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

We're going to get started. We are very, very grateful to have Celsius Holdings with us at the conference this year. We have the company's CEO, John Fieldly; and EVP, Toby David. So we're going to just jump right in. There are a bunch of questions prepared. I'm excited to have a chance to sit down with you both and kind of pick your brains a bit about the company and the category at large.

So maybe to start, it'd be helpful if you could offer a bit of an overview of the Celsius brand and what you think are the key differentiators to the brand equity versus traditional energy?

Yes. No, thanks for having us. We're excited to be here. It's fascinating where the Celsius portfolio and brand is today. When you look at some of the category that -- part of the category we're going after, some -- really most importantly, consumer trends. 3 of the biggest trends in consumer, all consumer beverages and products. When you look at it and what we're capitalizing on is Celsius is capitalizing on the better-for-you trend, right? Everyone wants better-for-you, but they don't want to sacrifice flavor and taste. So we take pride in our flavors and taste. We have over 7 essential vitamins, no aspartame, no high fructose corn syrup, and our flavor profiles are amazing. So that's the 1 mega trend that's out there as well. The second megatrend is we want more function in the food and beverages. We want more out of our water. We want more out of our energy drink. And we deliver on that. We have over 6 clinical studies on our product. It is truly a thermogenic that burns -- helps you burn calories and body fat. It really helps you achieve your health and wellness goals. And the third mega-trend that's out there is fitness. Fitness is the lifestyle. It's heat, cool, sexy premium. The brand was born in fitness, Vitamin Shoppe, GNC. You go to Gold's Gym, 24-hour, and that is our DNA today. And if you look at what has happened in the apparel category, with that leisure wear to the Lemon, Gymshark, and many others, that whole category is formed. And it's forming right now in the energy category with Celsius being a leader on the mainstream opportunity that we see in the category. The other opportunity, because we're hitting on those -- 3 of those fastest-growing trends in food and beverage, we are more than energy. We're seeing a lot of consumers coming for the first time seeing Celsius as we're much more invitable. We don't have an aggressive tone, great flavor profiles, like I talked about. I'm drinking a green apple cherry right now. You have your Oasis Vibe, which is a prickly pear. We launched that at Coachella, it's really cool. And then Toby has a brand-new Cosmic Vibe, we launched at CircleK. So it's out of this world, great flavor profile, sparkling through punch. So those are some of the -- at the high level there that we're capitalizing on. And would you add anything else, Toby?

Yes, I would just add, what differentiates us as well, not only the health and wellness benefits, but just the usage occasion. We obviously fit the traditional energy, when somebody is just looking for that pick-me-up. We're also seeing people trade out their coffee in the morning and afternoon. One of the big differentiators is you actually see people consuming Celsius with their meals, lunch in particular. That's not something you traditionally see with the 2 big players, the Monster and Red Bull. It's more of an appetite suppressor that don't really pair with food. Whereas we have some very inviting flavors, Lemon Lime, some other fruit flavored, orange flavors that pair well with meals, and almost acts as a functional soda for these folks. So at lunch, they're getting their soda, their healthier soda. They're also getting that pick-me-up energy for the remainder of the day. So that's an area -- food service is a big component of our growth right now, about 11% of our sales through Pepsi have been through the Food Service division. We just rolled out Jersey Mike's nationally, which is over 2,000 locations. Really going to be an excellent opportunity for to prove out our thesis. So this is a brand that actually isn't just energy -- it kind of, the lines are blurring a little bit between CSDs and energy where you're seeing the price increases that some of the CSDs have taken. The delta in price now between a 16-ounce soda, it's $0.50, $0.60. So a lot of consumers are maybe looking to purchase up $0.50 and be able to get some functionality and then energy drink that can also act as maybe a CSD for them.

