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  • Writer's pictureRealFacts Editorial Team

The Untold Performance of Sugar Water Stocks

Soda can tops

In 1988 Warren Buffet bought 23 million shares of The Coca-Cola Company worth 2.73 a share. Those shares along with about 400 million shares that Berkshire Hathaway currently owns are worth more than 23 billion and 9.2% of the Coca-Cola brand. The stock has increased by 4,979.01% since its IPO, making it one of the best investments of the past 50 years. Coca-Cola now has a market cap of just over 250 billion, has a strong dividend, and is classified as a well-established mature blue chip company, selling over 200 brands in over 200 counties. There were several reasons why Warren Buffet bought interest in the company including: a strong brand recognition, consistent growth through the good and the bad times, and overall building of a large “moat.” Which can be defined as brand recognition, a diverse range of products, and relationship with suppliers and consumers.

Stock analysis of Coca Cola stock

If we didn't think that a 4,979% return was enough Monster Beverage (NASDAQ: MNST) better known as Monster Energy Corp returned 67,212.31% since its IPO in 1985 a year after Coca-Cola. Monster Energy had a little bit of a slower start however it gained momentum through its strategic marketing. Coca-Cola used celebrities and famous individuals to promote their brand and raise awareness. Monster offered a similar approach focusing on extreme sports and action sports, like UFC, Nascar, and Motocross to tailor to their target market of younger blue-collar workers. In Coca-Cola’s time, they had TV ads and magazines with celebrities. With Monster they promote their brand with extreme sport athlete sponsorships, motorcycles, and race cars. You probably can't watch a motocross rally today without seeing a Monster Energy logo.

Experts said that “they (Monster Energy) were very slow and methodical in how they built the distribution of the brand, making sure it was strong in every market that it was in … they built it the right way” Nik Modi. They built it right indeed, Monster energy has grown to trade just under a 57 billion market cap and still growing. They too have built a “moat” with several beverages including energy drinks, teas, coffee, and alcohol. Coca-Cola saw the similarities and offered their help in Monster back in 2015 buying a 16.7% stake in the company that has grown to about a 20% stake along with generous profits since then.

Stock analysis of Monster energy drink stock

As we look at these two giants and compare them to the rest of the S&P 500 in a 30-year period Monster Energy beats the returns of all the stocks listed. It wasn't what many thought, it wasn't Microsoft, Apple, Meta, or even Nvidia. It was a beverage company that had the right strategy to market its product that can perform well in times of good and bad to their generational target market. There is a new generation among us and that generation has taken haste to its drink of choice which is Celsius Holdings (NASDAQ: CELH). Celsius like Coca-Cola and Monster is just another beverage but Celsius has the strategy and can share the potential future that Monster and Coca-Cola have experienced no matter in good and bad times in the market. With everyone's eye on technology this past year the beverage industry averaged a return of -5.3% Celcius returned 148.1% blowing past the pack in 2023. Since its IPO in 2006, it has already returned a 7,128.48% trading just under a 17 billion dollar market cap with room to grow this stock has the potential to be the beverage of its time.

Stock analysis of Celsius energy drink stock

Celsius has strategically positioned itself as a pioneer for healthier beverage alternatives. The cornerstone of Celsius's success lies in its beverage formula, designed not only to fuel physical exertion but also to promote wellness. It has been proven to burn calories and body fat, while being packed with essential vitamins and minerals, with no added sugar or artificial preservatives. This nutritional profile resonates deeply with Generation Z which is increasingly cognizant of the impact of their dietary choices. After COVID-19 America as a whole and especially Generation Z, became even more health conscious, and COVID actually helped them even more, through their strong brand image and marketing.

The energy drink industry as a whole is projected to be worth $240.24 billion by 2027, Celsius stands poised to capture a significant share of this market. With its unwavering commitment to innovation, wellness, and consumer engagement, studies have shown that an estimated 75% of consumers globally said they plan to eat and drink healthier as a result of COVID-19. And according to the 2021 AlixPartners Health and Wellness survey. Consumers are becoming more aware of their lifestyles, and Celius is positioned perfectly to fit these needs.

