Crypto News: BW Reads: Inside the energy drink wars

Welcome to Bw Reads, our weekend newsletter featuring one great magazine story from Bloomberg Businessweek. Today Deena Shanker writes about how America got hooked on Celsius. The normie energy drink has outlasted hundreds of competitors in a category littered with brazen brands and crash-and-burn startups. You can find the whole story online (free) here.

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In a corner of the beverage industry known as much for over-caffeinated hype as it is for outrageous naming conventions, new brands appear just as quickly as others disappear. In the early 2000s, there was the arrival of Pimp Juice, rapper Nelly’s controversial and short-lived energy drink, named for his chart-topping song, followed several years later by Cocaine, a liquid marketed as “Speed in a Can,” whose name was reason enough for the US Food and Drug Administration to force it off shelves. Bang Energy, a sugar-free concoction created for the gym-bro set, seemed as though it might be the next big thing; the company that owned it went into bankruptcy. In the early 2020s, YouTuber Logan Paul briefly got teen boys obsessed with Prime Energy, while a barrage of aggressively named brands attempted but failed to find widespread appeal, including Full Throttle, Venom Energy and, for bookish types, Nerd Focus. Not even beverage giant Coca-Cola Co. could find staying power: Its first attempt, Vault, discontinued after only five years; 10 years later, Coke Energy flopped. From 2000 to 2013, says beverage industry consultant Mike Sweeney, more than 1,600 energy drinks tried to get in on the action.

Celsius has managed not only to outlast most of its competition but also to find itself near the top of the category long dominated by Red Bull and Monster Energy. The brand’s rise is improbable in more ways than one. It’s arguably the most normie of energy drinks, with fruity flavors delivered in understated slim white cans. In its first two decades, Celsius Holdings Inc. also managed to defy death twice: first, in 2011, when the South Florida company then run by its husband and wife co-founders ran out of cash and got delisted from the Nasdaq, and second, the next year, when it was under new management and got kicked out of major retailers because people just weren’t buying it.

So the company rebranded Celsius’ cans twice while keeping the same formula, which includes a staggering 200 milligrams of caffeine per can, more than Red Bull or Monster. By the second time, in late 2016, it had abandoned its original pitch as a calorie-burning green tea for dieters, instead recasting itself as a sugar-free, fitness-focused, pre-workout energy drink for the health-conscious, including women, whom the industry had largely ignored. Within six years, Celsius stepped in where Bang Energy, its once much larger competitor, stumbled, namely taking Bang’s spot on PepsiCo trucks when Bang’s relationship with the straight-laced distributor fell apart. “It was just, who had the right opportunity to capitalize on it successfully,” Ken Sadowsky, an industry veteran, investor and adviser known as the Beverage Whisperer, says of the other company’s missteps. “And they did it.”

In 2023, Celsius became the No. 3 brand in the $20 billion US energy drink market, according to market researcher Euromonitor International Plc. Then, last year, it turbocharged that status by purchasing the category’s No. 4 brand, Alani Nu, whose tropical-neon-hued cans, equally high caffeine levels and fitness influencer co-founder were also bringing more women into the category. Six months later, PepsiCo Inc. paid $585 million to raise its stake in Celsius from 8.5% to 11%. (It also offloaded its laggard Rockstar brand onto Celsius as part of the deal.) Even during Celsius’ most recent, bruising quarter, reported in August, the company still managed to gain market share year over year and retain its No. 3 position in one of the beverage industry’s highest-growth categories.

John Fieldly arrived at the company 14 years ago, when the brand seemed all but doomed. In a volatile business known for attracting celebrities and opportunists, Fieldly is basically a merchandising nerd. He was part of a turnaround team at chain Eckerd Drugs, where he learned retail basics such as how to interrupt the customer on the way to the checkout counter with more products to buy. When he joined Celsius as chief financial adviser, the company had 12 employees, and Fieldly wasn’t sure it would work out. “I figured, you know, if it lasted a year, that’d be great,” he told Bloomberg Businessweek in October.

Six years later, after it had, more or less, worked out, he was promoted to chief executive officer. Celsius’ rise can be traced largely to sticking with a fairly conventional beverage playbook: distinct marketing and opportune distribution agreements. The day Fieldly was named CEO, in April 2018, the company had a market capitalization of about $255 million. Today it’s worth nearly $9 billion.

On a warm but not-yet-scorching morning last fall in Boca Raton, Florida, where Celsius is based, Fieldly stepped into a Publix. Whereas most people walk in and see sections like produce and meat, Fieldly lasered in on what one of his deputies calls “the strike zone” — those eye-level shelves in each aisle that anyone selling anything wants their product to be on. He circulated around the supermarket as if working checkpoints: There were nine flavors of Celsius in a refrigerated section beside grab-and-go sandwiches; a freestanding mini-rack of Celsius propped up at the end of an aisle; single cans and multipacks claiming four rows in the energy drink section of the soda aisle; and four other placements throughout the store. At a nearby Target and a convenience store, it was more of the same: displays of Celsius mixed in with trendy probiotic sodas, 12-packs of Celsius and single cans alongside soda and wine, chilled Celsius in a cooler next to a lottery ticket machine and in another cooler flanking the slushy dispenser. “You win or lose at retail,” Fieldly said, clearly pumped.

Celsius has pulled off the most critical and complicated move in the beverage industry, nailing distribution, says consultant Sadowsky. “That doesn’t explain why the consumers still gravitate towards it, though,” he says. “That’s marketing.”

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