And I think what we see is, like with Celsius, the usage occasion is expanding. So we see it as Energy 2.0. We're beyond energy. And I don't think we really thought about that before the Pepsi partnership, which it was -- we've spoken with a lot of investors why we're here, and Celsius -- Pepsi sold their first case of Celsius in October 1 last year. So really on that 1-year anniversary date with them. And I think, when we look back, the biggest opportunity we saw with Celsius is closing the gap between the convenience and gas, where we're sitting at a 60% ACV. And that was really the last frontier on opportunities that we saw. We didn't even know about this really food service opportunity. We knew people were having it in the office with lunch and different areas. But the mass opportunity we have with Pepsi now with this food service opportunity could be really big and incremental to the overall revenue growth, as well as a lot of opportunity convenience for us.

If we're thinking about Energy 2.0 and with meals and so on, I mean, is there scope for, it might sound crazy, but like a lower caffeine version? Is there, I don't know, if this brand has shoulders that are broader than traditional energy.

Yes, I think so. I mean, we have a cross-functional team that meets -- we have a variety -- we have a 3- to 5-year strategy on the portfolio. Timing and sequencing is really important with the teams. We've doubled the size of the organization in the last 12 months. We have a lot of new team members. There's a lot of coaching that's required, a lot of mentoring to get them back, to get everyone on the Celsius train. But then, everyone's excited. We're getting some great talent from some of the top companies in the world joining our team. So we're really excited about that. But when you look at within the portfolio, I think we can play there. We can -- actually could -- potentially Celsius, we want to build Celsius as a global iconic brand. And it could be just like the Gatorade portfolio, is able to go in a variety of adjacent categories. But today, we're really focused on the energy. We're seeing the use of occasion expands. But it could be functional seltzers. It could be hydration products offering. It could be also additional functionality for health and wellness within our overall portfolio that we could potentially leverage down the road.

Okay. Great. Sort of related, but a little bit different way of coming at it. Do you see a different value proposition in the lifetime value of a Celsius consumer versus what's been the case in the category, with the traditional category? Legacy category.

Well, I think what you've seen for Celsius over the years is we're up in this fitness environment. So we were aging up within the category. We were still kind of a dietary product until we repositioned in 2017 into more of a better-for-you essential energy type of product, that also have these functional characteristics with it. So I think there are some opportunities -- I think there are some opportunities there for us.

I think we need to look at the lifetime value of the consumer. So when you look at Celsius, with that fitness component, we have a "Live Fit" mantra. So that Celsius Live Fit, it's not essential energy for life. It's for inside, outside the gym. So I do think we have a higher value on our consumer. I think you can have a Celsius before you workout in the morning and then you're having it with lunch or an afternoon pickup. So you're getting multiple usage occasions. We also see the latest Mintel data show that, what was it, 44% of our consumption is new-to-category per numerator.

44% of our consumption is new-to-category, so incremental to category. So what we're seeing is these -- we have 2 different demos within that new-to-category. New-to-category, which is -- let's just call them 18-year-old that's entering the category for the first time. But we're also seeing this 40, 50-year-old consumer that traditionally was not willing to enter the category for whatever reason, maybe Red Bull and Monster weren't for them. But for whatever reason, Celsius is a more inviting opportunity for them to enter that category. So it's really about even in terms of that new-to-category, we're getting both that younger consumer and this older consumer. And that's what -- I guess, earlier, the point I was going to get to, is you know that 25 to 45 where it used to be, where we really aged down in the last -- without losing that older demographic, we've aged down. You go to any college campus these days, you ask them what the most popular energy drink is, Celsius is going to be 1 of the first ones that come out of their mouth. We're competitive with Red Bull, we're competitive with Monster. So when you're talking about that lifetime consumer, there's a lot of stickiness in this category, especially with the high usage people. It's incredibly difficult to get people to switch from brands if they're a heavy user. We have seen some opportunities where we've been able to approach consumers from the 2 big players in the category as people try to shift from this -- to this health and wellness, and that's usually a lot of those older consumers. But the ones entering the category, that's where the big opportunity is for Celsius, that compounding effect year after year, bringing in these 18, 19, 20 year olds and keep creating that lifetime consumer. That's how you're actually going to be able to compete with the Red Bulls and the Monsters of the world. And nobody has been able to do that. I mean there hasn't been a brand that's reached 10% market share in the last decade. We're right there at the moment. So I think there's an opportunity there. And I think people are beginning to realize that Celsius can play with those 2 players. And one of the big data points we want to reference today, we just put out our Investor Deck updated. John cited in the Q1 earnings that our market share in South Florida is 21.7% as of April. He brought that up because historically we brought up Amazon and how we get this close to 20% market share. We were outpacing Red Bull in Amazon. I think a lot of people are a little bit skeptical about whether that could translate into brick-and-mortar, traditional brick-and-mortar. So we cited that South Florida data, one of the largest markets in the country. But we just up here the data, we're up to 23.5%. So almost 24%. We picked up almost 2 full share points in 4 months in one of the largest markets in the country. That's a more mature market, where we're still gaining market share. And that's what we think we can take this brand nationally. And we've actually entered that.

