Celsius Holdings, Inc. (CELH) Earnings Call Transcript & Summary

Good morning, everybody. Thank you for joining us on day 2 of the BofA Consumer Conference in Miami. I'm Jonathan Keypour. I work on consumer staples team. I cover Celsius Holdings. We have management here with us today, John Fieldly, CEO, Jarrod Langhans, CFO. Thank you for joining us. Appreciate it very much. I guess just to start, if you guys could maybe summarize how you came to Celsius, explain the story a little bit what makes it different how it kind of fits into energy? And I guess, just refine what your favorite flavor is?

Yes. I'll start off. Excellent. Excellent. Well, I got a Peach bag today. So it's a phenomenal flavor. We also got some great flavors out there. Lemon Lime, we brought back was one of the original flavors in the portfolio when I started, we brought that back this year, lead launch with Walmart. So really was able to activate Walmart this year, which is really excited about that, and it's going really, really well. Walmart. And Walmart is one of the #1 retailers in the country on volume-wise on energy drink sales. But a little bit about myself. I'm a CPA as well. I started off with Celsius almost 12 years ago as the CFO. Prior to that, I worked at a biotech consumer products company for a little bit. They were on -- help them get listed on NASDAQ. We did an S-1 filing. And then prior to that, I was in B2B publishing and with the Lebhar-Friedman working on their retailing today portfolio as a business manager. And it was over 8 years at Eckerds kind of on the retail side, rehabilitating Eckerd drug stores part of a turnaround team there. So I joined Celsius when, unfortunately, the company was being delisted out of every retailer in our country, original investor wanted to try to sell the business prior to my arrival, and it didn't have any buyers. Prior to joining Celsius as well, the original founders launched it during a time when -- with the kind of a thesis on building the world's negative calorie drink that was backed by science. You had a lot of really diet pills back in the day. Keep in mind, one of the main investors built Rexall Sundown, so truly understands multivitamins, dietary supplements. And South Florida, down here, there's a lot of dietary supplement companies. The research centers were GNCs is down here, Garden Lifes down here, Herbalife. So a lot of great -- like an incubation on sports nutrition down here is quite interesting as well as IBM had a research headquarters in Boca Raton where the first PC was created and developed there. So quite interesting, just like fun fact there. So I've been here 12 years. started up as CFO. I did a dual role, CFO, CEO for 2017 to '18. We did uplist to NASDAQ back on -- got the company back on NASDAQ in 2017, took the permanent role in 2018. And we've been continuing to build this brand each and every day, focused on profitability, margins, profitable growth and capitalizing on today's health and wellness trends. I think that's a major thing, and I know we'll get it later on, we'll get into some more details around that, really taking the brand from a really a niche diet brand into one of the fastest-growing better-for-you, fitness-focused lifestyle brands in the energy category today. So -- and it's a little bit about me and a short little winded answer there, but I can go on over 12 years, it's been a fun ride.

Yes. I haven't been here quite as long as John, I started back in April of '22. So I've been here a little less than a year. Joined the team for what's been a pretty crazy ride so far and got a lot of opportunity going forward from there. I was over in Europe actually for the last couple of years before that working with a company called Eden Springs, which was a subsidiary of Primo Water. So largest bottled water business across Europe and Israel. So we're standing up some shared service centers and really centralizing the back shop over there before I got the door knock to come join John. Before that, I had spent 8 years with Cott, which eventually turned into Primo as we transformed that business from basically a private label bottling business into a pure-play water business. And 10 years before that, I was in public accounting, so auditing public companies and doing those kind of things beforehand. So it's been a wild ride over the last decade or so and looking forward to the growth we've got going here and what we can accomplish here.

Thanks, guys. I guess we can jump right into the brand category, how it's changing, that kind of thing. We I mean internally, BofA in our notes we call it an Energy 2.0, you guys call it functional energy or there's a bunch of different names, but whatever it is, you seem to be able to agree that there's this indescribable a new kind of energy drink that's coming out, that Celsius is certainly one of the vanguards of. Our calculation shows something like 15% of total energy, maybe it's a little less, maybe a little more, but around that magnitude. I'm just wondering how you guys think about the functional energy space, where it's going, how much of the -- let's just say, longer -- medium or long term, how much of the category will -- do you see kind of migrating over to the function or the 2.0 Energy?

