Energy Drinks - Looking for a Jolt
'Celsius' faces competition in South Florida
Celsius founders Steve and Janice Haley
Steve and Janice Haley’s company, Celsius, had the start of dreams. The Boca Raton beverage maker won over local investor Carl DeSantis, who built vitamin company Rexall Sundown before selling it for $1.8 billion in 2000. DeSantis backed Celsius, which went on to raise $13 million in a public offering a year ago. The product garnered $10 million in free advertising, Janice Haley estimates, from appearances on the “Today Show,” “The Doctors” and a slew of other television programs. Celsius jumped from being on the shelves in 6,000 stores to 33,000 retail outlets ranging from local gyms to Walmart.
Celsius is just one of several beverage companies launched in the region in recent years. “South Florida is a hotbed of beverage innovation,” says Gerry Khermouch, editor of Suffern, N.Y.-based Beverage Business Insights. With health-conscious (or, at least, image-conscious) consumers aplenty, the area is receptive to new drink products, especially in the “functional” beverage segment composed of nutrition-supplement and energy drinks.
Southeast Florida also has a base of companies that supports new drink makers and health-oriented investors willing to back what they hope could be the next Glaceau, the maker of Vitaminwater, which Coca-Cola bought for $4.2 billion in 2007. Giant beverage companies like the fast growth of functional beverages and their price points. Celsius, for instance, is usually $1.99 for a 12-ounce can.
Cellutions recently launched its Modjo for Life beverage.
Other southeast Florida companies rolling out drink products include Sunrise-based supplements company Cellutions, which last year launched its antioxidant Modjo for Life beverage, the latest in a stable of beverages and products.
Growth doesn’t guarantee profit, however, as Celsius found. To support its wide distribution, the 17-employee company spent big on marketing while discounting cut into revenue. Investors, seeing the cash burn too fast, knocked the stock to less than 42 cents per share from a peak of $4 in April. Steve Haley says the company has cut expenses to a sustainable level. It wants to ally with a partner that has strength in distribution or marketing. And it has introduced shot-sized products and powder sticks. “We know we have a great product in Celsius,” Haley says.