Talk about the things that are driving incremental spend in the category coming out of -- I just want to go quickly on the -- where you're sourcing the other 60% of volumes?

Yes. Yes. If you look at where we're sourcing the volumes, we're seeing, Toby mentioned, new-to-category. So that 44% new-to-category. We're sourcing for CSDs, we're sourcing from consumers that are being more -- more curious about the energy and the functionality world. Busier than ever before with phones and work and home, everyone needs more energy as we continue to evolve and the demands for each of every one of us, it becomes greater each and every day. The category is growing at 10% to 15%. So we had great growth in the category. We're seeing retailers add more space for the energy category as well, which will further help the category out. When you look at this '18 to '24, it's a big opportunity for new-to-category on those consumers. Also, Toby mentioned the demographics were about 50-50 male/female. We did get latest data in the convenience channel, one of the largest convenience stores, and typically, a 70-30 mix on energy we're told by the major retailer. And we're running about 60-40 within that retail. Yes. So 60% male, 40% female. So still over-indexing on the female consumer. And that's new-to-category. So that's really good that we're about balanced. And then we're also seeing, which is fascinating the way the brand, and it's really going on those 3 of the fastest-growing trends in food and beverage that's affecting all of us, is you're seeing this blurring of the lines within the category. So you're seeing consumers age out of energy. Maybe they went to TVs or coffee, but they're staying in. We're seeing somewhat of an older demographic also, seeing Celsius as more acceptable, maybe healthier with the vitamins and ingredients and the unique flavor profiles. And then we're also seeing consumers that are intrigued by energy, but the historical energy drink portfolio has made a -- been a too aggressive of tone, and maybe they don't want to be associated with that type of stigma. And I can't tell you the number, even here today at the conference, the number of people we've ran into that are drinking Celsius, they replaced their afternoon coffee with Celsius, but we do not consider themselves energy drink consumers. So it's really a mindset the way we've been able to build the Celsius portfolio, focusing on the health and wellness, the vitamins, the great flavor profiles. And really, our main mission is to be the most refreshing energy drink in the market.

I would just add to that. So you referenced where we're sourcing a lot of these consumers from. We mentioned the 44% new-to-category per numerator. You've got that younger demographic that's probably -- that's entering it for the first time, that's probably drinking more CSDs. So that's cool as -- and that's moving into energy for the first time. That older demographic, they're moving from coffees and teas and for the first time into energy. But the second data point for the numerator was about 40% of our consumption additionally is incremental to the category from the user intensification, which means the users are actually drinking more energy drinks because they're consuming Celsius than they otherwise would have. So for retailers, that's incredibly important that, that's incremental to the category. It's not just brand shift. And brand shifting is -- that doesn't really help a retailer out. But when you're bringing incrementality, that's critical. And then, when you look to, we're sourcing from within the category, it's going to naturally be Red Bull and Monster because they're 70-plus percent of the category. So that's really an overwhelming amount of the brand shifting does occur from. But that's still a smaller percentage in total as opposed to the incrementality that we're bringing to the brand.