Yes, I think that's a great question. And the way you've identified that segment -- your segment in the category, like 2 of the largest competitors in the category segment in order to push smaller brands or up and coming brands or challenger brands into the gutters or the nosebleed section or the crack of coolers. So I think there is something there, but the way we see it, we're going after total energy. And we're actually taking a step even further once we conquer that goal is to go after total beverage and we can talk about some of the opportunities we have here with Celsius. And I think you'll see this at lunch so that we have samples up in the hallway just see a number of individuals that are drinking Celsius with their lunch versus people that would drink a Redbull or Monster with their lunch is quite interesting to see, and that's a huge food service opportunity. But so that's where we're at. We're going after total energy. We want to be touching Redbull and Monster and every cooler. That talk about functional energy. Energy is function, right? It is -- so we're all functional in all the brands. And there's -- you could call it new age brands. They call fitness brands. There's a variety of different ways to really segment the area and the category, but we're going after total beverage and total energy. And keep in mind, 5 of the top -- if you look at the top 5 SKUs in all of beverage, 2 of those SKUs are energy drink brands. So that's the opportunity we have. Yes. I don't know if...

I guess we should jump into the Pepsi deal probably pretty quickly. That's been a step change accelerator in the business. I guess if you could just -- it was announced in August, started implementing in October 2022. I guess, run us through maybe what is Pepsi's responsibilities? How much of that has been transferred? What's left to be transferred and what, I guess, what could be in the future?

I mean we're still early in the game, right? So we have a quarter under our belt so far so still got a couple of more quarters to really fully optimize into their system so we've got a good team in place. We actually have Paul's story out here yesterday, who's our Head of Operations, that's been really running a lot of the transition in from a supply chain perspective. So he actually did the transition from Rockstar, where Rockstar went from Coke into Pepsi. So we've got that experience in those learnings. So we're early days when it comes to getting fully optimized and getting fully into their system. From a distributor perspective, we have transitioned all the distributors that we will be transitioning. So there's really only 1 main distributor left, but that distributor is not going to get transitioned out. So from a distribution perspective, Pepsi has fully been transitioned. We do have some opportunities with some key accounts we're picking up that we need to move from a direct model over to a DSD model. There's still a little bit of that kind of work to do. But really, right now, it's about us getting to know each other and really optimizing the supply chain and making sure we can take some of those peaks in terms of volatility and from an ordering perspective and really start to smooth that out and get more kind of seamless daily kind of orders in as opposed to kind of every couple of days type of orders in. So -- but it's difficult because we're growing so much. So you'll see spikes in different parts of the country, and we just need to react. But I think we're -- Pepsi is very data-heavy. So once they get a good amount of data in, I think you'll see things smooth out and get optimized pretty quickly.

And that's like within a year kind of thing as you lack the 4Q transition, it should sort of smooth out and get better, is that like a fair time line?

I mean, it's never going to be perfect, right? But I think once we get some data in there and we've got some time in their system, I think things will get easier over time. So it gets easier every week, every month, every day. So from that perspective, we're getting there, but it's just when you move from the AV system over to the Pepsi system, it's not going to be perfect overnight right?

I'll just chime in, when you look at the opportunity at hand right? So when we talk about this on earnings calls, like we've been the #2 brand on Amazon for, again, several -- many quarters, actually several years now. And so much opportunity on there when you look at the availability, and it's all about distribution, making sure we can compete in that energy door with those larger brands and getting the proper placements. And I think over the last 4 quarters or so or 5 quarters being that #2 brand on Amazon, even while our ACV continues to gain in availability. So consumer segment, the consumers -- the credibility with Celsius with a consumer mindset continues to grow and get stronger with our distribution gains. To get to a 90% ACV from the partnership as of October 1 when it started off, I think it was transformational for the company and the number of SKUs that are on shelf now. So 2023 is really, as Jarrod mentioned, is optimization year and also to see how high, high is for Celsius over the next 12 months. There's resets still taking place. And I don't think we couldn't have picked a better partner. If you look at their overall portfolio and how Celsius fits in, they have Celsius, they have Rockstar and fast twitched within it and then Mountain Dew Energy. So we really fit a really nice void in their portfolio, to your point, better view and it's really a portfolio play within the PEP energy. So I think it's a great partner, and it's going to be -- we're really -- the whole team is excited -- we've hired a lot of people from Pepsi with Pepsi experience that know the network, know the opportunities to work through some of the kinks. There's going to be kinks on any new partnership, right? We need to learn each other and how to work with each other. And we're both very professional. And I think I'm really excited about the brand all the way through the division.

