The Rise of Celsius (CELH) and the New Era of Energy Drink Brands
AlphaSense Expert Insights Webinar
The AlphaSense expert webinar with Jon Bratta, the former VP of Emerging Brands at Monster Energy, is accessible now. Jon’s 25+ years of experience have spanned retail, manufacturing, and distribution, giving him a unique perspective on the how the industry has changed over time. To give you a sense of what we covered, here are three of the topics from our discussion:
On Retail Placements – “A lot of retailers make decisions based on slotting allowances – who’s going to pay me the most money to be in the store. From managing category professionals for a number of years and having been a category manager, you’re never going to trick the customer that much, for that to make sense. So, it should be a balance [between paid placements and organic pull]. When my teams were managing shelf space, we’d flex some if somebody gave us abnormally large shelving allowances… but it should be a good blend of what the manufacturers / bottlers are offering in terms of support and what they’re doing inside of the category, as well as consumer demand. At the end of the day, you can give somebody a full shelf, and it might help them move incrementally better than they would with a couple of facings, but if they don’t have consumer demand to carry that space, they are just going to lose it in the next cycle of resets… You’re fighting for heavily contested space; everybody out there is looking to gain more shelf space.”
On Monster’s Competitive Response to Celsius – “Reign was Monster’s answer to Bang, which Monster now owns; Reign Storm is Monster’s answer to Celsius… Where I think Reign Storm has [struggled] is on share of mind and distribution; they certainly have distribution, but the focus continues to be on [Monster] Green and Ultra, the massive share brands that drive Monster’s sales and performance… I think a bottling network only has so much bandwidth, to focus on a certain number of brands. When it comes down to the ‘die on the sword’ brands, it’s going to be Green and Ultra… Driving Reign Storm is incremental, but it might not be at the same level as making sure they are dialed in on the top performing brands… At the end of the day, there’s only so much you can focus on; that’s where I think you see a bit of suffering for some other brands that come into the portfolio for distribution.”
On Eric Hanson’s Move to Celsius: “He probably knows the ins and outs of PepsiCo, how to play to that audience. This is speculation, but it’s something that I don’t think Rockstar was very dialed on in their initial relationship with PepsiCo… For [Hanson], who understands the ins and outs of PepsiCo, it’s probably a pretty sharp move… to help you smooth those waters. Anytime you have a manufacturer that isn’t wholly owned and produced by the distributor, it is going to create a little bit of tension that doesn’t ordinarily exist when you’re talking about a wholly owned house brand [like Mountain Dew for PepsiCo]… At the end of the day, if you do not have good distribution and good distribution partners, you are not going to win in the marketplace.”
Thank you to Jon for sharing his insights on the continued evolution of the industry, and thank you to AlphaSense for hosting today’s expert webinar.
Note - This is not investment advice. Do your own due diligence.
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