right, Celsius Holdings at a glance. First, as I mentioned earlier, Celsius contributed over 50% of all energy growth last year.
We are the number three energy drink portfolio in the U.S. Now combined, Celsius and Alani Nu, 16.6% market share within the tracked channels. We are actually closer to Monster for that number two position than the fourth portfolio brands below us now. 16.6%. No one's ever touched that before other than Red Bull and Monster. Brand Celsius holds a 98.7% ACV, sold in over 241,000 U.S. retail outlets. Right now, Alani's tracking the low 80% range as far as ACV. A lot of upside for them. We're the number nine, Celsius. Not Celsius Holdings. Celsius is number nine in liquid refreshment beverage. We're going to get to that slide in a minute. It's very impressive to see who our peers are there. $3.5 billion in retail sales last year for Celsius Holdings. All right, I'm going to get into a little bit of history of Celsius Holdings.
Founded all the way back in 2004. In 2009, we launched over in Sweden, which actually, back in that time frame, it probably was about half of our revenue. I joined the company in 2013. That's when we initiated our drill deep market strategy. We were a turnaround company at that point. The original founders went thin and wide and tried to market to the whole country with not enough cash to do it. The company was really on fumes when we came in in 2012, 2013. What we did was just scale things back. We initiated a drill deep market strategy. This is where we focused our sales and marketing in five markets around the country: New England, South Florida, Tampa, Dallas, and Los Angeles. If you look at those markets today, those are actually some of our top performing markets.
South Florida, we've said it before, about a mid-20s market share. New York, New England, Boston area in particular, close to 20% market share. LA, which is the largest energy drink market in the country, roughly a 15% or so market share there as well. I think when you take a step back and you look at the opportunity of Celsius, you look at some of these markets, some of the biggest markets in the country, and we're in the mid-teens, high teens, even in the low 20s. In 2017, we modernized our branding. Prior to that, we were the world's only negative calorie beverage. We still are. We just don't market ourselves as such. What we market ourselves as is an energy drink with functional benefits, burning body fat, accelerating the metabolism. In 2017, we moved to this can that you see today.
In 2020, we launched our Vibe line, which was a subline of our core Fruit Forward line. Same formula, same product, just a little bit more fun flavors and packaging. Actually, in 2020 also, it's not cited here. That's when we actually expanded our DSD national footprint. We started going into 250-300 distributors, predominantly the Anheuser-Busch and independent beer network around the country. That's when you started to see Celsius take off. 2022 is when we signed our deal with Pepsi, August 1st of 2022, rolled in under their trucks October 1st and just started some absolutely astounding growth from that point forward. 2024, we acquired Big Beverage, which is a manufacturing facility in North Carolina. That was our foray into vertical integration. It is going to give us a lot of flexibility. It is going to help drive our margins more favorably moving forward.
In 2025, we launched our hydration packets. We'll get into that in a little bit and acquired Alani Nu. I mentioned this earlier, top 10 in liquid LRB, liquid refreshment beverages. When you take a look at this list, this is like a who's who within beverage: Coke, Red Bull, Gatorade, Pepsi, Monster. I mean, having joined the company, I think we were doing about $4 million in revenue when I joined back in 2012, 2013. You take a look here and be along with some of these names. I think three of these brands were from the 1800s. We have a ways to go to catch up, but pretty impressive list right there. This is just Celsius, not even Celsius Holdings. Let's talk about the energy drink market and how that consumer has evolved over the last 20 years.
If you're as old as I am, you'll remember that 20 years ago, this was a very male-dominated, predominantly young thrill seekers, very niche category. Remember congressional hearings, people were trying to figure out what to do with energy drinks. Fast forward 20 years, what does it look like? More gender balanced, more age balanced, lifestyle and functional focused, and certainly not niche anymore. It's mainstream. All right, let's talk about Celsius in our portfolio of products within just Celsius. We have our core line, which is Fruit Forward in our 12-ounce can. We have our Vibe line, which we have more fun with, more lifestyle oriented, more fun with the flavors. Same formula, just different packaging. We have our 16-ounce Essentials line, which is maybe targeting a little bit more of that male demographic, more fluid and a little bit more caffeine, as well as having essential amino acids.