Great. I guess I've heard you guys sort of frame the opportunity that Pepsi gave you that maybe wasn't on the table or it wasn't on the table as easily. If you guys just remind us maybe like in terms of fridges or doors or types of by channel kind of that opportunity they got for you?

Yes. So like there's 3 major really areas of their business that we really didn't have reach for. Number one, just as Jarrod mentioned, the efficiencies, right? So having 1 national distribution network versus 325 different points of -- contact points with independent bottlers adds a lot of complexities. But when you look at distribution side on of these, they call the metals program, which are really independent store owners that Pepsi manages their coolers, their inventory and their planograms. So we get immediate access to those -- that distribution that you really couldn't gain access to before. in a cohesive way with proper progression, proper number of SKUs on shelf. So that's a huge opportunity. And they call it OTS, the market, the independence is a huge market for the energy drink category. So that's a big win. Also, the next win is we talked -- I just mentioned it at lunch, like how many people are going to have a Celsius,they haven't tried to try it's the best thing. But going on food service is another great opportunity. We didn't have access really to food service anymore. We started going into some of the wholesaler networks going into some at work locations. We were going into hypermarkets, which was really great. But with the breadth of the step-up of opportunity with Pepsi versus what we had in our prior network going through some of the wholesalers, it's really night and day there on that area. And then college campuses, about 60% of the college campuses are locked up by Pepsi. So they have like the exclusive rights. And so we've always tried to get on the college campuses had to like dance around them versus going on campus. And now we're in a lot of the college campus coolers and it's going really well. I think that's a huge opportunity. As I mentioned on the call, we're in 1,600 today, so there's a lot out there. Hospitals is another great opportunity. So out these at work locations where Pepsi has really good footing and distribution, we're able to gain access within there. And then the optimization of the supply chain, which is down the road and as we continue to optimize.

Anecdotally, we just got Celsius in the cafeteria at work. We are all thrilled about that. I guess you mentioned that the consolidation from so many distributors into one national system that must be freeing up quite a lot of resources, but at the same time, you guys are expanding ACV like 30 points inside of a couple of months. It's a lot of demand and then a little bit -- you get some resources freed up, some resources clamped down. I'm just wondering how you look at the -- well, first of all, in terms of the pace of expansion, -- was that maybe faster than you expected? How can -- how should we think about that as being the right pace? And then with the resources you freed up, is that sort of flowing back into -- that seems like it's flowing back into fueling awareness and creating demand and that kind of thing. So just sort of the balance between the speed of the expansion and the level of needed support?

Well, I'll let Jarrod talk about some of the resource allocation programs we're working on, but I think going from a 60% to 90% ACV in 90 days. We knew there was huge opportunities there. I quite frankly thought I was going to take a little bit longer. I thought we were going to have a lot more disruption moving from some of our prior distributors, to Pepsi I think the company handled the transition extremely professionally. Jarrod and his team did a great job as well working with our prior distributors. And I think they really respected that on the transition we went well. But there's been a lot of resource allocations. We're constantly talking about that.

Yes. I mean I think what we're saying is we just hired this quarter, 100 people. already. So we're really expanding our college program. So I think we added about 70 people to that program alone. So really getting kind of boots on the street when it comes to having people on site on campus. And then we'll continue to add sales and marketing resources and back-shop resources as well. But we're not taking our foot off the gas when it comes to having really the salespeople out on the street and the marketing team to support our growth and to support where we want to go. So I think from that perspective, we haven't pulled back. There are definitely efficiencies we're gaining really across the supply chain. But from a customer facing a key account facing, we still got our sales guys going out and merchandising and taking on the key accounts. and seeing where we can optimize things can we get better space on the shelves and all those kind of things. So still work in the street when it comes to that piece. Like John was saying, the ACVs grew pretty quickly. So the power of the Pepsi system happened quicker than we expected, and that's where we were able to put some kind of extra investment in, but we put that through more of the digital, the social media-type channels where you can push money in fast and get good geographic dispersion across the footprint. So as we saw the ACV moving quicker than we may have anticipated, we were able to get kind of some branding and awareness and marketing into the system with that and then kind of back to more of our normal cadence where we've got specific programs designed around drill deep strategy really across all the main cities within the U.S. that are energy drink cities. So from that perspective, the resources are there. We're looking to invest as we grow and really making sure that we're putting forth the investment and having the right resources in place. So not slowing down when it comes to that part.

