Podcast Summary
Real estate manager's perspective on investing opportunities vs growing energy drink market: Principal Asset Management offers a holistic view on investing opportunities with local insights and global expertise across various asset classes. Meanwhile, Celsius' success in the energy drink market highlights the importance of effective distribution strategies in a competitive landscape.
Principal Asset Management, as a real estate manager, provides a comprehensive perspective on investing opportunities by combining local insights with global expertise across various asset classes. Meanwhile, in the consumer world, the market for energy drinks continues to grow, with new competitors like Celsius entering the scene. Celsius differentiates itself by promising not just energy but also metabolism acceleration and body fat burning. The company's success is a testament to the ongoing demand for energy drinks and the importance of effective distribution strategies in a crowded market. John Fieldly, Celsius Holdings' CEO, will share insights on how the company has managed to thrive in this competitive landscape during our interview on Odd Lots.
Celsius's growth due to partnership with Pepsi: Partnering with Pepsi enabled Celsius to expand to almost every retailer in the US, increasing product availability and driving growth in a competitive beverage market
Celsius's significant growth in the last year and a half can be attributed to their partnership with Pepsi as their distribution partner. Prior to this deal, Celsius faced challenges in getting retailers to carry their product due to the need for consumer demand and warehouse space. To build demand, Celsius had to sell directly to retailers and create a consumer base before approaching distributors. With Pepsi's help, Celsius has been able to expand to almost every retailer in the United States, making their product widely available and contributing to their success in a highly competitive beverage industry.
Understanding the retail process for beverage brands: Focus on target audience, create unique offerings, position as better-for-you, understand planograms, tailor sales pitch to retailers, distributors, and consumers
Building a successful beverage brand involves understanding your target audience, creating unique offerings for retailers and distributors, and positioning yourself as a better-for-you option in the market. This requires a customer-centric approach, focusing on the needs and voids in the consumer's portfolio and offering a product that can help them achieve their health and wellness goals. Planograms play a crucial role in getting your product on retail shelves, as they determine which products are selected based on maximizing revenue for the retailer. Understanding the planogram process and tailoring your sales pitch to the retailer, distributor, and consumer can help you carve out a space in their portfolio and ultimately lead to success.
Proving Worth in Retail: 45 Days to Make an Impact: Brands need a strategic approach to secure shelf space, build consumer base, and demonstrate demand within 45 days or risk being cut. Utilize emotional appeal and create a 'billboard effect' to increase sales and prevent cannibalization.
Securing shelf space in retail environments, particularly in competitive categories like energy drinks, requires a strategic approach. Brands often have only 45 days to prove themselves before being cut, making it essential to build a strong sales story and demonstrate demand. This can involve working with local store managers to gain trial and build a loyal consumer base, and then scaling up to larger regional or national rollouts. Emotion plays a role in convincing buyers to invest in new brands, and creating a "billboard effect" on shelf can help increase sales and prevent cannibalization. Ultimately, the goal is to perform well enough to continue growing the brand based on data that shows results.
Distribution is key to beverage brand success: Effective distribution strategies can lead to increased visibility, sales, and long-term success for beverage brands.
Effective distribution is crucial for the success of a beverage brand, especially during the initial stages when trying to capture consumers' attention. This was highlighted in the discussion about Celsius' growth and distribution expansion with Pepsi. The relationship between a brand and its distributor can evolve as the brand grows, with opportunities for increased collaboration and resource utilization. However, some companies, like Red Bull, choose to own their own distribution networks for greater control. Ultimately, a well-executed distribution strategy can lead to increased visibility, sales, and long-term success.
Celsius leverages PepsiCo's distribution network for growth: Celsius focuses on sales and marketing, while utilizing PepsiCo's resources for distribution. This strategy expands reach, brings innovative drinks, and maintains market share.
Celsius, a growing energy drink brand, focuses on its core competencies of sales and marketing while leveraging the distribution network and resources of PepsiCo. This strategy allows Celsius to expand its reach and bring innovative, great-tasting energy drinks to more consumers. The brand's strong presence on Amazon, with a loyal consumer base, demonstrates its success in this highly competitive market. Celsius continues to grow by staying true to its fitness-focused DNA and forming partnerships that align with its brand, such as with Jake Paul, MLS, and Ferrari in F1. The brand's success on Amazon, despite increased distribution and availability, highlights its ability to maintain its market share and growth trajectory. Celsius aims to help consumers accomplish their goals and objectives, making it a trusted choice for health-conscious individuals.
Authenticity, Health, and Flavor Innovation: Celsius maintains consumer relevance and loyalty through authenticity, health focus, and continuous flavor innovation. Partnerships with athletes and organizations further strengthen its brand image.
