Steve Haley, chief executive officer of Delray Beach, Fla.-based Celsius, is no stranger to understanding consumers’ desire for beverages. For 20 years, Haley helped distributors and manufacturers predict where their industries were going. So it’s only natural that Haley would put his own company on the leading edge of a new beverage trend.
For 17 years, Haley worked in technology, primarily for a software company called Pivot Point. He eventually became the chief executive officer and helped distributors and manufacturers run their businesses and distribute their products. When Haley sold Pivot Point, he decided to retire, and got into the beverage business merely as an investor. But as he learned more about the business, he realized that an investor was not exactly what he wanted to do for the industry.
“As I got to know the beverage industry â€”both at the ground level, literally with the trucks and the guys and the routes and the warehouses, and getting into the stores and [seeing] customers buying them â€” I saw one of the things I had learned many years before,” Haley says. “The company that owns the category wins. So instead of creating the 100th energy drink or the eighth vitamin water, let’s create new categories.”
Celsius Holdings Inc., initially founded as Elite FX, began in 2004 with that vision of creating new beverage categories. The first offering, Celsius, is a soft drink formulated to burn calories. The word Celsius is internationally known as the way to measure temperature. The Celsius product is thermogenic, Haley says, and he wanted a name that would connotate burning heat or energy. The product is off and running, and later this year Celsius will create another category, although Haley won’t reveal the plans yet. The company’s goal is to create a new category every year.
Consumers' wants matter most
Haley credits Celsius’ success to being on trend with what consumers want. Obesity and diabetes are global issues, and Celsius can help address those issues, Haley says.
“Just think to yourself, as a consumer, that if you have a good-tasting drink that not only has low calories and none of the bad stuff, but also burns calories, would you want to try it?” Haley asks. “And so people do.”
According to the company, a clinical study conducted at the University of Oklahoma in January 2007 found that one bottle of Celsius raises resting metabolism an average of 12 percent over three hours in males and females. The results were presented at the International Society of Sport Nutrition Conference in June 2007. A second part of the study also was conducted in June, which had participants drink Celsius once a day for a month.
Haley says he wants his consumers to enjoy a drink that tastes like a normal soft drink, without sugar or calories. Consumers should be able to drink what they want to drink without having to make a lifestyle change, he says. The metabolism-burning beverage contains green tea extract, caffeine, guarana seed extract, ginger root extract, taurine and glucoronolactone. The beverage comes in five flavors: Lemon Lime, Ginger Ale, Cola, Orange and Wild Berry. Haley says that a new flavor is in the works, but it will not likely be added until after the summer.
The company is currently focused on adding distributors, and gaining access to more retail channels.
“If you were just an energy drink, you may for example, just be in convenience, drug and grocery [stores],” Haley says. “We’re also in nutrition stores, gyms, health clubs, spas … Celsius does well in all of those channels.”
The company changed the packaging of Celsius recently to appeal to even more sales outlets. Celsius was launched in 2005 in fully wrapped glass bottles. The glass bottles are a more expensive, premium package, and Haley says he spent the extra money to ensure Celsius was categorized as a unique calorie-burning beverage â€” not an energy drink. After being in the market for a while, he wanted to expand the packaging options in order to sell in different venues, including international.
In May 2007, a 12-ounce aluminum can was added to the Celsius packaging line. The cans opened up more opportunities for Celsius, Haley says.
“Some of the accounts wouldn’t accept glass, like gyms, like golf courses … glass is not allowed on beaches,” Haley says. “Cans broaden the type of accounts we can be in. I think we’ll end up having both of those for the foreseeable future.”
The main target consumer of Celsius is women because, according to Haley, women get the message of what raising the metabolism means faster than other consumers. People shopping at vitamin shops and health food stores are the bulls-eye targets because they are aware of the benefits, he says.
“If you see our ads that we’re doing in publications all over the country, they would be a little more geared towards the weight-loss, calorie-burning, raising-metabolism world,” Haley says.
Celsius has direct store delivery distributors in 24 states and some self-retailers, such as Vitamin Shoppe and Kroger, which distribute to another 15 states. Haley’s hope is by the end of the year to have all states in the distribution network.
“We’re pretty strong in the Midwest, especially Ohio and Michigan,” Haley says. “We’re strong on the West Coast. We are, in pockets, strong in New England, but not throughout New England. And of course we’re strong where we started off â€” down here in Florida.”
So does Celsius compete with any other drinks? Haley says Coca-Cola’s Enviga is the biggest competition based on the fact that Enviga says it is a calorie-burner on the can. Haley adds that the products have different flavor profiles â€” Enviga is more of a tea whereas Celsius takes on soft drink characteristics.
Regardless of the competition, the future and growth of Celsius focuses on three points, Haley says.
“It will be growing the DSD distribution network, getting in deeper in some of these channels and international growth,” he says. “As a company, broader than just a Celsius category or calorie-burning category, we will be seeing some growth from our next brand as well.”