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

Good morning, everyone. Welcome to the UBS Global Consumer and Retail Conference here in New York City. My name is Peter Grom. I'm the U.S. consumer staples analyst here at UBS, and we are very excited to have joining us this morning from Celsius, Chairman and CEO, John Fieldly, and CFO, Jarrod Langhans. So over the past few years, we've seen a pretty big shift in consumer preference towards functional zero sugar energy drinks, which now comprise the majority of the category. Celsius has been a clear leader in that shift and [indiscernible] that shift into the category growth in general. So even though velocities have slowed of late, the company is still positioned itself as a strong #3 in the U.S. energy drink category. So I have a number of questions that I plan to run through with the team, a lot of ground to cover today. So -- but I think you guys all have instructions out there in terms of how to submit a question. That question will then appear on this iPad. And so maybe for the last 10 minutes or so of the presentation, we can kind of open it up to audience Q&A if there are, in fact, questions, so yes, please don't be shy. Before we start, I'm required to read a legal disclaimer. As a research analyst, I'm required to provide certain disclosures relating to the nature of my own relationship and that of UBS with any company on which I express a view on this call today. These disclosures are available at www.ubs.com/disclosures. Alternately, please reach out to me, and I can provide them to you after this fireside chat here.

So with that, why don't we get started? Look, I kind of wanted to start maybe just looking back and maybe just -- John, I think it would be helpful to just kind of get your perspective on kind of what's happened over the last year. And look, you -- energy drinks weren't alone in this, but I think we were sitting on this stage last year, I think many of us weren't really anticipating like this big slowdown. So as time has gone by, I'm sure you have a better perspective in terms of what's actually happening. So can you maybe just understand why you think the category slowed the way it did last year?

Yes. I mean -- thanks for having us. And I think when you said -- if we were sitting here last year, we were all in a really good position, looking at March, the year was off to a great start for the whole category and Celsius. And we were gaining some of the largest distribution gains we've seen in company history. And there was -- you saw this kind of wave into Q2, and then we started to see some category slowdown for the first time. So the category went negative for the first time in the third quarter, saw some macroeconomic challenges. We saw convenience store traffic slow. There was some shifting in consumer purchasing habits, frequencies. And we felt we were impacted by that. We were -- we got up. I think it was the end of Q1 to beginning of Q2, we had the highest share that we've ever received, it was almost a 12% share in the energy category. Now roughly around 11% if you exclude coffees and teas out of the energy category. We've been hovering right around that number, but off the highs. And we woke up the 2 largest players in the category. We woke them up and believe in sugar free, launched a ton of innovation, some of the largest innovation coming from the competition that we've ever seen. The good news is the category for the first time shifted to greater sales coming from sugar free, so that sugar free movement that Celsius has been talking about, and we are the clear -- our whole portfolio is sugar-free. We continue to see those trends in the health and wellness trends. And we had some -- our innovation came in the beginning of the year. We had some lighter innovation in the back half of the year. And so that impacted some of our numbers, and we've seen that impacted in the first quarter as well. We have some timing of innovation and timing of promotional advertising programs within some of the top retailers that are recycling from the first quarter. So that's -- if you look at the scan data, we're a little bit soft in the last 12 weeks and 4-week REITs, but we do expect that to continue to improve in opportunities as we're leading into the summer beverage season. So I think those are some of the trends that we're seeing. We're confident in the Celsius portfolio. We made it into -- in 2024, we made it into the top 10 of all trademarks in beverage. Celsius is ranked as the #9 beverage brand. In all of beverage, it's $2.7 billion retail sales, 22% growth in retail sales in 2024. So there's a lot of great tailwinds, a lot of momentum. We've got a lot of great innovation coming, and we're excited what 2025 is going to offer to us as we continue to build this base. And then we have additional -- the Alani transaction, we're working. We're on closing that, and that's going to open up tons of opportunities for us as well. But the Celsius portfolio, we're super bullish on, and we think we're well positioned.

Super helpful. Maybe just pivoting back to kind of the evolution of market share, right? And kind of alluded to it in your response just there, but you're at the 12% share, and it kind of moved lower. But if we were kind of sitting here a year ago, I think there was a lot of hope out there from you guys, from investors as some of the shelf resets took place, particularly in convenience that you would see that market share really pick up. So I know hindsight is 2020, but I guess what do you think ultimately -- what didn't play out, I guess, as planned? And I think -- another question would be what could you have actually done differently?