We have our on-the-go sticks. These do very well for us and I think are still a big opportunity. Most of our consumers do not even realize we have these. It is essentially the same product in a packet as our 12-ounce can. We just launched this year our hydration. Think liquid IV type of product. We happen to think it tastes a lot better. I am biased. All right, let's talk about the growth strategy. Many of you are probably familiar with Celsius. We are a rocket ship from, call it 2020- 2024, triple-digit growth for about three and a half years. Hit a little bit of a slow period last year. What we have done over the last nine months is we have maintained a market share of roughly about 11%. What that tells me is we have got this great foundation of consumers who love our product.
What we need to do is a couple of things: more people, more places, and more often. More people. We need to bring more people into the category and drinking Celsius. We need to also get people converting over from other energy brands and drinking Celsius. That's the more people portion. More places. That's just expanding availability and getting further distribution. We cited earlier in the year, John Fieldly, our CEO, cited about we anticipated about 15%-20% greater distribution so far this year. That's what we've seen. And more often, this is really a huge opportunity for us. This is greater frequency of consumption within your existing base of consumers. I mentioned we've got this strong base that roughly has us around 11% share.
What we need to do is we need to drive those folks to drink one more can a week, one more can a month. That can really drive impressive results. You look at some of our strategies throughout the rest of the year and what some other brands, including Alani Nu, have done really well: limited time offerings. We call them LTOs. We've mentioned that we're going to end up doing an LTO later this year for the first time. It's an excellent opportunity to drive frequency with your existing base. Earlier in the week, as a matter of fact, we just announced that we're launching a new marketing initiative. It's called LIVE. FIT. GO. If you're familiar with our brand, we say LIVE FIT on it.
What we're attempting to do here, and we're really confident we're going to do, is expand it to a broader message for a broader audience so that people that maybe aren't necessarily just hitting the gym every day, that they understand that Celsius is still a brand for them. It's not just for folks that are going to the gym on a daily, weekly basis. I'm going to play a little video here to show you what that looks like.
It starts with Celsius. People I can feel good about. I'm going to need it. I'm training for life. From after-school pickups to meal prep to a 12-hour night shift. I don't have time to get ready. I've got to stay ready.
Down control starts with a Celsius. I get a whole day to sneeze. First, it's cardio. Then it's a race against the clock. Refuel. I've got 48 to do and 24.
It's 4:49 A.M. Grab a Celsius, lock in. I've got a goal to hit and a deck to conquer, a party to be the life of, and all the essential energy I need to do it.
LIVE. FIT. GO. That's where we're going this year with Celsius. That's how we're going to hit more people, more places, more often. It's going to be a comprehensive 360 marketing approach. You're going to see it digital, TV, all across the board, social media. All right, let's tap into Alani Nu. Many of you might not be as familiar with Alani Nu. We acquired Alani earlier this year. It closed on April 1. Alani was really, they were right there with C4 and Ghost fighting for that number four position within energy about 12 months ago. They just really started to take off. We had had our eye on them for a while. We loved their brand. We liked what they were doing. I know a lot of people seem to think that there's a lot of crossover between Celsius and Alani Nu.
We feel very differently about it. You take a look at their brand positioning. Their packaging is quite a bit different. The way they position their brand. While we're a 50/50 male-female split at Celsius, Alani Nu is closer to 90%. More than 90% of their social media followers are female. Fun fact, only about 1-2% of their followers follow Celsius. So very differentiated consumer. I would encourage you, I know we have some product out there. If you've never tried Alani, give it a shot. It tastes very different than Celsius. Totally different flavor profile. Focus on the sugar-free options with vibrant, unique flavors that resonate with that 18-24-year-old consumer. Bright, fun, female-centric, very playful and approachable. They've really done a fantastic job with their marketing. It's quite a bit differentiated than Celsius. Let's take a look at their portfolio.
I showed you Celsius's earlier. About 83% of their sales last year came from their energy drinks. They have a little bit more of a differentiated product assortment than Celsius does. We did acquire them for their energy drinks. Let's be clear. That's what's growing rapidly. They have some really interesting products. These shakes, protein, as I think many of us know, that's really on trend right now. It's going to be interesting to see the way that develops throughout the year. It's about 6% of their 2024 sales. As you can see, they have pre-workout snacks and other stick packs as well. Energy is certainly where it's at. That's what we're most interested in. All right, what's the strategic rationale? It creates a leading, better-for-you functional lifestyle platform at the intersection of consumer megatrends. Sugar-free, female. I'm going to tap into that in a second.
