MGB 512-516-519

Integrated Project: Celsius

Path 1 and Team 3

Julia Hiiri, Chongge Lu, Taino Naiboa, Oliver Pan,

Table of Content
Abstract 2

Introduction 3

Company Description 3

The Firm’s Global Marketing Strategy

Industry Context and Brand Identity 5

Mexican Market and the Entering Plan 5

Marketing Strategies (4Ps) 6

International Expansion and ESG 8

The Firm’s Supply/ Value Chain Management

Overview of the Company’s Value Chain 9

Sustainable Strategy in the Supply Chain 10

Developing a Specific Solution 12

What Does Literature Say About the Findings?13

Financial Management

International Financial Management 14

Sustainability and ESG: 16

Discussion and Lesson learned 18

Conclusion 19

Reference 21

Appendices 24

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ABSTRACT

This paper provides a comprehensive analysis of Celsius Holdings Inc., a leading energy drink
company, focusing on its marketing strategies, supply chain management, financial health, and
potential expansion into the Mexican market. The purpose of the study is to assess the company's
current strategies and propose recommendations for future growth, with a particular emphasis on
environmental, social, and governance (ESG) factors. The study employs a literature review,
combining qualitative analysis of company reports, industry data, and academic analysis. This
considers Celsius' business model, market positioning, supply chain dynamics, and financial
performance relative to competitors. Major findings reveal that Celsius' unique positioning as a
hybrid of energy and health drinks, focusing on natural ingredients and minimal sugar, has been
key to its success. The company's rapid growth, especially in the U.S. market, is attributed to its
innovative marketing strategies, a strong partnership with PepsiCo for distribution, and a
commitment to sustainable practices. However, challenges in financial stability, such as
fluctuating debt ratios and negative Return on Equity (ROE), highlight areas needing strategic
focus. The study concludes that while Celsius has successfully established itself in the
competitive energy drink market with its health-centric branding and strategic partnerships, there
are significant opportunities for improvement in financial management, global expansion
strategies, and sustainability practices.

Keywords: Celsius, energy drinks, soft drink industry, supply chains, marketing,
financials, sustainability, market expansion

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 INTRODUCTION

Celsius Holdings, Inc., commonly referred to as CELSIUS, is a non-alcoholic fitness

energy drink enterprise, established in the United States and publicly traded under the NASDAQ
symbol CELH. Operating within the United States, Celsius has witnessed substantial growth in
recent years, overcoming initial challenges encountered at the outset of its corporate journey.
This paper aims to provide a comprehensive analysis of Celsius, delving into its marketing
strategies, supply chain management, financial management, and potential expansion into the
Mexican market. Furthermore, the role of Environmental, Social, and Governance (ESG) factors
in the operational framework of Celsius will be critically examined.

The first chapter of this paper serves as an introduction to the company, outlining its
genesis and evolution. In the second chapter, we conduct an in-depth analysis of Celsius' current
marketing strategies and explore the feasibility and potential methodologies for expanding into
the Mexican market. The third chapter is dedicated to an examination of the company's supply
chain management, with a specific focus on the integration of sustainability practices within this
domain. Additionally, this chapter scrutinizes the impact of ESG considerations on the financial
health of Celsius, evaluating how these factors influence the company's financial positioning.
The concluding chapter synthesizes the key findings, shedding light on the factors contributing to
the success story of Celsius and offering insights into future prospects and strategic directions.

COMPANY DESCRIPTION

Celsius Holdings, Inc. is rapidly emerging as a prominent name in the energy drink sector
within the United States, marking its ascent towards becoming a household brand. This
expansion is not confined to the U.S. alone; the company has successfully extended its reach to
both Asian and European markets. The remarkable surge in the U.S. market warrants a thorough
investigation, as it is primarily driven by Celsius’ innovative global strategy, distinctive
marketing endeavors, strategic supply chain management, and astute financial administration.

Positioning itself as a health-centric alternative in the energy drink landscape, Celsius

endeavors to enhance athletic performance. The company's mission is to cater to health-

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conscious and active individuals by providing an energy source that empowers them to surmount
various challenges. In their ethos, the commitment to using only premium ingredients underlines
their dedication to enabling consumers to perform at their peak.