I mean we're not happy where we ended 2024 out in share. I think we were -- this time last year, we expected to be at a much higher share number than we are. Competition as leaned in. It could have timed our innovation better. And I think we've improved that with some of those strategies for 2025. Hence, you see a little bit slower start this year with -- if you look at the scan data because we made some strategic shifts to better time our innovation throughout the year. So that's a step change that we're making from 2025 to -- sorry, 2024 to 2025, but you're seeing some initial impact earlier in the beginning of the year. And we need to continue to execute better as an organization. So we've built out this growth department internally to really further synergize the marketing and sales team. We got to get better with retail execution. The teams have done a great job, but we have to continue to get better. We need -- we have great household awareness in certain markets. We've done a lot of research and analytics on that. And the household penetration is good, there's awareness, but we need to convince consumers on what is that inflection point to buy to try. What's that -- how do we further increase purchase consideration and expand consumption throughout our consumers that we do have. So those are some strategies that we have built in for 2025 to leverage and to work on that. So those are some things differently we're doing from 2024 to 2025, which are going to be a step change for us.

Okay. Maybe picking up on that. I mean one of the things that we've seen from a category perspective, exiting '24 and '25 has kind of been this nice improvement just in terms of trends. So kind of curious, what do you think has kind of driven that improvement? Obviously, one of your largest competitors took a price increase, so that helps. But I'll be curious how -- volumes also improved as well, right? So I'll be curious what's really driving that? And I guess maybe a question for both of you. Look, you're going to start to cycle that weaker summer, right, low single-digit growth. So would you anticipate category growth continuing to accelerate from here? Or is this kind of mid- to high single-digit range kind of a fair run rate as you think about 2025?

I mean we anticipate mid- to high single-digit growth rates through the year. That's what Mintel is saying. That's kind of in our internal numbers as well. So we're hoping for more than that, but we want to be cautiously optimistic within the category. I think consumers are coming back. Q3 was a tough time for a lot of folks. There's a lot going on. You saw some of the stimulus kind of coming off that as well and some of the shock factors to consumers, interest rates. And there's been a lot of pressure. So I think what you're seeing also, which is really exciting when you look at what's happening in the energy category is it's evolving from an impulse purchase. And you're seeing a lot more, especially large format and mass and food, and they're adding more space to energy drinks as energy drinks is becoming a greater portion of total liquid LRB or total beverages. Everyone's adding more shelf space. You're seeing more sales for multipacks. So that really shows you where consumers are going. Because if you look historically, energy drinks have been an impulse purchase for a specific need state. Now they're being purchased at [ off-warm ] shelf and larger pack sizes and part of the pantry. They're coming home as part of the pantry. What that means is that once you're part of the pantry, you're part of a daily lifestyle, a daily routine, you're part of the family, part of the household. So I think that's a huge opportunity when you start to think of like share of liquids throughout the day. And that's another strategy we have is increasing that consumption and usage occasion. And you're seeing energy drinks replace coffees. You're seeing them drink as a morning pickup. Our lunch pickup is huge. We just expanded into subway up to 18,000 locations within Jersey Mike's. We're partnering with Pepsi within their foodservice division. So you're seeing usage occasions expand. So that's another tailwind that we think is a huge opportunity for the Celsius portfolio.

No, that makes a ton of sense. I mean -- and then as you think about that moving forward, and you kind of alluded to this a little bit, right, just in terms of timing of innovation. So we anticipate kind of the core Celsius portfolio to see [ improvment ] as we move through the summer here. And then I guess you kind of said this on the call a couple of weeks ago, but you mentioned that you expected to gain. I think it was 15% to 20% more shelf space during the spring resets. Can you maybe just elaborate on that in a bit more detail? Is that broad-based? Is it [Technical Difficulty] channels? And then [indiscernible] classic sell-side 3-part questions...

Please, please...

But I just -- the velocity numbers and the kind of the core brand have been a bit more challenged. So are you seeing any retailers pull back on shelf space in any locations?

