Market leaders in food and beverage face many of the same problems as their smaller competitors – inflation, geopolitical strife, tariff fears and rapidly changing consumer preferences. But for companies like Celsius Holdings, which currently controls a fifth of the US energy drink market, the biggest competitive threat can come from its own portfolio of brands.
Executives at the better-for-you energy drink company, which runs its namesake brand, Alani Nu and Rockstar Energy, discussed the issue of brand cannibalization and more at the Barclays 19th Annual Global Consumer Conference.
Celsius Holdings has posted several quarters of rapid revenue growth before its most recent results showed pressure on profitability and some weakness in its namesake brand.
That was due in part to a massive reorganization, incorporating the brands into PepsiCo’s distribution system.
While the distribution reorganization appears to be a bump in the road in terms of brand strength, particularly with its Alani Nu lineup geared toward women, it illustrates the challenges that accompany owning multiple brands that sometimes compete for the same consumer.
Growing pains at Celsius
The Boca Raton, Fla.-based company is largely through the growing pains of its supply-chain reshuffle and now looking forward to growing its brands in 2027, according to Celsius Holdings Chairman and CEO John Fieldly.
Fieldly sent a clear message to investors at Barclays this week that the challenges with missed earnings targets experienced in Q2 are temporary setbacks that will help guide the company moving forward.
In early August, Celsius said the setbacks were partly the result of the decision to remove underperforming SKUs, a process in the CPG world known as portfolio rationalization. In retrospect, Celsius would have retained more SKUs, Fieldly said in August.
“When integrating this portfolio, we did some rationalization, and we’ve been talking with a lot of investors today about that, and we have a much stabler portfolio of core SKUs within the Celsius portfolio that sets a really firm foundation,” Fieldly said at the Barclays forum. “But going through that integration and some key learnings, we really went too deep on simplifying the Celsius portfolio for this year. But we’re going to take those key learnings, and we’re really excited about what’s in store for ‘27.”
Moving forward in 2027
Whether it was by design or a result of the rocky quarter, Celsius reformed its leadership team, which entailed the departure of its COO and President Eric Hanson.
Taylor Bohannon, Celsius’ EVP of North American Sales, was named chief commercial officer, and Tony Guilfoyle was promoted from chief customer officer to the newly created role of chief transformation officer.
Celsius Holdings CFO Jarrod Langhans said on Tuesday that the reorganization of the executive team paves the way for the company to focus on its go-to-market strategy in 2027.
That strategy focuses in part on price-pack architecture (PPA), which is the process of optimizing SKUs in a portfolio based on size, desirability and other factors to maximize profit.
Langhans described Alani Nu as Celsius Holdings’ super premium line, Celsius as premium and Rockstar as premium economy.
“It’s making sure you have got that set up right, so you don’t walk into a store and see Rockstar priced higher than a Celsius, right?” he said. “It’s making sure every store you walk into, you’ve got the right architecture there. Same with the different packs we’re going to market with. Are we going to go to market with minis for Alani?”
Guarding against brand cannibalization
Once the dust has settled in its reorganization, Celsius’ biggest challenge might not come from competitors but from its own brands working against one another.
This requires discipline with its promotions, according to Langhans.
“In the past, when we were only brand Celsius, we were constantly being attacked by some brand or two brands or three brands, so this allows us to kind of strategically position each of the brands so that we can win, and that we’re not going after each other,” he said.
That means carefully structured releases of its limited-time-offer (LTO) drinks such as its recent Alani Nu-brand LTO Witch’s Brew.
Making sure those promotional limited-time brands are not offered at a discount because of their desirability is core to the strategy, he said.