Celsius, a popular energy drink brand, focuses on authenticity, health and wellness, and flavor innovation to maintain consumer relevance and loyalty. The brand's partnerships with athletes like Jake Paul and organizations like MLS align with these values. Celsius's diverse array of flavors caters to various consumer preferences, leading to increased consumption and a growing consumer base. The brand's innovation in flavor profiles and its ability to harmonize flavors within lines keeps consumers engaged and loyal. The Celsius consumer is not just consuming the drink for energy boosts during specific need states but also during meals, making it incremental to retailers. Despite historical perceptions of energy drinks as appetite suppressants, Celsius is paired with foods and snacks, expanding its market potential.
Navigating supply chain disruptions for essential materials: Companies face challenges in sourcing essential materials during disruptions, but can offset increased costs through strategic partnerships, imports, and passing savings to consumers as markets normalize.
During times of supply chain disruptions, such as the can shortage experienced during the COVID-19 pandemic, companies can face significant challenges in sourcing essential materials like cans for their products. These challenges can lead to increased costs and the need for strategic partnerships and imports to keep production going. However, as supply chains begin to normalize, companies may be able to pass cost savings on to consumers in the form of lower prices for their products. For example, Celsius, a leading energy drink brand, was able to offset increased costs for vitamin ingredients through increased scale and volume, but faced significant challenges in sourcing cans during the pandemic. By working with partners and importing cans, they were able to keep their product on shelves when many competitors were wrapping cans or experiencing long delays. As packaging costs have decreased since the crisis, Celsius has been able to pass these savings on to consumers in the form of higher profit margins. Overall, the ability to navigate complex supply chain challenges and adapt to changing market conditions is crucial for businesses to remain competitive and successful.
Managing costs and pricing in beverage industry: Celsius addresses cost challenges through 'Orbit model' and strategic expansion, while considering efficiency and market factors.
Managing costs and pricing in the beverage industry is a constant challenge due to rising costs of raw materials, labor, and transportation. Celsius, a leading energy drink brand, is addressing this issue by implementing an "Orbit model" that produces, sources materials, and sells products within the same region to reduce freight costs. Regarding manufacturing, owning a canning facility may not be necessary for every brand, depending on their volume and margin requirements. When expanding into international markets, Celsius considers factors such as market size, distribution opportunities, and required margins to determine potential profitability. Overall, success in the beverage industry requires strategic decision-making and a focus on efficiency to navigate the ever-changing cost landscape.
Strategic Decisions in Business: Energy Drink Company Example: Understanding industry specifics, building relationships, and making informed decisions are crucial for business success. Starting small, promoting products, and considering freight costs, distribution channels, and product placement are essential strategies.
The success of a business, especially in competitive markets, relies heavily on strategic decisions regarding production, distribution, and marketing. The speakers discussed the example of an energy drink company and how crucial it is to consider factors like freight costs, distribution channels, and product placement in retail stores. They also touched upon the importance of building relationships and proving credibility to secure partnerships with larger distributors. The speakers emphasized the importance of starting small and building up, as well as the role of dedicated individuals in promoting new products to consumers. Additionally, they highlighted the significance of understanding the specifics of the industry and the market, from commodity prices to consumer behavior. Overall, the conversation underscored the intricacies of business operations and the importance of making informed, strategic decisions at every level.
Consumer goods production and marketing complexities: Companies may shift from marketing to distribution control for increased revenue and market power, while partnerships between corporations can impact product development and market dynamics.
The production and marketing of consumer goods like energy drinks involve complex systems and negotiations, raising questions about market power, product development, and distribution networks. For instance, companies like Celsius may initially focus on marketing, but eventually, they may consider owning their distribution to increase control and revenue. Additionally, the vitamin industry, which provides additives for these drinks, is a significant market with its own power dynamics and debates over effectiveness. The conversation also touched on the reasons why large corporations like Pepsi and Coke might choose to partner instead of developing their energy drinks in-house. Overall, these discussions highlight the intricacies of the consumer goods industry and the various factors that influence product development and market dynamics.
Kroger's fuel restrictions: While Kroger offers fresh produce and essentials to a wide audience, fuel restrictions may limit access for some customers seeking savings through fuel discounts or rewards programs.
Kroger, a well-known grocery store chain, positions itself as a provider of fresh produce and other essentials for everyone, but it's important to note that fuel restrictions may apply. This means that while Kroger aims to cater to a wide audience, there may be limitations for those who rely on fuel discounts or rewards programs to save money on their grocery purchases. This information may not seem significant on its own, but it highlights the importance of understanding the nuances of a company's offerings and policies. For consumers, it's essential to be aware of any potential restrictions or limitations, especially when it comes to something as fundamental as access to fresh food and fuel. For Kroger, this messaging emphasizes its commitment to providing fresh produce and other essentials to a broad audience while also managing costs and maintaining profitability. Overall, this takeaway underscores the importance of clear communication and transparency in business, ensuring that customers have accurate information to make informed decisions.