So I think -- when you -- are we going to -- are we happy with our share number where we stand? Are we going to -- no, absolutely not. I mean we're here to win. We have almost 1,000 team members, dedicated field sales team, marketing sales team. We're here to win. We got an amazing -- Celsius is an amazing portfolio that's aligned with today's health-minded consumer. We've got great innovation coming. We've got great strategies, great partners and collaborators. So you talked to any of our team members, we're super bullish on where this brand can go. We've made it into a solid #3 player and something that hasn't been done in over the last decade. We've crossed the 10% share mark. How do we get to that 15%? That's our next hurdle. And that's what we're working with. And you see some of the indicators there like look at the share numbers in South Florida. We've talked about that prior over 20% share. Look at New York City here. We're very close to a 20% share here as well, a 18% share. You go Baltimore, high double digits. In Buffalo, New York, L.A., Chicago, there's some really good markets around the country where we're north of that 15% share. So it is possible. And it is probable and the trends are there. We just got to continue to drive purchase consideration, loyalty, and we can do it with a lot of the strategies that we have. So -- and look at Amazon. I mean, Amazon, strong #1 and #2 player, depending on the day or the week that we're flowing through. So this brand can do it. We just gained massive distribution across the country. So we're in a lot of pockets in the country that we have low awareness, low purchase consideration. So we need to build on that and that's opportunities for us. So we are committed, we are focused, and I think there's a huge opportunity to drive share growth and revenue growth within the Celsius portfolio. When you talk about -- what was the other question, yes, there's 3 on there.

Shelf rate...

If we can't grow share and we come up to buyer meetings, if we can't grow -- not share, if we can't grow revenue and we get into meetings at the end of the year, there's going to be hard decisions, right? And retailers are going to put the best SKUs on shelf that turn. And -- so we're going to have -- we have to get back to share growth and -- not share, revenue growth. Coming out of the year right now, if you look at the last 4 weeks and 12 weeks, we're down, and that's because we're cycling with some of the strategies that we did some step changes for in 2025, but we're convinced our strategies are going to work and continue to overcome those as we start to roll through the year here. So we don't anticipate those conversations. We've got great relationships with retailers. And we don't think -- we think we're in a good place right now as the year plays out. We've got to get through the next couple of months here. And then things will start -- we feel things will start normalizing, and then we'll start getting back into a continual cycle.

Okay. So just maybe following up on that. So the 15% to 20% more, that's coming despite kind of more of the recent trends. Is that fair?

Exactly. That was really what was sold in last year. So these are the resets that are coming in. So when you look at those, I mean you look at the expansion and that 15% to 20% share, look at Subway, that's a new customer, right? Look at Home Depot is a new customer for us. We've been in Lowe's. You go to expansion into Kroger. So if you go to a Kroger right now, you're going to find Celsius at multiple front checkout coolers. Same with Walmart now. You'll start to see us in a variety of front checkout coolers. So it's not only a number of stores and distribution expansion, it's also the breadth of distribution in a lot of these outlets and retailers. So those are just some examples of where that 15% to 20% is coming from. And then there's more opportunities. We're dropping coolers. We have a target of over 15,000 coolers of incremental to place. We want to be within 6 feet of every checkout cooler. We got great distribution here in New York City, a variety of stores we went through and continue to check on. I mean it's -- we got to be in that path to purchase.

Okay. Maybe just sticking with the distribution question, but just focusing on C-stores. I know the channel has been more challenged, broadly speaking, I guess, but it's very important to the energy drink category. And kind of similar to the broader market share discussion, shares are also kind of ticking a bit lower here sequentially off the peak last year. But what's interesting, there's a gap between kind of your total company share and kind of C-store. It's a lower market share. So how are you thinking about closing the gap now, particularly as you expand TDPs in that channel?

Yes. I mean -- that was really the last channel Celsius has gone into. So when we look at how Celsius portfolio was built, it was really in food and it was in gyms and health clubs. It was in the food channel. It was on Amazon, then we went to large format and drug and then really gained most recently, broader distribution and convenience. So there's a lot of work to do in a variety of regional chains around the country. We're partnering and collaborating with all the major retailers and convenience. Casey's, we just did a partnership and collaboration with some of their food pairing opportunities. Same with AmPm. And there's just -- 7-Eleven has been a great partner in collaboration with them. We've got more collaborations coming on. So that is a very important channel in the energy drink category, and we need to win there. And we are winning in there in certain markets. And other markets, we just have a lower -- we're not there yet. It's a very loyal shopper that's in there. We need to continue to build this awareness, the purchase consideration and trial. And we're doing that with a variety of different strategies and tactics. And continue to activate consumers. And that is a channel we're committed to win on. And we know the Celsius portfolio warrants shelf space in convenience, warrants has a reason to be there and has a reason to be a major player there. When you look at coming out of NACS as well. When you look at all the trends at NACS listening to all the buyers, they are adding more space to energy, talking about the importance of pairing with food and some of their strategies that they have, which is really important. And energy is key to them. It's a large profit center for them. And one opportunity is this pairing with food, and that's something that we know at Celsius with some of the great flavor profiles we have from lemon lime, cherry cola. We got a mango lemonade that we're launching this summer, which is super refreshing, some really great flavor profiles that you can pair with food. So it's a really good alignment there to further drive increased basket rating and more profits.