Like food service, right, big opportunity, adding more staff on food service. We're going to add more resources as we grow. And the other opportunity is not adding resources internally, but educating the Pepsi teams. I mean massive sales teams, massive key account teams on Tier 2, Tier 3 and Tier 4 accounts, which we really didn't have access to before. So it's really partnering with them coming up in the next recess. We're working on AOP planning right now for 2024 with them. We're getting into their planning cycle. Keep in mind, we -- really this year, we partnered with them in October, which is really -- I mean they plan 18, 24 months in advance of the year. So we were really outside like almost forced in. So we really weren't truly integrated into their systems or their plannings or KPIs and structures that they had. So this year, we're able to really -- when you look at this year and next year, we're really able to integrate into their overarching big bets within portfolios be really part of that strategic decision within PEP Energy as well. So I think just the more we can get more synergies together, we're closer together, we're going to get better results.

Great. that actually -- that's a good segue into -- I want to talk about 2023 a little bit. I guess we can maybe briefly recap 4Q just as a lead into the year, but there was -- there was all this inventory kind of discontinuity that makes sense in such a transformative expansion. But I guess sort of high level, what do you see 2023 being like what -- how would it fit into the growth plan for Celsius? And I guess what are the priorities? And what's most important to you guys?

In regard to 2023, I mean, it's a transformational year for the company. We're the #3 energy drink brand right now. We finished the last year at almost -- right around a 6.4% share coming out of the year. We gained about a whole share point in 30 days, and that's really unheard of. We're seeing great momentum behind the portfolio. A lot of great excitement coming in from all of our key retailers, and the marketing team has great innovation coming out. So we really feel we're connected with the consumer, not only flavor innovation, but also I talked about the Peach Vibe flavor I have. I mean some of the great launches. We just launched our Fantasy Vibe last weekend, a big event out in Malibu, great experiential event. If you were on TikTok, Snapchat or Instagram we probably got some views of it. Really cool event and it's a great flavor combination tie-in is experiential flavor, and it's working. So we're really excited about that. We've got more of those labors coming in. We're going to build out our core flavors, talked about the Lemon Lime. We've got some other great flavors coming in at expands the usage occasion. And 2023 is going to be a great year, sitting at 90% ACV heading in. We got to get more SKUs on shelf. We got to get these coolers placed. We have about 20,000 coolers we're looking to place dedicated at front checkout coolers, and we're going to compete with the top brands out there. And that's what the team is committed to. We got to see -- I don't know if -- if anyone seen any of the displays out there. The teams are building check us out on LinkedIn as well. We do a lot of activity on LinkedIn. You can kind of see what the teams are building out there. Really proud of the team. There's not many energy drinks that can build displays like we build and rotate them through and then have managers allowed to come back and restock them. So, if you build a display like that, it must sell through just keep that in mind. Otherwise, you're not allowed to build displays. So that's like a really good sign when you see like some of the size of these displays like 1,200 case displays are just with a [ baler ] team up in the Northeast and Wegmans is a great account for us up in the Northeast as well, massive displays are building Celsius walls. And so it's a lot of good things. So just keep in mind, when you see a big this way that product must be rotating.

I assume my invitation of the launch part is lost in the mail.

Well, now that Bank of America is powered by Celsius. I don't know if it might be able to work that in.

Let's get to some tough questions, I guess. Let's do that. Actually, I have some softball ones. But this is just general about the consumer staying consumer. This is something everybody has been asking. Just wondering what you're seeing in terms of takeaway. I know it looks good in scan data and all that, but what are you guys seeing in terms of how consumers are interacting with energy? And I guess does that differ much by channel? Or is there any kind of lens we could look at it where it might be different from 1 consumer to the other?