And you're seeing that in our data. If you look at the latest data as of August 13, on IRI, excluding coffee, Celsius is one of the top brands in the category that's driving not only dollar growth but unit growth on both a 24-week and a 52-week. So that puts us in a really good position as we're, the next couple of weeks, we're all preparing for bio review meetings. So puts us in a good position, getting close to that 10% share in the energy category, with dollar growth and unit growth, which retailers are really focused on unit growth. Very difficult to cycle revenues when you're only driving that dollar growth because you're not building your base consumer, which is really critical and something that we're able to do in the Celsius portfolio. And I think that's those attracted -- those new consumers, both young and old demographics.

So in terms of buyer meetings, one of my questions had been, just given the so many factors at play right in different vectors where you are participating, are there certain channels that you think are better situated by the incremental sales versus others?

Well, I think when you -- like incremental sales, when we look at the portfolio, we just got to 95% ACV. So that's a major achievement. When you look at incrementality, tons of runway left, just activating the stores that you're currently in. If you look at our Q2 financials, we had great growth in our club channel, on Amazon, which both of those have been -- historically, we've been in those channels. And then also saw great growth in our -- in our distribution. So, independents, there's a big opportunity. I think more importantly is optimizing, getting second and third placements, getting better placement in coolers. Many retailers over -- nationwide retailers today, last year, we were selling in at a 3.4% share. So your prioritization puts you in that area. Now we're coming in at a 10% share with dollar growth and revenue growth behind this. So that should put us higher on the prioritization. So we can get better placements, secondary replacements. Toby is working on initiatives, working with our sales team on cooler placements. We have a big initiative on cooler placements, secondary placements. And that's a huge opportunity. And then the food service is, we're just scratching the surface on food service. College and universities just went back. Many in the room, I don't know if you were at the sampling booth yesterday where we had one of our colleges graduates of the Celsius U University. We graduated about 170 students just last month where they're going back to their campuses. They really are CEOs on campus, working on activation, sales and marketing. We have a whole leadership team and executive team present. We teach you about business, operations, logistics and sales, and it was great to have her here.

Awesome. Okay. So much momentum in the business right now, and that does come to question of supply. So how do you feel about inventory levels in the system and your ability to kind of keep up with all of this latent demand?

Yes. It's -- I think we work with some of the largest suppliers in the world. So we have secondary supplier routes working with the largest can manufacturers in the world. I think as an organization, we feel really good with our suppliers that we have to be able to provide the product. It's -- and then we're in over 17 co-packers. In total, we have about 22 for flex capacity. But it's really being able to -- I don't think it's on the supply chain side. It's really us managing the growth. When you're growing 100%, some SKUs are growing 200% to 300%. It's very difficult to manage, especially when we're trying to optimize our distribution or supply network. We're trying to create orbits. We want to produce an orbit, shipping an orbit to be as attractive as [indiscernible] possible. But when you have some players running in certain parts of the country, you're shipping outside [indiscernible] increased COGS, more freight, more internet fees on warehouses and those types of things. But I think we're good on the overall supply chain. We may have some inefficiencies as we grow. We'll be able to optimize that. We have plans in place to optimize that on a go-forward basis to further drive margin and leverage as we scale.

I would just add that 2 years ago we brought in Paul Storey as our Head of Operations. He was the Head of Global Operations for Monster, previous to that, to Rockstar. Incredible background. So we've got someone who's actually been able to scale similar energy, means that we're in here best-in-class relationships with all the top vendors globally. So we feel that we are very well-situated at the moment.

Yes, we're very fortunate to have Paul Storey. He's great.

Great. So let's switch gears to distribution. So as you mentioned, right, you launched with Pepsi October 1 of '23, yes, we're going make this on '22. And you spent the first 2 quarters kind of working to optimize distribution right from [indiscernible] and location expansions and so on. So maybe just reflections on kind of the initial transition with Pepsi.