7-Eleven is actually a good example where we've been here longer, right? So we only got into Circle K in the middle of '22. So we've only been in [ Circle K ] anywhere from [Technical Difficulty] months. 7-Eleven, we've been in longer, and we're actually -- the share we have at 7-Eleven is greater than our kind of 11% share, right? So that's an example of where we can win in a national convenience chain that we just -- it's timing and sequence. So it's really getting in there, having that billboard effect, building that brand awareness, and 7-Eleven has really helped us [ in the ] U.S. into all the other channels within convenience.

No, that's super helpful. I think that's a really good point, Jerry.

Yes. If we look at the AmPm and Maverik and a lot of these super regionals, it's just -- we've only been in a short period of time, really the early days. We haven't -- the brand hasn't been around for [Technical Difficulty] investment behind those 2 major brands. And so I think it's -- I think we all -- I guess [Technical Difficulty].

Maybe I have a bigger picture question. And I -- John, I would just love some perspective on the energy drain category. And I guess maybe just describe the Celsius, how they fit within kind of broader LRB. And I guess what I'm really trying to understand is frequency, brand loyalty and brand switching, right? And I guess today's consumer really a different audience. And I guess [ consumer ] become more discretionary in any way versus maybe what is thought of traditional energy or legacy energy is more kind of daily use occasions.

Yes. I think I mean when you look at the Celsius consumer, it's really the core consumer. It's revolving around a daily routine and daily lifestyle. It's -- there's a variety of different attributes there. Our consumer wants more out of their energy drink. They want more out of life, they want more out of their food. And you're seeing that as a major trend with all consumers. We want hydration, but we want more -- with Celsius, it is -- it offers that great energy with no crash, no jitters with great flavor because flavor is super important for our consumers. But also the enhanced vitamins. It's they -- we do have a variety of our consumers that do read labels. And when you look at the Celsius portfolio and if you look at the ingredients, it's a multivitamin in a can. It's got 2.8 grams of vitamins in it. It's got your B complexes, it's got biotin and chromium and green tea. So there's a lot of attributes there that resonates with that consumer base on wanting more out of what they're consuming. They want their food and beverages to do more. Fitness is a lifestyle, is aligned for today's consumer. A big portion of our consumers are fitness advocates and athletes and really see themselves as more of a health and wellness within the DNA of the consumer base. And those trends are going to continue to evolve and continue to grow. Daily consumption is really core. We see a high repurchase rate within our consumers. And then our consumers historically have been -- are loyal. They're loyal to the Celsius portfolio. We do -- according to Mintel and Circana, we do see some of our consumers move from Red Bull to Monster, and there is a good portion of the energy drink, just general consumers that do flow around between brands, and it could be based on promotion, pricing, flavor or what's taking -- what that retailer promotion that's taking place. But we do have an extremely loyal following and consumers. I mean -- and that's historically true to all energy drink brands. So what -- how does the category evolve, how do consumers evolve as energy goes mainstream? It could eventually move into more of a CSD kind of category as it's becoming -- moved beyond that specific need state, I need an energy drink to accomplish this. It's more becoming that daily household item. And that's the evolution of the beverage category that we're going to see over the next 5 to 10, 20 years.

Yes. It makes sense. Maybe shifting to kind of Pepsi. A big part of the company's success has been kind of the distribution partnership there. Can you maybe just discuss how you're working to strengthen that relationship? Last year, you had some changes in the incentive structure. There were some unexpected inventory dynamics. So just any thoughts on the high level on the partnership? And then maybe, Jarrod, any color on kind of the inventory optimization going forward, anything that we need to kind of be aware of?