Yes. I think when you look at the overall consumer, there's a lot to learn there and a lot to understand. I think we're trying to understand it each and every day more what the consumer is doing. I think especially the news that comes out this week, the banking side and just there's a lot of noise, interest rates are high, inflation is high, how are consumers cut back, they're going to have to cut back. I think there's just a lot of things to really look at. I think when you look at the energy category, in particular, when you look at the basket size of what are consumers purchasing on a weekly or monthly basis. We feel internally, there's other areas consumers are going to cut back first before they cut back on their -- really what powers them through the day. It's like cutting back on your coffee or energy drink. It's really Celsius as part of a daily lifestyle, a daily routine. So it's probably lower on your cut list versus maybe having that extra drink at choosing the right restaurant -- a different restaurant to go to, maybe not having dessert, maybe getting 1 less drink or something along those lines. So I think there's other way areas consumers will cut back before they cut their Celsius out. But that's to be determined. I think what's interesting in the energy category, it's continued to grow. You're seeing good dollar growth. I know some of the other brands out there are seeing dollar growth, but the units aren't growing. So I think that's something to pay attention on as well. It means the core consumer is very loyal, right? We know that in the energy category. So they're willing to pay a few more dollars for the -- but for the same amount of units being consumers. I think what's interesting in Celsius, you look, we're growing dollars and we're growing units as well. So definitely incremental to the category. We talked about that on the Q4 earnings call, #1 driver of brand growth in the energy category represented about 22% what's interesting that unit growth was about 30%. So units are there. The units are growing, the dollars are growing. That brand is truly growing, not just selling more drinks to the same consumer. So I know it's a little bit winded there in regards to the consumer segment, but that's kind of internally how we feel about our consumer.

I have more questions, but I think we should open up for Q&A. Brian?

John, you've mentioned a couple of times food service and also like lunch, so people consuming outside of what would normally be an energy usage occasion, I guess, and kind of makes me think of Gatorade, right? Like if we go back 30 years ago, what made Gatorade a more main streamed beverage was people were not just -- most people don't sweat that much, right? They were still drinking Gatorade. And what Gatorade did was iterate, right, different flavors, once they realized there was usage occasions outside of just working out that they kind of iterated flavors and sublines. So can you kind of talk a little bit about kind of that potential path for Celsius, how you're thinking about product innovation, line extensions to make the brand relevant across more usage occasions?

Yes. I mean I think that's a great example. When you look back to Gatorade, right, not just for hydration pre or after workout or during workout routine I think that's really the playbook that Celsius has, right? I mean it's -- when you look at it, we started off in the gyms to pre-workout. We saw -- we have an amazing energy drink, taste great, 7 essential vitamins. We're hitting on this better-for-you movement without sacrificing flavor. Everyone wants more function in the foods they consume, and fitness is hip cool, sexy and premium and goes broadline. If you look at what happened with apparel, with that leisure wear. So I think there's massive opportunities. And that's why we started to break out. If you look, the big thing this year is bifurcating our line, so it's our -- of our core line with our core flavors, our fruit forward position potentially a different usage occasion. We're looking into potentially a different consumer segment. And then we have our Vibe line. It's a little bit more fun, potentially a little bit more inviting for maybe another subsegment within -- as you look at the different consumer segments and within the category. So we're very much going down that path. Look at adjacent categories, I think there's really great opportunities that we could take the Celsius brand. Also, a partnering with Pepsi that opens up a huge opportunity for regional tests and potentially national rollouts, really finding maybe gaps or white space within our portfolio where we can add value. I think that's what we really need to work on. Timing and sequencing, as Jarrod and I always talk about, the focus right now is on our core portfolio. I think over the next 24 months, that's got to be -- we just got in. Let's continue to build out the Celsius core portfolio. then let's bring in another adjacent categories. It could be further going down the performance line there. As we look to segment the category, just like all the leading brands do, we can start segmenting the category as being a category captain, a category leader within the energy space, especially at these retailers really will give you that authority and that credibility to start segmenting. So I think it's a great point and definitely what we're looking at.

John, maybe I can ask the bad cop version of Brian's question. But if I just think about longer term, right, for Celsius, like the 6.4% share you talked about, you're well underway to 10%, it seems like. And that historically has been like the ceiling that the third player has a hard time breaking through. And so just like what have you learned from maybe the shortcomings of the other brands, even in talking to Pepsi that have gotten to kind of 10% and then faded -- and how you think Celsius is going to be different once you get there that you can get to, I don't know, 15, 20 points, whatever the long-term goal from a share perspective is.

