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Celsius Holdings Inc

CELH: XNAS (USA)
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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation
$32.00XthqTgjjtdq

Celsius Set to Seize Near-Term Energy Drink Demand, Despite Lacking a Competitive Edge

Business Strategy and Outlook

Celsius has amassed impressive volume share gains in the North American functional and reduced sugar energy drink category in recent years and is poised to surpass over $1 billion in sales in 2023 from just $75 million in 2019. Propelling the momentum, we surmise Celsius’ better-for-you product portfolio and active-lifestyle branding strategically caters to consumers' penchant for healthier alternatives, while a 2022 distribution agreement with wide-moat PepsiCo has bolstered its channel reach and ability to secure shelf space. That said, we remain skeptical that Celsius benefits from any durable competitive advantage based on brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.

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