Yes. I'll just talk about general -- the partnership in general and Jarrod getting details on the inventory movements and also some of the way we've tied in with IT and some of the synergies within our data and analytics. But we have great relationships with Pepsi. I was with Ramon 2 weeks ago at CAGNY. [ Ram, ] we have great relationships with him. We were in the field. We're working with their -- we're tied in with their priority periods. We're tied into their strategic planning. We go to the same process as their own brands on making sure we have our strategic focus and collaborations. And they're expanding us in foodservice. We're leveraging over 30,000 sales reps across the country. There's always opportunities to improve, right? And how do you better tie in? How do we become that better supplier to Pepsi? And we just hired starting on the 24th, Eric Hanson, 27-year vet of PepsiCo in a variety of leadership positions. And that's just to further enhance that partnership and collaboration and unlock synergies and opportunities. We work extremely closely. A lot of our team members on the sales side have worked at Pepsi. And we're -- there's -- I think the relationship is as solid as it's over been. It's going to continue to get even solider with Eric joining the team in the next 2 weeks and the organization. We work closely on strategies. And they want us to win just as bad as we want to win, and we all need to sell more cans and more cases and bring new consumers in and drive more incrementality. I want to talk about some of the data and tie-in and software and some of the inventory. I mean, we've done some great things in the organization to really maximize the Pepsi partnership in '25.

Yes. So our sales guys are fully wired in now. So we've got 400 to 500 strong out on the street that are kind of incremental to the Pepsi sales force. So we've got our apps that are wired into their apps now. So for ordering and building displays and selling in additional cases. So that's tied in. Also, our supply chain is tied in even tighter to their supply chain in terms of forecast and looking out. So if we look today as we monitor depletions, our depletions are consistent with what you're seeing on the scanner data. So we're in good shape. There's always kind of that end of quarter where you could always have a little bit of timing, but that's more noise than any kind of structural thing. So we're in good shape this quarter. We were in good shape last quarter. So as we continue to track, we think we're -- from an inventory optimization, if we see anything, we'll call it out. But at the moment as we're looking at the depletions and as we're working with them on forecasting, no issues to call out today. But I think overall, last year, they did have a pretty significant optimization across their entire footprint. And I believe a couple of weeks ago at CAGNY, they did talk about how they were moving the Frito program into their mixing centers. So they -- we weren't the only ones that got kind of caught up in the optimization. There was a lot of space that had to free up in order to be able to bring that -- those products and that brand into the mixing centers to further drive optimization within their system. So that's behind us. And I think where things stand today, like you said, we've got Eric on board in 1.5 weeks or so, and he'll just further strengthen our relationship and our partnership with Pepsi.

And we're really looking at all aspects of the business, right? So looking at -- Jerry mentioned like supply chain, how do we improve procurement, logistics, how do we get more efficient, right, on our side, and how do we better leverage their infrastructure. So our teams are working very closely with them. Then you also look at the supply chain, the sales organization. So we're collaborating in a variety of parts of the country where we're actually working on a collaborative approach selling the energy portfolio for them. So those are things we're working on. Also tied in these suggested orders is a major opportunity to unlock. We're able to -- our team has -- when they go into a store, they know the store manager, they know the location, they know the planogram, they know the displays that are up, the incrementality. We can place adjusted orders that go straight to that rep that's managing that store. So it's -- you're preselling in. So we've been working on our timing and sequencing within the sales organization so we can get even much more efficient, drive more efficiency out of those trucks so we can get better stops, better execution and better displays. The only way to win, we've got to win, we got to win by disrupting the path to purchase. We can do top funnel, mid-funnel and lower funnel to increase that consideration to purchase. But that -- those retail execution is extremely important to win in this game. So that's where we really need to get and continue to improve on. And this is a big unlock. It's having the suggested orders with them. It just shows you the relationship there. I mean, to have -- that just think of the commitment and the trust that's required in order to do a suggested order for a customer because that does not happen once. And one fail, you'll be blocked from that customer and ever doing that again. So that shows you how great the organizations are really working together and the trust that is built between these organizations. So I think -- and then on the marketing side, we're starting to work with them as well, some marketing opportunities and in-store collaboration. So cooler placements, you see us in a lot -- almost all of the Pepsi energy coolers were there. And everyone probably travels. You saw us a lot at the airports and partnerships, so foodservice and so -- I think partnership is strong.

