If you’re looking for a consumer stock that could be a millionaire maker, one of the top stocks to consider is Celsius Holdings (NASDAQ: CELH). The reason why is quite simple — rival Monster Beverage turned out to be one of the best-performing stocks over the past three decades.
With Celsius having a tough year in an otherwise strong market, could this be an opportunity to jump into a stock with a lot of long-term potential? Let’s take a look to see if Celsius has monster potential to be the next millionaire-maker energy drink stock.
The energy drink market is dominated by two companies at the moment: Monster Beverage and Red Bull. Within the U.S., Red Bull holds about a 35% market share, while Monster is over 29%. Celsius has been able to take the No. 3 spot with about a 9% share.
Before this year, the company was helping power the growth of the energy drink category in the U.S. It went from about 1% market share in the U.S. in early 2021 to about 4% toward the fall of 2022, when it signed a new distribution deal with PepsiCo. That deal powered the company’s market share all the way up to 9% before the end of 2023.
Celsius’ success stemmed from being able to attract a wider demographic (most notably women) to the category in what had largely been a male-dominated market. It did this with its sleek can design, sugar-free varieties, refreshing flavors, and a “healthier for you” marketing message. As such, while consumers of most energy drinks tend to be male, Celsius has been able to obtain a 50/50 male-female split in its consumers. It has also positioned the beverage to be consumed at any time, not just around workouts, while touting its weight-loss characteristics.
While the company has still seen growth, its market share has settled into the 9% range as it has become fully distributed in the U.S. Part of the problem has been general energy drink category weakness, which has stemmed from traffic woes related to the convenience store space. Energy drinks are often more spontaneous purchases and weak traffic in this important channel has hurt overall growth.
Not surprisingly, Celsius has also seen increased competition given its success. Both Monster and Red Bull have also introduced sugar-free flavors aimed more toward a broader set of customeers, while upstarts such as Alani Nu have gone after the Celcuis’ segment energy drink market as well.
This all helped lead to decelerating growth for Celsius this year, which pushed down its stock. Its year got worse in Q3 when it reported a 31% decline in sales due to an inventory mismatch at its largest distributor, PepsiCo. It said that the gap between sell-in and sell-through was narrowing but that it would still impact Q4.