In recent years, Celsius has experienced exponential growth, ascending to become the
third top-selling energy drink in the United States (Beverage-Digest, 2023). This rapid expansion
has been reflected in their consistently improving financial performance. Notably, in the fiercely
competitive U.S. market, they are progressively encroaching on the market shares of established
giants such as Red Bull and Monster. The financial upswing has facilitated the diversification of
their product range, introducing innovations like protein bars in Nordic countries and assorted
drink packs. A critical development in their growth trajectory was the forging of a substantial
distribution agreement with PepsiCo. This $550 million investment significantly bolstered
Celsius’ position, granting access to PepsiCo’s extensive distribution network (Celsius, 2022).

PepsiCo has emerged as an integral distribution ally for Celsius, aiding in the placement
of their products in major retail outlets. In the United States, these include large supermarket
chains like Walmart and Target, while in the Nordic region, they are present in stores such as
Spar, ICA, and K-kauppa. Additionally, in Asia, their presence is marked in Park’n’Shop and
Watsons. Despite a setback in 2013 with the withdrawal of their products from Costco, their
primary distribution channel, Celsius demonstrated resilience by reinventing their product line
and rebuilding their operations.

This impressive trajectory suggests that Celsius is well-positioned to pursue more

aggressive expansion into international markets. However, the company has faced its share of
controversies, particularly regarding the health benefits of its products and allegations of false
claims about the absence of preservatives. In response, Celsius has addressed these challenges by
settling the related lawsuit and enhancing the transparency of their health claims, reaffirming
their commitment to consumer trust and product integrity.

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 THE FIRM’S GLOBAL MARKETING STRATEGY

Industry Context and Brand Identity

Globally, the energy drinks market is highly competitive and diverse, as it is segmented
based on different consumer preferences and health trends. Targeting this industry is
characterized by high consumer demand, especially among young people, and a strong emphasis
on marketing and brand differentiation (Glanbia Nutritionals, 2023). Celsius is uniquely
positioned at the intersection of energy drinks and health drinks. It focuses on natural ingredients
and energy-boosting properties without the excess sugar and artificial ingredients common in
other brands (PureWow, 2021). Celsius stands out with its positioning as a healthier, fitness-
oriented alternative to traditional energy drinks (McLaughlin, 2023). This positioning responds
to growing consumer demand for healthier, functional beverages in recent years.

Celsius' brand identity is centered on health, energy, and an active lifestyle (Celsius,
n.d.), which is an apparent deviation from the typical high sugar and high caffeine content of
traditional energy drinks (Harvard T.H. CHAN, n.d.). Unlike Red Bull and others, which focus
more on extreme sports and high-energy lifestyles, Celsius has built a brand architecture with a
unique value proposition to appeal to fitness enthusiasts or consumers looking for healthier
beverage options. Such a brand image would resonate well in an increasingly health-conscious
region (Beeson, 2023).

Mexican Market and the Entering Plan

The Mexican market is a good choice for Celsius' global expansion plans. There are
several considerations for this strategy. First, Mexico’s middle class is growing. Judging from
the data, the middle-class accounts for 47% of the total population of Mexico and is steadily
increasing. The Mexican economy is forecast to grow to be the fifth largest in the world, and this
growth will increase the income levels and purchasing power of middle-class consumers
(Mcdonald, 2022). Secondly, the country is becoming more health-conscious (Chauvin, 2023).
These provide an attractive market for Celsius. Consumption of energy drinks in the country is
on an upward trend, with demand for such drinks forecast to grow by approximately 5% annually
(Statista Market Insights, 2023). This shows that the market is highly receptive to new entrants,

5
and its prospects are promising. Moreover, USMCA enhances the attractiveness of the Mexican
market. This agreement will help American companies like Celsius grow in Mexico by
streamlining trade logistics, reducing tariffs, and more (Reiff, 2021). The export entry model is a
good fit for Celsius for specific plans to enter the Mexican market. Supported by a distribution
agreement with PepsiCo, Celsius' export model can leverage PepsiCo's local solid distribution
network within Mexico (Lucas, 2022). Additionally, Celsius could form partnerships with local
gyms to conduct product trials. This can gain valuable market insights early in development and
reinforce the brand’s fitness-focused image. Furthermore, this can also be used as market
research to help brands make timely strategic adjustments.