Those are two of the fastest-growing segments of energy. Combines two growing scaled energy brands with clear category tailwinds, complementary brand positioning and attractive consumer demographics, expected to drive incremental category growth. Leverages combined strengths and capabilities to drive to the next phase of growth and enhances top-line growth algorithm and expected to be cash EPS accretive in year one. Mentioned this earlier. We feel and we know that Alani is incremental to Celsius. Again, it shows you a little bit of the demos, but you can see even just from the images, quite a bit different from one another. Celsius higher household income than the category, whereas you have Alani Nu over there. It is a little bit more of a younger consumer base, obviously predominantly female. Both have very high repeat rates. The target audience for Celsius, more gender-neutral, performance-driven with broad appeal for everyday energy and beyond.
While you've got Alani more female-focused, lifestyle-oriented for consumers seeking a fun and approachable brand. Creates this better-for-you functional lifestyle platform, $2 billion roughly in net revenue last year in 2024. Today we're staring at about a 16.6% category share. I mentioned this a little bit earlier. When you look at what's driving the energy drink category, it's sugar-free and also the female consumer. There's actually a report that came out last week that really talked so much about women are driving the energy drink growth right now. I couldn't think of a better portfolio than Celsius and Alani Nu to really capitalize on that. You can see sugar-free for the first time last year overtook full sugar at more than 50% of the category. That trend's only going to continue. You can see it from 2020. It started and where it's at today.
I mentioned this earlier. Celsius Holdings, between Celsius and Alani Nu, that was 50% of the energy category growth last year. We're still driving the growth. Alani Nu in particular, growing at triple digits right now. Really excited about what they're doing and really excited about the trends you're seeing from the Celsius brand, especially the last, call it 12-14 weeks. Take a look at the energy Mulo Plus with convenience. There's a lot of letters right there. Basically, that just means the total tracked retail network, whether it's convenience, Amazon, Costco, Walmart, all of them. Take a look at Celsius. Just since Q1 of 2022, that's 10 shares Celsius Holdings picked up in the last, call it three-plus years. Pretty amazing right there. You see Red Bull up top at 37%, Monster there at 27.5%. And we're chasing them down.
All right, prime for growth with strong competitive advantages. Function backed by science, a category leader in growing in health and wellness fitness segment. Actually, Alani Nu, much like Celsius, was born in fitness. GNC was the first retailer to carry Alani Nu. You have got two brands that are capitalizing on the health and wellness trends. Strong brand affinities, differentiated sales and marketing approach that creates significant demand. Loyal consumer bases, very loyal consumer bases. Actually, some of the TikTok videos that I am showing of Alani Nu consumers showing up to a Target and some of these younger females just wipe out the entire, all they have got in inventory when there are new flavor launches. It is pretty cool. Continuous innovation with the introduction of new flavors and products and best-in-class operations and supply chain capabilities. That is a huge opportunity. I am going to touch on it a little bit later.
Integrating Alani Nu into Celsius Holdings, we have a really fabulous operations team and a huge opportunity to drive synergies there. Let's touch on the 2025 profile for Celsius Holdings. I'm not going to go through every one of these numbers. We did hold a modeling call last week. It's on our website. I encourage all of you to take a look at it if you haven't, where we kind of walk through what Alani looked like in 2023 and 2024 and maybe some expectations for 2025 as we integrate it in. You can see here they did roughly $600 million in net revenue. It was 46% year-over-year growth. I referenced it earlier. They're at triple-digit growth year-over-year right now. They've really accelerated things quite a bit.
Something to remember when you're tracking a brand like Alani Nu, we went through this at Celsius a few years ago. There's always going to be a discrepancy, or not always, a lot of times there's going to be a discrepancy between reported net revenue versus Circana or Nielsen if you're looking at that. It's just the ebbs and flows and when orders come in. When you're in that growth phase, there's going to be a delta. We included that just for visibility of what it looked like over the last, call it five quarters. As you're modeling things out, just keep that in your mind for perspective. Celsius and Alani Nu, pro forma 2024 financials. I referenced this earlier. Close to $2 billion in net revenue last year. Gross profit margin of about 48% combined pro forma. You can see the rest of the numbers there.
On the modeling call, Jarrod, our CFO, walked through this. I'm not going to go through every number, but we wanted to give folks an idea of how they should model things out because this is a working process. We said about 24 months it'll take to fully integrate Alani Nu into Celsius. Hopefully sooner, but give us 24 months. There's no reason Alani Nu shouldn't have a very similar, if not the same, margin profile as what you see with Celsius today. We've said they're about two to three years behind us. But you can take a look at what we're forecasting for 2025 from a margin perspective. All right, Celsius is driving shareholder value. I mentioned the more people, the more places, the more often. I'm not going to drive that home any further.