Great. Jarrod, maybe sticking with you for a second here and kind of building on that. I would just love some perspective on just how we should be thinking about the U.S. top line growth from a core Celsius perspective. Obviously, category growth, demand market share, all those will play a role. But you are lapping a pretty outsized impact as it relates to inventory destocking, impacts from promotional allowances, et cetera. So -- but that also kind of follows a year in '23, where it seems like there was a little bit of an inventory build. So it's been harder for us, my peers, I think someone in the room, how to figure out how much of this inventory promotional impact will normalize as we think about the year ahead. So I know you don't give guidance, but maybe conceptually talk through how we should be thinking about lapping these impacts.

Yes. So from a high level, just looking at this year, obviously, the first half of the year is going to be a tougher comp than the back half of the year from our numbers, right? If you look last year, we were roughly 22% at retail. So good solid growth. It was a little stronger in the front half, as you talked about. The whole energy category got a little soft in Q3 and then kind of picked back up in Q4. We still -- we have the same kind of path. We do have some significant inventory movement that happened in Q3. So we'll have a big pickup there. If you look at -- through the rest of year, John did talk about with innovation launches happening more in mid-April instead of mid-January and some of our promotional calendar kind of being skewed more towards the back end of Q1 into Q2. There's a little bit of comp pressure that you'll see in the first quarter. You'll see it get a little less so in the second and then kind of what we talked about with kind of when you got to, I guess, like May, sometime between beginning the end of May, there is definitely some comps that we'll be rolling over that are, call it, easier from a reported perspective. So I think you'll see the softness we talked about in the first half, and you'll start to see us pick up as we get through the second quarter, much more so in the third quarter, and then we've got a little bit in the fourth quarter as well. So that's kind of the cadence. And that kind of goes with some of the movements you've seen and also kind of some of the trajectory you've seen with the whole category in general, where you're expected to see a little bit of building across the year, right, where the second half is expected to be stronger than the first half. Part of that's comps. Some of our soft comps happen to just coincide with some of the energy category soft comps, right, Q3 being the main one.

Okay. No, that's really helpful. And then maybe rounding out kind of the -- or sorry, 2 last questions, just kind of the core portfolio. I mean, you touched on the shelf space opportunity, but can you just talk about what's planned from an innovation perspective? You launched the hydration sticks a short while ago. So can you just talk about the opportunity there? And I think this is your first real move outside of kind of the core energy drink category. But do you see opportunities for the Celsius brand to kind of expand into other adjacent categories as well?

Yes. I think when you look at this year, it really -- when you look at our core Vibe and Essentials, it's going to be flavor innovation. That's our big bets for this year. When you look at mango lemonade for summer, you got retro Vibe and Playa Vibe. We have a grape slush we're launching with the Essentials line. We've got a few other flavors, and we're excited about an LTO we'll be launching in the back half of this year that more to come on that. But when you look at the first foray into like a subcategory and adjacencies, it's hydration, it's something we've talked about. A lot of our consumers have asked for more opportunities to consume Celsius throughout the day and hydration pairs perfectly for our portfolio being a fitness, health and wellness brand. Initially, it's launched on Amazon, just rolling out. It will be on walmart.com and a variety of other retailers coming soon. It's really too early to tell on the -- how large that would be. We do have a really large powder business that continues to grow. We see a lot of opportunities in powders. More retailers are taking our powder sticks on the go, energy sticks on. So I think that's -- that is definitely a business we're focused on growing. And I mean it's over almost a $100 million business for us. So sizable, and growing and there's retailers are leaning in, great flavors there. This hydration is a huge unlock. And I think there's other opportunities. We want to be careful on how far we stretch the brand. So very cognizant on that with the team. But there is -- there potentially is other opportunities along the way that we'll evaluate, but timing and sequencing is really, really critical. And at the end of the day, we got to win in energy, like that's our #1 priority. We're learning with the hydration, but we are committed to winning in energy.

Okay. That makes sense. And then so maybe rounding out here. Can you just talk about the brand's opportunity to kind of expand internationally? You moved into several new markets this year. What have you learned about the brand in those markets? And as you think about growth from here, is it more about new markets? Or do you see an opportunity to expand distribution within those new markets that you went into over the last year?