Celsius' main competitors in Mexico include Red Bull, Monster, and Quala. For example,
as early as 2017, Red Bull's market share reached 35%, leading the energy drink market in
Mexico (Villa, 2023). As of June 2023, Monster's sales increased by 25.3%, and its market share
increased by 0.4 percentage points compared to last year, reaching 28.8% (Insider Monkey,
2023). The influence of these traditional brands in Mexico is a big challenge for Celsius to enter
the market. However, given that the healthy energy drink space is still an emerging market,
Celsius should seize the first-mover advantage and carve out its market share as quickly as
possible by emphasizing its unique health-centric value proposition to differentiate itself from its
competitors.

Marketing Strategies (4Ps)

In terms of products, Celsius should maintain its health-focused product features. At the
same time, it can be seen from the energy drink trends in 2023 that both Red Bull and Monster
are trying new flavors, with watermelon and mango becoming the preferred flavors for new
product development (Glanbia Nutritionals, 2023). Based on flavor trends, Celsius should also
innovate more flavors. The company can invest more in research on new flavors or recipes for
the local market in Mexico. Brands can seize consumers' desire to try new things through product
innovation, rejuvenate their brand image, and more easily reach target user groups to increase
sales.

In terms of price, Celsius should consider competitive pricing to penetrate the price-
sensitive segments of the Mexican market while maintaining its premium and unique brand

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image (International Trade Administration, 2023). Considering Mexico’s diverse economic
sectors, while pricing competitively, a tiered pricing strategy can also better help brands (Bajpai,
2023). On this basis, the company can maintain high-end appeal while attracting a wider
audience. Traditional brands such as Red Bull and Monster already have a strong influence in the
Mexican market, but Celsius should not lower its pricing to compete with them, thereby losing
its brand uniqueness and value. This will cause customers and consumers to receive the feeling
that the product is cheap, which is conveyed by the brand through pricing and is not conducive to
the long-term development of the brand.

In terms of place, PepsiCo's extensive distribution network can help Celsius start a
business in new regions (Lucas, 2022). Not only that, PepsiCo's solid online presence ensures
product accessibility. Specifically, when entering the Mexican market, Celsius should leverage
its partnership with PepsiCo to rapidly expand its retail presence and explore online channels to
meet Mexico's growing e-commerce market (International Trade Administration, 2023). In this
process, identifying the brand’s key customers is indispensable. For Celsius, B2B customers are
the most critical because brands need to distribute products to the end of the supply chain
through these customers. Establishing efficient distribution logistics is essential to establishing a
market presence in Mexico. Then, targeting B2B customers like distributors Grupo GEPP and
Bepensa, as well as retailers OXXO and Walmart (PepsiCo's distribution network in Mexico),
Celsius should focus on building solid relationships through supply chain coordination and
marketing support. This includes collaborating on retailer promotions, in-store marketing efforts,
and ensuring a continued supply of merchandise to distributors to meet demand.

In terms of promotion, Celsius can highlight its unique selling propositions, such as
natural ingredients and health benefits. Furthermore, brands can use digital marketing to reach a
younger, health-conscious crowd, especially on popular social media platforms in Mexico. In
addition, Celsius can further spread the brand's uniqueness to the public by holding targeted
promotions at local events and fitness centers, such as having Fitness Expos and local Health
Fairs or doing fitness skill-sharing sessions at Smart Fit, one of the most popular gyms in
Mexico. Such health and wellness events can create buzz for the brand and increase brand
awareness.

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International Expansion and ESG

The beverage industry is facing increasing pressure to adapt to environmental, social, and
governance (ESG) considerations. Celsius has considered several ESG initiatives in the
production of their products.

