Celsius' revenues skyrocket in advance of large-scale China launch

13-Mar-2018 - Last updated on 14-Mar-2018 at 03:26 GMT

Fast-growing energy drink brand Celsius Holdings recorded nearly 60% growth in revenue year over year, even as investments in its China launch mean it is still reporting losses overall.

Celsius reported fiscal 2017 revenue of $36.2 million, which is up from $22.8 million in 2016, a 59% rise. Domestic revenue increased 72% to $24.1 million, up from $14 million in 2016, while international sales increased 37% to $12.1 million, up from $8.8 in the previous year.

Celsius has launched its latest Heat product domestically in 7-Eleven stores nationwide. The brand has been selling heavily in the convenience store channel for several years now.

“We launched in 7-Eleven now, about 2 1/2 years ago and it shows you that the product is turning well to have them continue to partner with Celsius,” interim CEO John Fieldly told analysts in a recent earnings conference call. The call was posted in transcript form on the site seekingalpha.com.

The company’s flagship product, a beverage called Celsius, is sold as a dietary supplement and contains a blend of taurine, guarana extract, green tea extract, glucuronolactone and ginger extract. The Celsius Heat line extension was launched in early 2017. It also includes 300 mg of caffeine and 2 grams of L-citrulline, an amino acid that is part of the body’s nitric oxide pathway.

Boosting nitric oxide stimulates vasodilation and blood flow and has been linked to athletic performance increases. Domestically the beverages are sold at Vitamin Shoppe, 24-Hour Fitness, as well as 7-Eleven.

Brand backed by Hong Kong billionaire

Celsius Holdings appears to be well capitalized, with an influx of $16 million in 2015 from a group led by Hong Kong businessman Li Ka-Shing, who according to Forbes magazine is the richest person in Asia. Def Jam co-founder Russell Simmons also participated in that investment. In November of 2016 the company entered into a partnership with Li’s A.S. Watson group, which is the largest international health and beauty retail group in Asia. The brand was initially being distributed in Asia in Hong Kong and Macau.

A group led by Li reportedly put another $15 million into the company in March of 2017 to help build out the launch in mainland China, where Celsius is making a major push in partnership with Qifeng Food Technology Co. Ltd.

“Our entry and expansion in Asia market was a critical step in our pursuit of building a global brand. Asia and China in particular, is one of the largest and fastest growing economies in the world, establishing the Celsius brand, operations and distribution through local and regional partners has accelerated our entrance into this market,” Fieldly said.

“We committed considerable resources in Asia in 2017 with investments in excess of $7 million to promote our brands establishing local production at sourcing and successfully launching a subset of our product offerings. Our initial area of focus in China has been Beijing, Guangzhou and Shenzhen,” he added.

The company said it spend $7.3 million on the China launch, which meant that despite the stellar sales numbers, the company still reported a full year net loss to shareholders of $8.6 million.