Yes. I mean the same health and wellness trends we see in the U.S. are global trends and everything is one click away. So we do have a really good distribution in share in Sweden. We're right around a 13% to 14% share in Sweden. We've been there a while, been there over 10 years. That's a great market for us, actually, one of our first markets expanding internationally, but 2 individuals found Celsius back then in Miami and bought a container and took it back and built it. So that's why we landed there. We've always been focused on the U.S. We do have high single digits in Finland, only there a few years. But the major markets we just launched that you're referencing is the U.K., Ireland, Australia, New Zealand and France. Those 5 markets rolled out -- started to roll out in -- back half of 2024 and '25. We're taking a very methodical approach. So we picked English speaking. Great partners build great brands as well. We partnered with Suntory for the international expansion in these markets. They have great distribution, been really great on collaboration. We're targeting specific retailers and building a loyal consumer base before we expand into other -- into further distribution. So keep in mind, we only have 6 months, maybe 3 months at best at retail to make it. If you don't make it, you're out. So we want to be very methodical in our approach. We're also being cognizant on profitability. So it's a balanced approach. Now we have seen initial success have been very promising. In Australia, we partnered with 7-Eleven for the lead launch. It's been really well. It's -- they referenced as one of the best launches they've seen in the last 5, 7 years. It's been really successful. They're starting to roll out in further distribution. That has gone much better than we initially anticipated. So we're really excited about that market. The U.K., we partnered with Tesco Metro marts first and now have been expanding and rolling out into other markets, really early in the early phases there. In France, the same. So everything is promising, but we don't want to over -- we don't want to get too excited. We don't want to be -- it's timing and sequencing. Let's let these revenues come through. Let's see how we continue to build upon this consumer base. We know the flavor profile. The brand positioning is resonating with those consumers in these markets, and we're really excited about the opportunity. But we don't want people to get ahead of their skis here. We're going to continue to add more resources in these markets as we gain more revenue and more profitability. And we're going to go as fast as the brand continues to grow. So we got great strategies coming this summer, more distribution coming internationally. And where we go from there, I think you're probably looking at expansion in 2026 and '27. I want to keep everyone super focused. Jarrod and I have spoken about this. It's very important. We don't want to go too thin, too broadly. So we're hyper focused on these key launches within these markets, and we're going to continue to build scale there.

Okay. No. So we're only a few minutes left here. So I want to talk about Alani Nu. So maybe, John, just a broader question, just give us some high-level thoughts on the brand and maybe how it's positioned in the energy drink category?

We're really excited about Alani Nu, admired that brand for many years. We know the founders over the years. And the brand is resonating with a very unique consumer segment. It's going after that female, Gen Z, new to category. It is a growing segment within the energy market. It is -- has a great loyal following. It's -- has some great innovation, standing student health and wellness as well. So really look at those mega trends in food and beverage and the Alani portfolio is tailwinds are strong behind that brand for that female shopper. And if you look at the distribution, you look at where the infrastructure we have at Celsius and how 1 plus 1 can even -- is going to be even stronger working together and collaborating. This puts Celsius as over 16.5% share in the energy category, makes it a mega #3 player. It allows -- pricing promotional strategy unlocks with a multiple portfolio strategy. It is very typical to play at this high level with a singular brand because you're always being leaned on unless you're on deal every day of the week. So there's a variety of -- opens up pricing promotional strategies, supplier synergies infrastructure synergies and just continues to put Celsius now has a modern energy portfolio for today's consumers. So we're excited about it. Their brand team is amazing. The -- this is just going to be a great opportunity for -- to continue to -- it's accretive to revenue in year 1, accretive to EPS and puts us well positioned for today, tomorrow and what we see in the future.

Given that both brands are kind of rooted in that health and wellness, I mean, is there a bit of a brand overlap in your core consumer?

Well, when you look at the -- that's -- a lot of questions we get from investors is that your 50-50 -- approximately 50-50 male, female Celsius shoppers, so now the Alani portfolio is cannibalizing. That's not the case. You look at the Celsius consumer, you look at the Mintel data and some of the panel data, we're seeing that we have about 15% of our Celsius -- 15% of our Celsius consumers are also buying Alani. But actually, it's even a higher number for Red Bull and Monster. So it's not as high as individual's perception is, and it's a growing segment. So there's a -- this female shopper is massive out there. There's a variety of different need states and both these brands deliver different need states and attributes and have a reason to be in the coolers and a reason to exist together. So we don't -- we see it as incremental.

That's helpful. Jarrod, maybe one over to you. Can you just talk on the potential integration, how you plan to bring these 2 brands together and kind of maybe where you see the biggest opportunity for synergies looking ahead?