We're driving EBITDA margin through operational excellence initiatives designed to deliver strong cash flow generation. We came in at a 52% gross margin in Q1, which is fabulous. We'll see where we land the remainder of the year. Like I said earlier, our ops team is best in class. Paul Storey, our Chief Supply Chain Officer, he led ops at Monster previously and Rockstar previous to that. He's got the best relationships in the business and really does a great job for us. Operational excellence driving margin expansion. We boosted innovation and production capabilities with the acquisition of Big Beverage, our contract manufacturing plant in North Carolina in November of 2024. I think it's been mentioned before publicly. We foresee that plant being able to at some point maybe do about 20% of all of our production.
That should be able to represent most of our Southeast business. Driving innovation, global procurement, supply chain, and global marketing through our center of excellence in Dublin. We set that up last year. Really have a fabulous team over there that's going to help us ramp up international business as well. Investing in technology and AI-assisted tools to drive sales and improve efficiencies. Just like everybody else, AI is something that we're paying close attention to and we're utilizing on a daily basis. Executing talent strategy to support our growth initiatives. We're going to maintain a disciplined capital allocation. You saw some of that with our acquisition of Alani Nu. We're going to invest to fuel organic growth, invest strategically in innovation and market initiatives designed to accelerate organic growth and maximize productivity, strengthen our capabilities and expertise, and cement foundation for sustainable growth.
Number two, maintain a strong balance sheet and debt paydown. If you have ever met John Fieldly, our CEO, he was a CFO by trade, CPA by trade. We essentially have CFOs running this company. We do not mess around when it comes to expenses and things of that nature. That is why Paul and I are sitting at the Motel 6 while we are in town. Nothing against Motel 6. Robust liquidity position with current net leverage of approximately one times and ample cash on the balance sheet post Alani Nu transaction. Strong cash flow management with a goal of reducing that leverage over time. Number three, we are going to continue to be opportunistic as far as an M&A perspective. We are always going to evaluate opportunities. That being said, the integration of Alani Nu is our number one priority right now.
We're going to keep our eye on what's out there. The eye on the prize right now is getting a strong integration and maximizing that opportunity. What's the investment thesis here? Number one, a leading portfolio of premium functional beverages with strong and growing consumer demand for functional and better-for-you zero sugar energy solutions. Again, zero sugar. You see Red Bull leaning in heavy, Monster's leaning in heavy. We're the OGs when it comes to zero sugar and Alani Nu as well. 100% of our portfolio is sugar-free. Attractively positioned to capture opportunity in the large and growing functional beverage category through strategic investments and innovation. Number three, robust brand equity and awareness with opportunities to expand driven by targeted marketing initiatives and a loyal consumer base. Number four, clear path to drive incremental revenue and profit growth through more people, more places, and more often.
I think that's the sixth time I've ever referenced that. That's how important it is to us this year. Strong financial profile with a well-capitalized balance sheet enabling sustained organic growth, strategic vertical integration, technological advancements, and value-accretive acquisitions. I'm not going to run through all these. These are just a bunch of numbers that you guys can cite. Yeah. I'm not up here just to recite the appendix. With that, we've got a few minutes left. I know Jon wanted me to try to take up all the time, but if I'm here for Q&A, I know we've got a breakout section here shortly. It's up to you, Jon, how you want to do this.
As you know, the energy drink category slowed last year. I'm just kind of curious what you're seeing more recently and maybe more importantly what your expectations are for 2025. Yeah.
I mean, you've seen the consumer kind of bounce back as far as our category. You've seen more the foot traffic within convenience has improved. That could be the gas prices have come down. I think that's helped. That's where our preponderance of energy sales come out of convenience. That's been helpful. You know what? Red Bull has leaned in on their sugar-free and their LTOs. I think LTOs have really driven a lot of the category growth, whether it's Monster, Red Bull, Alani Nu for sure. That's something that I referenced earlier. We're going to be, I think I referenced it earlier. We're going to be launching an LTO in Q3, Q4. I think that's driving a lot of frequency. I'd like to see, I don't have enough data yet, but get more consumers entering the category again.