Well, I think I think when you look at those other brands that went -- I guess you're talking about like Rockstar, you're talking about Bang, some of the other energy drinks that out there that kind of got to that 10% ceiling. I think it's the life like the way they went to market. I think what the way Celsius went to market is extremely unique, and our consumer segment is very unique, we're 50-50 male female. Actually, latest data was 54% male. So a little bit slightly a little bit more male, but really 50-50 -- those brands you're talking about went to the traditional energy drink market first. Bang went to fitness and then Bang went to convenience and then they started to build out in the all other markets. I guess just due to the turnaround strategy with Celsius and really the original thesis of the Celsius brand, we've built the brand a little bit backwards from being a leader in the energy drink category, one would argue because you usually go after the largest TAM. We've built this brand on -- in the fitness channel. We built this brand on Amazon. We're #2 brand on Amazon. We are well north of a 10% share. We've built this brand in the grocery market and club and now and drug and mass. And now just really the largest expansion was in the convenience channel most recently, where 70% of the volume is -- so I think if you look at some of the data points outside, and we haven't really talked about any of those data points, but there's a huge opportunity to go north of 10% from several of the retailers we're in and several of the regions we're in. Just right down here in South Florida, we're well north of a 10% share right now. The question is, can the brand travel? That is the big question. To your point, can it get north of a 10% share nationally on a national basis. That's what we're going to find out over the next 24 months. That's the answer. I would argue that Amazon is national, all apples -- where all brands are treated equal and we're north of a 10% share. I think if you look at Costco, it's a great opportunity there. And look at other national retailers as well. We'll see what happens at 7-Eleven, huge opportunity at 7-Eleven, Circle K now and some of these national retailers. So I think there's anecdotal information that says this brand can go north of 10% share. Now there is markets that we're not strong in, right, the Pac Northwest right around the -- great Lakes. This brand has really been a stronghold in Southeast Texas, California, gaining some great share points up in the Northeast, look at Boston, look at New York and starting to see some great momentum in Chicago. But there's a lot of new markets that we're entering, especially with the ACV. So how quickly can we adopt the new consumers? How quickly can we tell them the retailers we're at? And how quickly can we bring them into the portfolio? That's really the question. And what's the timing and sequencing on that.

You guys have grown tremendously over the past couple of years. And obviously, this Pepsi deal should hopefully take you to the next level. Can you maybe talk about capacity, supply-demand trends you're seeing? And maybe any troubles you could foresee and maybe how you adjust that?

Yes. From a capacity perspective, like I said, we had Paul out here yesterday. And if we look at where we are today, we could easily go 2x in terms of -- from a volume perspective with our current footprint. And then we've got some surge opportunities where we've got extra co-packers lined up or if anything were to go beyond 2x. So at this point, from a warehousing, a storage and a co-packing perspective, over the next 2 years, we could easily triple or quadruple our footprint from a capacity perspective. So we're not worried about being able to generate the volumes and from that perspective. From a supply chain perspective, we are carrying an extra inventory intentionally. So if there is any kind of bottlenecks or issues that pop up, we've got that time. So we've got a lead lag built in if we need to. Right now, we're -- from a can perspective, we're using the 3 main can suppliers in the U.S., and we haven't seen any raw material issues, knock on wood. So from that perspective, we're in good shape. So we've got built up inventory, our co-packer network is strong. And luckily, at the moment, we don't have any supply chain lags going through the system.

And it's a great question, right, especially coming out of the pandemic where supply chain was flipped upside down. Paul Storey is our Head of Operations. You -- from back end and really built Rockstar and spent a ton of time at Monster, best in the business. We have multiple routes of supply chain as well now. So I think going to the can -- what we call the can pandemic and going through the pandemic, multiple sources, multiple raw material sources and making sure we have that availability, I think, is extremely key and that's a big initiative that we've learned. And I think every company has kind of learned from that you need to be very cognizant about supply chain. So a great question on that. And I think every CPG brand is extremely focused on that, especially of what we've dealt with the last several years.