Celsius has adapted the ways they operate to fit the standards of their location, such as
having a more extensive recycling program in the Nordic countries, and the usage of rail
transportation in places where it’s possible (Celsius Holdings Inc., 2021). If Celsius were to
expand to Mexico, they can consider the unique aspects of the country to adapt to the new
markets. As mentioned before, Mexico is an emerging market with many opportunities. As many
developed countries are having a health and fitness boom that Celsius is riding on, this can be
seen emerging in Mexico as well.

It is important to understand the local cultures and norms to adapt to the new market. If
Celsius were to expand to Mexico, they can continue operating global strategies, as there is large
demand for energy drinks in Mexico already. It would be beneficial to localize only specific
aspects, such as finding local brand ambassadors and partners. Celsius should continue
transparent reporting and following ESG regulations even if the new market does not require it.
Aspects such as carbon footprint reduction targets, ethical labor practices, and corporate
governance standards are often globally integrated and uniform across all markets. This would
enhance the community engagement in a positive way, building strong brand reputation and
loyalty.

Celsius should not only respond to ESG pressures but also use them as a lever for
innovation, market differentiation, and competitive advantage. The balance between global
standardization and local adaptation is pivotal in their international strategy.

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 THE FIRM’S SUPPLY/VALUE CHAIN MANAGEMENT

Overview of the Company’s Value Chain

Celsius Holdings Inc. is a leading company in the functional energy drink and liquid
supplement markets, catering to a wide range of consumers (including athletes) with cutting-
edge, research-backed products. The basic materials for Celsius's functional energy beverages
and supplements are obtained from co-packers. These co-packers are the ones who put the secret
brand formulas inside the bottles and cans (MarketScreener, 2023) so that you can buy them.
Most of the ingredients used in Celsius products come from U.S.-based vendors, and for some
ingredients, there are even many dependable options. This redundancy helps prevent supply
chain failures.This proximity of production to Mexico makes exporting products to Mexico
feasible. Third-party co-packers assemble Celsius's products and charge the company a case-by-
case fee for the privilege. Celsius products usually have a shelf life of 15-18 months. The
company's supply chain is depicted in the diagram below.

Figure 1. Sketch of supply chain

Celsius's sustainable supply chain is based on a few fundamental tenets. The first step the
company takes to lessen its environmental impact is to get its materials from within the country.
Sustainability and health-conscious consumer movements support using all-natural products,
including green tea, ginger, and vitamins. Celsius also uses a variety of packaging material
suppliers to maintain product availability during widespread market fluctuations, such as the
current can shortage. The company's distribution collaboration with PepsiCo also has the
potential to increase the network's efficiency and longevity. According to CSIMarkert (2023),
Celsius places a premium on responsible sourcing, a wide variety of ingredient suppliers, and the

9
flexibility to quickly adjust to changing circumstances in its supply chain. These moves are not
just good for business but also reflect a broader market trend toward sustainability and health
consciousness. Except for the very stylish aluminum cans, all the packaging materials the
company uses are produced domestically so that they can acquire them from various other
companies. The 12-ounce can is currently produced in only one plant in the United States. If
production were halted at that source, the corporation would have to rethink the can's shape and
design.

Figure 2 shows that Celsius Holdings Inc.'s cost of sales declined by 0% year on year and
increased by 14.21% sequentially in Q2 (CSIMarkert, 2023), while the company's suppliers'
realized sales fell by -13.32% and grew by 1.53%, respectively.

Figure 2. Overview of the revenue performance in 2023

Sustainable Strategy in the Supply Chain

For an energy drink company like Celsius, the supply chain plays a crucial role in
supporting and realizing sustainable strategies (Wang, 2013). Pinna et al (2028) proposes four
categories of Key Performance Indicators that would drive sustainability in soft drink supply
chains. The main categories are 1) general aspects, that includes safety and customer satisfaction,
2) materials and packaging, 3) water and energy and 4) emissions. Demartini et al (2018) argues
that water and packaging are the two main critical factors in soft drink supply chains, but we will
look at all suggested KPIs.

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 The first aspect emphasizes the importance of a safe and secure working place at all
points of the value chain. The industry has to be safe, and any accidents or health and safety
incidents need to be minimized (‌Belyaeva et al, 2020). Celsius can audit their suppliers to ensure
that they adhere to ethical labor practices, including fair wages, safe working conditions, and no
child or forced labor.

