Celsius CEO on aluminum shortage: we’re in a ‘can pandemic’

Yahoo Finance’s Brian Sozzi and Julie Hyman speak with Celsius Holdings CEO John Fieldly about the company’s latest earnings report, company growth, outlook, and much more.

Video transcript

BRIAN SOZZI: Energy drinkmaker Celsius Holdings going to put investors to sleep with its first quarter earnings. The company saw sales surge 78% from a year ago, as it gained more shelf space at retailers. Operating profits rose 80%. Year to date, the stock is up a cool 15%. Celsius Holdings CEO John Fieldly joins us now. John, good to speak with you here. You know, I followed your company literally as it got off the ground. So it's amazing to see you're at a more than $4 billion market cap here. How are you going to keep the growth going this year?

JOHN FIELDLY: Yeah, it's interesting. Thanks for having us, Brian. We were on the show about two years ago. And you're absolutely right. It's been a journey. We are doing extremely well. We just put up solid results in Q1. So, exceeded $50 million in revenue. We're up about 78%. Our North America business was up 100. We're in just the beginning.

We actually just crossed over. In the total energy drink market, we have 1.2% share right now. So, and growing at an extremely high growth rate, about 218%, according to Nielsen scan data at the register. So, lots of opportunity. We're just getting started. It's a big category. And consumers are looking for healthy, better for you, more function in the beverages they consume. And we're on point.

JULIE HYMAN: John, what's the end goal here? I mean, you guys still have a ways to go, but I mean, overtake Red Bull? Conquer the world? What do you got your eyes on here?

JOHN FIELDLY: It is conquering the world. We feel we can be the number one player in the energy drink category. We have something-- I know Nigel was on earlier. We have something very unique in the energy category. We offer proven functional energy. We are thermogenic. We also offer healthy ingredients that don't sacrifice taste. And no crash, no jitters. Gaining distribution across the country and across the globe. We're adding more distributors.

And it's just an exciting time. Right now, we're running a great summer program. You can see the sign behind me. It's what's your vibe for summer, bringing positive vibes during this time. So we're excited about that. We're on trend. And the category is ready for disruption. Going out with your grandfather's energy drink, in with Celsius. So, it's exciting.

JULIE HYMAN: I think my grandfather's energy drink was coffee, but yes, point taken. Just to follow up on that, for people who might not be familiar, what does thermogenic mean? Like, what are the additional things that you're talking about that this drink would do?

JOHN FIELDLY: Yeah, something-- what's very unique about Celsius-- and it must be unique in the category-- we have over six clinical studies on the product. So we were born in gyms and health clubs and vitamins specialty space. And thermogenic, it increases your body's metabolic rate, which it promotes and increases fat burning and calorie burning. So we're all about living fit. It's Celsius Live Fit. It's for active lifestyles. And it's all about your personal performance. That's why you consume energy drinks. It's to live a better lifestyle to accomplish your goals.

BRIAN SOZZI: And John, in the first quarter, you know, just looking at the margins, margins did take a hit. And you call that higher input costs. The can shortage the industry is experiencing-- can you get enough cans right now to make your product? And then have you raised prices?

JOHN FIELDLY: Yeah, no, great question. It is, as all categories are getting affected right now. We have been affected. There is a can shortage. There's a can pandemic out there right now, especially in the beverage industry. We're importing cans from around the world. We started, actually, this process back in Q4, a little bit ahead of the curve. We started importing cans back in March. So our margins were impacted. Also, in order to meet demand, with demand up over 100% and a shortage on cans, we had to wrap cans. So that's a higher cost, input cost, for us. And then we're also seeing freight costs, transportation costs increase.

And also, labor costs. It's difficult finding labor currently. So we're hoping this all subsides. We are looking at it. We do have a unique position. So talking about pricing power and those type of things, we do feel we have a strong position as a premium brand in the energy category to try to offset some of those. But our first quarter was impacted due to some of these input costs. Containers is another major issue out there, trying to locate containers to move product around. And they anticipate the trucking business is about, I think it's like 30,000 less drivers on the road today, just due to the new drivers coming in, with graduation classes limited due to COVID and those type of things. So the industry is having a really tough time right now.

BRIAN SOZZI: John, what was your first thought when you heard the news recently that Coca-Cola was discontinuing its Coke Energy product?

JOHN FIELDLY: You know, I really-- I thought it was very interesting when Coke launched their energy product. I thought it was great because that brings more consumers to the energy category that maybe did not-- weren't energy drink consumers. You know, you could have been transmissioned in from, you know, Coke was the traditional energy drink. You transition into the category with Coke Energy, and then you start experiencing and searching around. You pick up a Celsius, and we likely converted a lot of new consumers.

So, you know, the challenge is some of these brands can't really expand into adjacent categories. And that's what you're seeing with the CSD, with Coca-Cola. I know they have some other new innovation coming in. But hey, more space for us in the cooler, that's for sure. There's a lot of new competition that comes in every year. It's limited due to the cans-- the limitation on cans this year, but there's always competition coming in each and every year. But it's positive for Celsius. We're gaining more distribution. And it's good news for us.

BRIAN SOZZI: All right, well, let's leave it there for now. Celsius Holdings CEO John Fieldly, good to see you. We'll talk to you soon.