I mean the biggest thing is really taking the infrastructure that we've built across the sales force, 400, 500 people. We've got a large key accounts team. We've got great relationships with retailers, really bringing them into that sale system. Also our supply chain, we've got a center of excellence we created last year. We built up and scaled our supply chain team so that we can onboard them pretty seamlessly, get them into our orbit structure, get them into our contracts from raw materials, packaging, freight perspective and really take kind of where we were 24 months ago and kind of accelerate that up over a 24-month period. So if you go back 2 years and kind of look at what we've been able to do to our system through our sales force, through our supply chain, we're looking to do the same thing to them and really accelerate that and drive the synergies through our system with the scale that we've built. So a lot of it is going to be workforce and supply chain, but then also savings across procurement and things like that, some back shop savings as well. But really, a lot of it is kind of known costs that we can really put a line in the sand on.

Okay. Maybe sticking with you for a second, Jarrod, and shifting and talking about profitability for a second. It was kind of one of the bright spots here as we exited the year. Gross margin, north of 50%, similar position for the full year. Can you just talk about how you see gross margin and profitability more broadly evolving from here as you look out over the next 12 months? Obviously, aluminum and premium have been pretty topical across all beverages. But curious how you see those cost buckets kind of impacting your trajectory just based on where things stand today?

Yes. I mean from a short-term perspective, we've got some price locks and things in place. So we're comfortable from '24. I think we mentioned that a couple of weeks or a month ago, where we're in pretty good shape for this year now depending upon where tariffs and things like that go. We do see with big beverages, the plant we bought and with some scale that we've done, some upside opportunity on that 50% margin. Good tariffs and things like that drive some downside. So we've kind of circled that 50% as a good number for us this year. There is some upside. There could be some downside. So kind of net-net, that's kind of where we are. I think from a tariff perspective, it's hard to say because it changes every other day, right? So I try not to do too much modeling on the tariff stuff. With the 25% that just got put in place, we're still in good shape, and we mentioned that about a month ago. But you never know things change. We do have, with our center of excellence opportunities and different channels to bring in, in different ingredients providers, so different routes into market. So we do have different strategies we can utilize if we need to. So we're pretty comfortable where things stand today.

We continue to have a variety of strategies to drive more leverage out of the system. So talk about big beverage, the acquisition we made in Q4, that's going to continue to unlock and just really continue to optimize our raw material and ingredient routes and big opportunities.

Okay. And maybe just one final one here, just sticking with margins, but on more of the selling and marketing side, right? I mean, it was 26% in '24. I know a component of that wasn't really just stepped up investment, part of it was the deleverage that you saw. So just as we think about '25, Jarrod, what do you think is kind of a reasonable target?

I mean historically, we've probably been closer to kind of 22%, 23%. We did spike up to the 26%. I think if we do see opportunity to invest behind the brand, then we will. There could be some -- depending upon total revenues quarter-by-quarter, you could see it a little higher, a little lower. Obviously, Q2, Q3 tend to have a little higher revenues. So Q1, Q4 could be a little bit higher from the sales and marketing as a percentage of revenue. But we do -- we will take the opportunity to invest behind that if we see opportunity to. And I think we'll just have to kind of throughout the year. But we do -- John has talked about, we do want to grow market share. We do really want to make sure that the 15% to 20% expansion is successful, really build that brand awareness, especially in some of those areas Northwest, Midwest, where we don't have the brand awareness that we have. So to really drive that, sometimes it does take a little bit more to get there, and then you can kind of scale back from there. So there are pockets that we'll see opportunities, and we'll just communicate that throughout the year.

And we did talk about CAGNY. We have really a summer program. We're going to be kicking off really healthy halo marketing program. So we didn't have that last year. So we do have that, as Jerry mentioned, heading in with 10% -- 15% to 20% space increases. So we have some broader distribution. We've got some great innovation coming in. And based on how revenues turn out, it could be at the higher end because of some of these initiatives we're taking advantage of. But right now, it's the time to really invest behind this brand. It's got huge opportunities. The ACV is at an all-time peak. You're coming off of a greater reset. You've got retailers leaning in. Like I mentioned, some of those front checkout coolers at Kroger and Walmart and 7-Eleven of those and the expansion of 7-Eleven and just some of the collaborations. So we're really excited about the summer, and we've got some great marketing programs that are planned.

All right. Well, why don't -- that's a perfect place to stop, I think. John and Jarrod, thank you so much for joining us today. We wish you nothing but the best of luck moving forward.

All right. Thank you for having us. Cheers.