Yes. I think it's going a lot better than everyone anticipated. I think there was a lot of individuals within Pepsi and I think on our team that thought it was going to be a lot more difficult. When you look at some transitions in the past with other brands to both systems. So I think one advantage we had is we have a lot of team members on our team that actually have worked at Pepsi. So they knew wiring, who to call if there's an issue, versus Toby and I trying to figure out different needs and who has the roles and responsibilities, what division. So that gave us a little bit of a competitive advantage. And as soon as we started to get closer to a distribution agreement with Pepsi, we really started to find the prior Pepsi experience in each one of the divisions, so they can help us move extremely quickly on the wiring. Changing retailers over on distributors is very typical. It's not easy. Changing distributors in general is not easy. One competitive -- one advantage we had is our contracts, we transferred about 80% of the distribution at one point in time. I noticed a lot of examples of other companies when they transitioned, they had different cutoffs on dates. So you're changing kind of division versus the vision, and it gets really messy, especially with these national retailers. In order to flip stores over, you need to make sure you have the whole store covered or zoned. And we dealt with that when we were in the ABI network, trying to flip over our direct customers to ABI. We had to make sure coverage of stores and lots of spreadsheets and a lot of difficulty there. But the transition with Pepsi has been on great. There's been a couple of hiccups, but almost practically seamless.

I would say it's exceeded everyone's expectations. We have a great relationship with Pepsi. John was the only allied brand person that was allowed to speak on stage [indiscernible] moving in Dallas about a month ago. Very well received. It's exciting for the network to have a brand like Celsius that's really a challenger.

Okay. Great. Like you mentioned, right, ACV, it's always how much ACV has increased. So I guess, can you just elaborate on the drivers in club and e-commerce specifically? Because those [indiscernible] accelerate but it was really a very strong [indiscernible].

Yes. I think that surprised us -- I think that surprised us very strong, because you think with the ACV increases, items per store now have increased since last year as well. I think we're at 8.6...

And we're up about to 15. So our SKUs per store has doubled while driving our ACV from 65...

And then -- so you gained more availability, more opportunity, but yet the club business and online business continues to grow. And it's almost like all tides are rising at the same time. So it's really fascinating. And I think that gets us really excited as well, because you would think there would be some type of cannibalization, either Amazon or the club business would be cannibalized by some of the new distribution gains we have. But going back to that numerator data, you're seeing Easter intensification increase. So we're bringing on new consumers within the Celsius consumers. If you went back even prior to Pepsi and you go back to when we were with ABI, prior to them, all of our sales were really warm. The bulk of our sales were warm. You either had to buy it on Amazon, you had to buy it at the grocery channel or mass, and we didn't really -- we have been very little cold availability. So our consumers have been always loyal, buying it, taking it home, chilling it, and then having it as a part of a daily routine or daily regimen that they had. And that's a lot when you ask a consumer to buy $20, $10 worth of Celsius to take it home, chill it, and then consume it. Very difficult to build a beverage company that way. But we did. And then when we start gaining cold availability and further expansion, you're seeing the consumer take advantage of that -- almost that impulse purchasing that we were at -- drives the energy category, that we're able to take advantage of. So they might have had it in the morning before they work out because they chilled it, and then they're picking it up at lunch or in the afternoon usage occasion as well. So I think that's some opportunities that we have there.

Yes. The club business, I mean, we're at about a $250 million run rate in club. Costco, Sam's on fire right now. So we not see any losses on Amazon. You would think if anywhere the loss would be, because the case size, people buying [indiscernible] cans at clubs, maybe Amazon would show -- Amazon was up over 100% last quarter. We're a strong #2, just really a point or 2 behind Monster the #1 on Amazon.

We had an amazing Prime Day on Amazon. So really well.

You talk about e-commerce, Instacart, we're the #1 brand on Instacart. We do not pay as Red Bull and Monster there. So we have a lot of anecdotal evidence where we're #1 or #2 across the country and certain key big retailers. We haven't really cited those before, but it's, again, proof-of-concept that we can actually play with the 2 big players in the category.

Okay. So now with ACV having hit 95%, what are the key focus areas for you and for Pepsi in terms of driving growth in 24?

