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Diving overview:
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Expenses were made by Celsius Holdings. Acquired Big Beverages Contract Manufacturing for $75 million.a long-time co-packing partner. The transaction was completed on November 1st.
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The acquisition will strengthen supply chain management, enable faster innovation cycles and expand production flexibility.
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The deal comes amid a slowdown across the energy drinks industry as consumers cut back on spending and fewer visits to convenience stores, a popular channel for purchasing beverages.
Dive Insight:
Although the energy drink industry currently faces challenges, Celsius is laying the foundations for a more promising future.
The transaction provides Celsius with 170,000 square feet of state-of-the-art manufacturing and warehousing facilities, providing greater flexibility for the business.
Celsius can expand its locations as your business grows and requires additional capacity. Production can be changed more easily depending on consumer demand for a particular product, or if Celsius wants to launch a limited-time product. Unique flavors have proven to be the key to attracting and retaining consumers, especially young people, in a hyper-competitive field led by Monster and Red Bull.
Celsius also pointed out that having more control over the supply chain provides an opportunity to improve margins and profitability.
“This acquisition gives Celsius tremendous leverage to accelerate our product innovation and manufacturing capabilities, and will continue to lead the company in the energy drink category with great-tasting, functional and good-for-you performance energy drinks. We believe we can continue to grow,” said John Fieldley, CEO of Celsius. said in a statement.
Charlotte-based Big Beverages has been a Celsius co-packer for many years, and the facility will continue to focus primarily on manufacturing Celsius products. Big Beverage’s management and employees will remain in operation.
Celsius is scheduled to announce its third quarter financial results on November 6th. Celsius should prepare for future growth in the $19 billion energy drinks sector, even as it struggles with headwinds affecting the wider economy. Mintel estimates that energy drinks are doing well. $30 billion business in next 5 years. Once relegated to the gym, nearly half of consumers drink energy drinks multiple times a week, the research firm noted.
Celsius has experienced significant growth in recent years as consumer interest in better-for-you, functional products accelerates, a trend that has intensified during the pandemic. Celsius fits neatly into these categories as a sugar- and calorie-free drink, but it’s packed with ingredients that claim to deliver training and energy benefits without the crash. Revenue for 2020 was $131 million, compared to $1.3 billion last year.