I think last year you saw that slowdown. I think that had more to do with the macro issues. The category is growing robustly. It was, I think, 7% in Q1. It has accelerated in the last four weeks. As we head into summer season, I'm really excited about where the category is, where the trends are for Celsius, along with some of the market initiatives that I spoke about. The shelf space gain that you mentioned earlier, 15%, is that on the Celsius brand? Is that on Celsius and Alani Nu? What's the mix there? When did those actually hit the shelves? Did it already hit the shelves? Yeah. The 15-20% reference was for core brand Celsius. That's what John Fieldly, our CEO, had referenced earlier in the year. Those have pretty much all hit the shelves.
You see the shelf resets begin to take place in January and they run through May. A couple of large retailers still hit the shelf. Feel really good about where we're at. We're going to have some innovation that launches over the summer. A couple of SKUs coming out. Then we have the LTO coming out later in the year. We will get some additional placements. A bulk of that 15%-20% have already occurred for Celsius. We haven't really spoken publicly about Alani Nu's gains this year, but they've been substantial. I would think that there's a great opportunity for further distribution for them the remainder of the year and then into next year.
We will see Alani Nu become part of the distribution of Pepsi. How would it say? Is that part of the integration? Yeah.
We're not really commenting publicly on that right now. We feel like we've got great optionality between whether it's Pepsi or the current network there in that fragmented AB independent beer network that we had come from. That network's fabulous. They've lost a lot of key brands over the last two or three years. Right now, Alani gets quite a bit of attention there. There's pros for both networks. We haven't made any decisions yet. There's really nothing to talk about publicly.
Yeah. It's interesting to be kind of broadened out beyond kind of gym rat to everyday mainstream user world, main locations. I like the message. Are you going to be spending more too? Are you kind of leaning in or heavy enough on your spending?
Yeah.
I mean, in the modeling call, we've talked a little bit about what the percentage of sales and marketing would be for the remainder of the year. But that's for Celsius Holdings. So that includes Alani Nu. I would anticipate there's probably a little bit of additional spend that's going into that initiative. Right now, you're seeing the two big players spend quite a bit in marketing, in particular Red Bull. I can't turn on TV without seeing their cartoons right now. It is really important that we lean into this marketing campaign. We're really confident it's going to do well for us.
Are their margins 8 percentage points or some other 10 percentage points lower than Celsius? Is that the mix of their business where they have more non-energy drink business? Or is it just scale?
It's just scale.
I mean, it's really where we were two to three years ago and when we were roughly the same size as them. I fully anticipate. I mean, if you look at the back of their can, their ingredients, a lot of the same ingredients. They source the cans from the same three big players that we do, a lot of the same manufacturing facilities that we're in. I think just we've got a great team, as I referenced earlier, that negotiates great rates for us. Number one, getting them rolled into our contracts will be fantastic. Also the scale. You're talking about going from $1.5 billion to $2 billion-plus worth of buying power. I would think that that's actually going to enhance things. It's going to take some time. Hopefully, it's quicker than the 24 months I mentioned.
There's no reason why they shouldn't have a similar margin profile to Celsius.
You've spent a lot of extensions a couple of years ago of flavor extensions. One of the things I hear regularly is, and maybe part of broadening the appeal is a lower caffeine version or can size. Is there anything that you're thinking about from an innovation perspective that would maybe support the broadening of the customer base?
Yeah. Yeah. I mean, if you take a look at Alani Nu, they actually have a smaller can that's 100 mg of caffeine. It's certainly something that we're exploring for core brand Celsius as well. Our innovation team looks at a whole host of different opportunities. I would agree with you. Done a lot of flavor assortment over the years.
I think sometimes maybe fewer, but bigger could be an opportunity for us as we move forward and more focused national campaigns with some of these launches, as well as some what I term true innovation versus flavor innovation.
As big as ever, said that could be supplying 20% of your core Celsius volume, or did that?
I would say Celsius and Alani. Yeah. Has opportunity. We have one line in there now. It's already got some of the infrastructure set up to put a second line in there. North Carolina is, for those that do not know, it's one of the hubs for a lot of manufacturing for beverages in the U.S. There are a few co-packers right in that area, great freight lanes there to get across the Southeast United States. Yeah, it's a huge opportunity for us.
That would be friendly as far as the margins when you're able to produce it yourself.
Is that, if any of the benefits of that packaging should already include Celsius?
Yeah. Maybe a little bit in Q1. Q4, not necessarily. I think in Q1, you start to see some of that.
All right. We'll take it to the breakout room. Thank you, Tony.
Thank you.