Well, I think when you look at '24, so as we said here last year, had that 3.4% share and Pepsi getting ready for them to sell their first case October 1, we weren't included in this AOP process, where they do their national programming and wiring. So we almost went -- we're working with Pepsi this year more on a divisional level, creating our programs. So as Toby mentioned, we were included in the AOP meeting this year. So we're going to have national programming and national wiring for national execution and specific events. So that will allow us to be more -- better execution on a variety of these key national retailers, and then be included in the whole process, included in a variety of their KPIs and goals and objectives for the year. So we're really excited about that. That should help us have seamless -- better execution. And then as we're sitting here with our key accounts team and the Pepsi key accounts team, we're getting in that full cycle, of selling cycle, getting into bio resets, revised planograms. And so I think that's -- the relationship has been phenomenal. I think we're going to have a really good season coming up on working on these resets with a lot of our key retailers for -- that we're best-in-class partnerships at 7-Eleven. We are one of the only vendors at the Vendor Summit that was able to present on stage as well. So we're really building these -- forging these great relationships with retailers and the brand is exciting, we got great momentum. It's going to be a great year. We have more marketing dollars than we ever had before. So we're going after new communities. We just signed a deal with MLS. We signed in first with Inter Miami and then Messi shows up a couple of weeks later. So that was a great win having and sequencing sometimes is everything in life, but that was a great win. Having Messi join the MLS team and now we're the official energy drink of the team. And we just signed a national deal for the overall league, so as well as in Chicago, as well for the team. So we've got some great programs there, partnering with PFL. We got our Live Fit Tour go coast to coast, really activating their Vibe activation, have some great programs and building on our marketing team. It's going to be exciting year. So '24 is going to be great year for us.

You mentioned the market share data in South Florida, which is great in terms of the proof point, that there's still growth ahead in the more mature markets. But how does your approach vary, if at all there, versus more up and coming market.

Going to see similar growth rates. It's more about where you started and where you've been in these markets. So we had our drill deep market, when John and I started -- we started with the company 11, 12 years ago. We only had 5 markets that we'd be focused on, [indiscernible] resources in South Florida was one of those, the New England area was another, Tampa Bay, Dallas, Southern California. And all those markets over and are quite a bit versus our national average because they're kind of legacy, more mature markets at this point. So we've taken that playbook where we're replicating it across the country now. But when you go into Portland or Houston or Chicago, some of these non-legacy markets for us, they're starting at a different basis point or starting point than where South Florida is today. But they're growing. So they grow maybe a little bit quicker because they have more room for rapid growth to get that first up to 5%, 10%. But now we're still seeing similar growth rates in those markets once they hit those thresholds. There's -- we're seeing growth in every market in the country right now. It's really exciting to see. And it's all about, to John's point, we have more marketing dollars at our disposal than ever before. And we have an incredible marketing team, digital team, was able to geo-target and put fences up around markets. We have events going on in the markets around the country. So we're able to increase the brand awareness. And that's something that's important because I know a lot of people want to say, well, you're at 95% share, what's next? What's next is, outside of getting all these new placements and these retailer meetings, getting better placements in stores, I can go on about that for 20 minutes, but it's increasing the brand awareness. We're near where Monster and Red Bull is. And that's a great thing because that's room for growth. That's room for when that velocity is going to start spinning off the shelf. And that's how you actually become that competitive #1 or #2 brand in the category here in the U.S.

And in '24, we're going to be expanding the number of our focused markets. We're all creatures of habit, right? We go to the same grocery store, the same gym, same gas station, likely the same restaurant every other week. And so we really need to be part of a daily lifestyle, a daily routine and that takes some time to build those daily consumers. But to Toby's point, with Pepsi, we're able to touch consumers, get that distributed set up properly in the right channels, at the right placements, with the right displays, with the right marketing overlay. And our overall playbook on strategy, where we bring sales and marketing together within specific markets, we can activate these markets much quicker and start to see really good share gains and returns within our investments. So for '24, we will be expanding into additional markets outside of our core '23 today as we look to leverage this 95% ACV that we currently have in all these stores.

Great. So I also want to ask a question on longer term, just as the business matures. So the second quarter adjusted EBITDA margin expanded and it was just under 24%, along with 1,000 basis point increase in gross margin. So if we look ahead to when sales growth, I guess, normalizes closer to like a category average, how do you think about the longer-term run rate for the operating margin? Does it migrate towards that at one of the large incumbent players making back and is the years of conversation?

