People are stressed out and exhausted. The past two and a half years, full of public health crises, recession and inflation, have been so eventful that news of a possible alien invasion barely even made a blip. Nights are sleepless and days restless, and we need an extra boost to keep us going.
That might help explain why investors are amped for candy, cola and chips. Hershey's stock is up 19% this year. Coke is up nearly 10%. Pepsi is up 4%. (Reminder: the overall market is down 10%). Inflation has taken a bite out of retail sales, but Americans are biting back — and sipping, too.
That's good news not only for the giants in the consumer goods industry but also lesser known players. Consider Celsius Holdings, whose energy drinks are everywhere these days.
"The reality of it is that we all need more energy," said John Fieldly, CEO of Celsius. "We're working harder and working longer, and we're never disconnected." Sales of Celsius have surged 137% since last year, and the company reported earnings of 12 cents per share last quarter, up from just one cent last year.
Earlier this month, Celsius announced that PepsiCo would make a $550 million investment in the energy drink maker and become its preferred distribution partner.
"The general sense of those in the industry is that people have come off of a stressful period of uncertainty, and they find comfort in certain beverages and snacks. Even as inflation leads to higher prices they refuse to give up these small luxuries," said Duane Stanford, editor and publisher of Beverage Digest, a business newsletter covering the non-alcoholic drinks industry.
The appetite for energy drinks is growing. "It's profitable, and large soft drink companies want to be in it. One of the ways they've done it is through these partnerships," said Stanford.
Celsius markets itself as the ultimate small luxury, the solution to both burnout and anxiety. Celsius claims to give its consumers "healthy energy" without jitters or a comedown and includes ingredients like green tea extract and ginger root.
Coffee has become the jolt of choice for many younger consumers who were turned off by the extreme sports vibe of the energy drink market, Stanford said. That's why brands like Celsius are attempting to appeal to a broader audience and to attract Gen Z consumers who were turned off by male bravado marketing.
Pepsi's portfolio also includes Rockstar and Mountain Dew Rise. But Coke, which partners with Monster Energy, is currently better positioned in the energy drink sector than Pepsi, says Nik Modi, RBC Capital Markets beverages analyst.
Celsius is currently the fifth most popular energy drink on the market, trailing behind Monster, Red Bull, Bang Energy Drink and Rockstar, but Stanford says that Pepsi is betting it will quickly expand and win market share.
Comments
Post a Comment