Revenue graph for energy and sports drinks

The patterns for growth are similar to KO and MNST. In 2022 Celcius struck a deal with Pepsi Co. as their distribution partner. Investing $550 million for a 8.5% stake of convertible stock in Celsius. Pepsi has aided Celcius in 61% of their distributions in 2023 compared to 12% of their distributions in 2022. Leveraging PepsiCo's extensive distribution network, Celsius has expanded its reach exponentially, 95% of sales are in North America however they have big plans with Pepsi now in their corner to take this globally like Monster offering the healthier alternative. Pepsi is showing more interest as Celcius grows year after year, capturing prime shelf space in retail stores, penetrating key markets worldwide, improving cost structure, and streamlining sales and marketing.

Celsius's marketing tactics have solidified its status as a cultural phenomenon among Gen Z. From high-profile endorsements by celebrities like Jake Paul and Shaun White and strategic partnerships with social media influencers and podcasts on platforms like Spotify, TikTok, and Snapchat, Celsius has developed a brand image that resonates with its target demographic. Celsius has partnered with Dunkin Donuts as well, a customer can now benefit from both sides by buying a breakfast item or coffee in the morning and while they are there buy a Celius for lunch or to drink before work. They have recently made a sponsorship deal with the MLS for the 2026 World Cup and are demonstrating they are always one step ahead. A year before Lionel Messi joined Inter Miami in America they became their sponsor. Boosting their brand through soccer in America and to the millions of dedicated soccer fans worldwide watching Messi play.

Celsius has been building its “moat” of products. In addition to its signature energy drinks, Celsius has ventured into protein bars, on-the-go powders, and mocktails to name a few where mentioned by insiders and CEO John Fieldy. This is to cater to the evolving needs of health-conscious consumers, the introduction of new flavors and formats, including slender cans and on-the-go powders, not only enhances consumer choice but also fosters brand loyalty among a discerning consumer base.

Celsius commits to the community. The Celsius University ambassador program graduated 170 students last year in 65 colleges. Students are trained and taught to market to the masses on campus bringing awareness and interaction of the brand to their peers. The "Sweat with Celsius" online classes were introduced during COVID, promoting wellness to their market, which has acted as a catalyst for sales growth and promotes the “live fit” motto.

Celcius has been catapulting its revenue to nearly $1.32 billion in the last 12 months—an ascent that has left industry observers astounded. The company's financial standing is equally impressive, with a GAAP net income of $182 million through 2023. It still holds a 13.8% net profit margin, a little lower than Coca-Cola and Monster due to more marketing and operation costs that will later pay back down the road. It has a high and expensive Price-to-Equity (P/E) ratio of 92.9X but its success and future success is the reason for this. Year to date the stock is up 148% and reached $96.11 a share as its high. Better yet after being unprofitable the last few years they have had a huge turnaround paying off all their debt and reporting positive earnings in 2023.

Revenue graph for Celsius

However, amidst the outstanding performance uncertainties loom. Analysts have assigned a very high uncertainty rating to Celsius, citing the fiercely competitive nature of the energy drink category and the emergence of smaller challengers. Leaders like Monster and Red Bull pose significant threats, leveraging their scale benefits to fuel innovation and competitively priced products. Moreover, With PepsiCo in their corner neither Pepsi nor Celcius will have this die as it proposes a unique opportunity to pair up and beat Coca-Cola for the Gen Z demographic.

In conclusion, Celsius's rise serves as a testament to the power of innovation, strategic partnerships, and consumer excitement in driving success in the competitive beverage industry. As it continues to inspire a generation to live fit and live life to the fullest, Celsius is not just a beverage—it's a lifestyle choice. While uncertainties persist, Celsius's trajectory towards sustainable growth and market dominance remains undeterred, offering investors an opportunity to ride the wave of its success. As Warren Buffett famously remarked, it's indeed “far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

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