Absolutely. I mean, we have a peer group that we watch very closely. They're a large public company. And I think when you look at the overall sales and marketing, percentage of revenues and our G&A, the other company does put outbound freight in their sales expense versus COGS. We put it in COGS, you just got to make that adjustment. I think we can get very close, if not similar, to that comp. And it's -- I don't see why we can't. We've got great leverage in the second quarter. Sales and marketing came in around a little over 19%. Probably wanted to spend a little bit more, being like the 21% to 22% range. It's probably where we want it to be, but revenues grew really high. We have a detailed, almost they have a process in order to make investments, and we're not just going to spend the spend. I want to make sure we got the ROI. We're leveraging sales. We have a whole playbook that has to be required in order to make investments. So we went over our budget, internal budget. And we did make some additional investments, but we weren't going to overinvest just to hit a percentage number in that. We do see opportunities in '24 probably to get back down in that 21%, 22%, somewhere around that range, maybe 21%, 20%, because we want to leverage the new distribution we just gained. So I don't think right now is the time to pull back. Let's continue to drive share, new consumers for the category. If what we're doing is working with the dollar growth and the unit growth, and let's see how far we can take it and continue to keep running.

Okay. Great. We only have a few minutes, so I just wanted to close out touching on international ambitions. I guess having Messi now, you have like international investor because you see Miami kids all over the world all of a sudden. It's crazy. So just how should investors think about your appetite for expansion internationally, the time line to do so and not -- plenty of runway domestically, but, yes, priorities in terms of new markets, time line and how investors should be thinking about that?

Yes. We get a lot of questions on international expansion. I think in general, to your point, there's massive amount of runway left in the U.S. And we do see opportunities in other markets. We do currently have distribution. We're a little bit over a 10 share in Sweden. We're doing extremely well in Finland, although single-digit share, but starting to see great growth there. It's a smaller market. We also just launched with a partner in South Korea and in Taiwan. But some of the larger markets, when you look at the U.K. potentially Canada, Australia and Japan, those are probably market -- those are markets that we're currently looking at, working with other partners, trying to figure out what's the best route to market, what's the best value chain, working through some of the strategies, working with responsibilities. We do have a team now of about 4 people that are working on international expansion within playbooks. We want to be very methodical in our approach. Once again, I go back to what our features we have it. So yes, we're touching and we're capitalizing on 3 of the fastest-growing trends, including beverage. We want to be methodical in our approach though. You will see us in 2 countries. Right now, we're working on finalizing the opportunities with 2 countries. We're looking at Canada as #1, and we'll announce another one, someone soon. But Canada should be a big opportunity for us next year, and there's a lot of synergies with the U.S. that we can leverage as well. So having -- it's going to take investments. We're not going to overinvest and do blanket approach where we just gain a massive amount of distribution and really overinvest to try to get turns. We want to be methodical. We want to create that daily consumer. If we can't create that daily consumer, we'll be now in 6 months. And we're cognizant of that. We don't want to do like these other brands that have gone in and gone out, and there's been a ton of them. So we're going to focus on the fitness health and wellness. We're going to focus on a couple of key retailers. We're going to build a loyal consumer, and then we're going to continue to add resources to continue to scale. And we're going to make sure we're driving profitable growth. The company has been [ instituted ] on profitable growth, Board of Directors, committed on profitable growth, and ultimately return shareholder value as best we can.

Yes. I think just the way to look at it is more of a 3 to 5 years away and even beyond. 2024, we're going to get into a few countries. We're going to develop that playbook and that we're going to go input into other markets. And then you'll probably see a larger rollout in 2025. But it's -- our priority is going to be the last, there's so much room for growth. The State of Ohio is probably the size of some other major markets around the world. So we're going to -- we have our priorities set, but we also are very interested in the international landscape.

Absolutely.

Okay. Great. We're out of time. Please join me in thanking Toby and John for being here. Thank you so much.

Thank you so much. Thank you.