Energy drinks are everywhere, and that’s not an accident. John Fieldly, CEO of Celsius (CELH), joins The Watch List to discuss strong quarterly earnings and their strategy going forward. CELH has hit a new 52-week high every day for about a week straight, and the stock is up 113% year-to-date (+42.5% year-over-year).

“Live Fit” is Celsius’ slogan, and Fieldly thinks it resonates with consumers across demographics and boosts their dominance in the space. “We have a great position to own this category.”

In its 2Q earnings release, Celsius contends that it has 17.3% market share in the U.S. energy drink sector. Statista estimated the 2024 total energy market at $208 billion in the U.S. and expects it to hit $248 billion by 2029. The Mayo Health Clinic estimates people consume 8 gallons of sports and energy drinks per year, and calls them the “second most popular dietary supplement among U.S. teens and young adults” (the first is multivitamins).

A flurry of analysts raised their price targets on the stock after it blew past Street estimates. Adjusted earnings per share were $0.47 and revenue was $739.3 million.

Growth has been strong in foreign markets like Australia and some European countries. “These are global trends – health, wellness, fitness, lifestyle,” Fieldly argues.

Fieldly attributes some of the quarter’s success to the integration of Alani Nu, a “female-focused, better-for-you, healthier energy drink portfolio of brands.” In 2Q, Alani Nu sales rose 129% (vs Celsius brand +3%). Fieldly thinks that there could potentially be more acquisitions on the horizon.

“It is just an exciting time in the energy category,” he says, adding that Celsius is leading the sugar-free part. “Flavor is driving the category” and attracting women and Gen Z consumers. Another potential asset: Celsius doesn’t just sell cans, it also sells mixable powders easy for people to take on the go.

“Historically, if you go back 3-5 years…it’s been more of a “need” state,” Fieldly explains, meaning that consumers bought energy drinks only when they needed that pick-me-up. Now, he says energy drinks are becoming part of a “daily lifestyle” and becoming more of a pantry staple.

However, Celsius does have tariff headwinds, including for its aluminum cans. The company said that tariffs haven’t hit yet because of their existing inventory, but they see the impact coming.

“We’re working on a variety of strategies to continue to maintain margins,” Fieldly assures viewers, including vertical integration – they acquired a copacker last year to keep more operations in-house, and have higher purchasing power with the Alani deal.

Consumers have shown preferences for new flavors and products marketed as health-conscious for years now, and Celsius is tapping into those desires. The energy drink market shows no signs of slowing down, but competition is stiff. Investors must decide if Celsius is making the right moves to rise to the top.

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