It seems to be all for Q&A for now at least. I'll keep going. I guess 1 question I have that I'm very curious about is how you guys think about the contribution from the multiple sales growth levers to your total sales growth trajectory ? Meaning, how much of the growth you guys are targeting, do you think you're going to get from distribution expansion this year, how much from pricing, which I assume is not very much? How much from velocity, which I assume is the lion's share?

Yes. I mean, I think the category has been growing around 10%, 8% to 10%. We think that continues to grow. I think with the latest data points, we're looking for updated Mintel data soon. We were talking about 26% of our sales were new to category. -- new-to-category consumers. We're seeing 52% of our sales increased consumption from availability. So our consumers are consuming more Celsius. So when you look at our -- the velocity numbers, we just expanded a lot of new distribution and a lot of that distribution is in your Tier 3, Tier 4 accounts. So keep that in mind. And it's -- so we got to fit into our shoe a little bit as they say. We had a lot of new items on shelf as well. So velocity naturally should go down somewhat. We're very focused on velocity. We're continuing to focus on that and continue to grow that. Velocity growth should come into play in 2023 as we go forward. We're pushing to see increased velocity. And then in regards to the overall share the category 6.4%, and we'll see where we progress as we go forward. But it's got to be velocity. It's going to be a full year with a 90% ACV. Additional items per store and your dollars per TDP growth is something that we also really need to focus on.

So I guess it's fair to say that this is going to be a year where ACV expansion is less important than number of items on shelf. And that's going to require a pretty decent amount of advertising step up to support it makes sense to me. I guess the questions I have are, if you could kind of highlight any of the timing or the shelf resets that might -- when we can expect this to come through what your expectations are for shelf gains. And in terms of the marketing piece, you mentioned that it's very easy to quickly ramp up on the digital side of it and push that through as needed. You guys have broader aspirations in terms of traditional, not newspapers or anything, but the kind of thing that will get Celsius in front of everybody?

Yes. I mean absolutely. We do a lot of digital, but we do -- we're getting more traditional as well out of home. It's -- there's not one item we do that -- it's a combination of our approach. We have a kind of a 6-pillar marketing approach where we can equity to consumers in a variety of ways. We're partnering with new partners like the PFL, Professional Fighting League. We're getting into a variety of sporting, car racing, NASCAR partnerships. We have some NHRA partners, we have -- getting into surfing as well a variety of different venues and different verticals to reach those new consumers, more consumers as we continue to scale and grow there. I think there's a -- turning up the marketing, we can turn it up quickly. I mean, there's ways to do that. But we're very cognizant on the profitable growth as well and meeting expectations. And that's something we look at.

And just on the shelf reset?

Yes, shelf resets. I mean, so you were sitting at 90% ACV. The next couple of points of ACV are probably not as important. Every point of ACV is important. So I don't want to say that because the sales team will hear me. So every single point of ACV is extremely important. But on an overall top line revenue opportunity, the numbers per store are very critical. We always went from like 8 to 12.5. We'll see how many additional we can get. Really, it's optimizing the retail store, right? And I always talk about like owning the dance floor within our sales organization and within our teams, we've got to own the dance floor. It's the only way to win. You're not going to win on the dry shelf. We need to have at least 3 points of disruption in every outlet. That's where Pepsi comes in. They're in a lot of these stores multiple times a week. Even in Walmart, they're there every single day. They have employees that are just at Walmart. That's their job. They show up at Walmart, they merchandise. They will be merchandising Celsius, putting in cold, end cap coolers and just keeping that availability. So even though our number of items might not increase, let's just say, I'm hoping for a more increase in 12.5, obviously. But let's just say that 12.5 holds, you could gain a ton of efficiencies by just making sure those 12.5 are in additional places in each outlet driving more velocity, more sales and throughput through those stores. So it's really -- as Jarrod mentioned, it's the optimization of the partnership with the retail partners. An example here in public, we're down in Florida. We started off on the dry shelf. We gained open air, grab-and-go coolers. And if you go in, we're at the checkout now with 2 flavors. So there's 2 flavors at every other checkout. We're not satisfied with that. We want a full row. We want the -- and once we get a full row, we want 2 rows. So that's the incrementality and the opportunity. That's not going to come through on some of the scanned data, number of items per store. It's not going to come -- what it will come through is the velocity numbers. That's where that's going to start to kick in.

Got it. We are exactly out of time. Perfect. Thank you guys very much.

Thank you, everyone.