Celsius can minimize their carbon footprint in their packaging methods, by opting for
more sustainable packaging, such as aluminum and also ensuring the efficient use of the
materials to reduce the waste. In Norway, Sweden and Finland, there are national can recycling
programmes, which ensure that the materials of the cans are recycled or reused after their
lifetime usage. Introducing this kind of programme in more countries would improve the circular
economy.

The life of the product starts from the ingredients. For any drinks company, water is often
the main ingredient. As an increasingly scarce resource, it is important that the water is derived
from clean, sustainable sources. The other ingredients, such as guarana and taurine, should be
sourced from sustainable farms that respect labor laws and fair-trade practices. Celsius has taken
actionable steps to reduce their carbon footprint in their distribution and supply chains, such as
shipping larger shipments at once and reducing shipment travel distance. The company also
adjusts its sustainable practices by region, like using rail transport in the Nordics.

Celsius places a premium on ethically sourcing its raw materials, most of which come
from the United States. The dedication to domestic sourcing is consistent with sustainability
objectives, as it lessens the environmental impact of transportation. This method not only helps
local economies but also makes supply chains more resilient by decreasing reliance on foreign
suppliers. By using a wide variety of ingredients, Celsius can improve the sustainability of its
supply chain (MarketScreener, 2023). The likelihood of shortages is mitigated by the company's
use of various components, such as green tea, ginger, and vitamins. This diversification is
consistent with sustainability since it increases supply chain resilience by making backup sources
available in case of shortages or disruptions.

The supply chain's thought process on packaging materials' impact on sustainability is

significant. By securing packaging materials from a variety of suppliers, Celsius guarantees

11
uninterrupted production. The current shortage is just one example of the company's sustainable
supply chain (MarketScreener, 2023) and its capacity to adjust to industry-wide constraints. It
shows that Celsius will continue to serve its customers through thick and thin. Celsius's supply
chain sustainability has taken a giant leap forward with the help of PepsiCo's distribution
network. Leveraging PepsiCo's broad distribution network helps improve the effectiveness of the
distribution process. By cooperating with a significant participant in the beverage business,
Celsius lowers redundancy, cuts down on emissions related to transportation, and optimizes
delivery routes. It not only helps the planet in the long run, but it also boosts sales and makes
happy customers.

Developing a Specific Solution

Celsius Holdings Inc.'s commitment to a sustainable supply chain includes measures to

increase component diversity. Celsius reaps several advantages from the diversity of components
it employs in its products. These include green tea, ginger, and vitamins.

Benefits

Supply Chain Resilience: Ingredient diversification decreases the risk of supply-chain

disruptions. The corporation may easily switch to backup suppliers in the event of shortages,
guaranteeing a consistent supply of its best-selling beverages.

Sustainability: The reduction of dependence on a single supplier or geographical area is

one way in which ingredient diversification contributes to environmental sustainability. Reduced
environmental effects from long-distance transportation is one way this strategy contributes to
sustainability goals.

Challenges

Quality Control: It might be difficult to ensure quality control when managing multiple
suppliers of different types of ingredients. It is vital that all ingredients be up to par with the
company's standards.

Cost Considerations: Sourcing from many vendors may lead to more extraordinary
procurement expenses. Celsius must weigh the possible financial benefits of diversity against the
risks involved.

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What Does Literature Say About the Findings?

The sustainable supply chain procedures used by Celsius Holdings Inc. have been praised
in the academic literature as an example that may be applied to businesses of a comparable size
and in other industries. Celsius' strategy of acquiring raw materials domestically and diversifying
ingredients aligns with the research conducted by Cole, Pethan, and Evans (2023), highlighting
the importance of ethical purchasing and supply chain resilience. By doing so, the organization
mitigates risks related to supply disruptions, a technique that may be extended across industries
to boost the overall sustainability of the supply chain. Collaborative distribution strategies in the
beverage sector are discussed by Björklund et al. (2018), and their findings are reflected in the
case of PepsiCo's relationship with Celsius to optimize distribution. Such cooperation not only
improves distribution operations but also can cut emissions related to transportation, a practice
that holds importance for numerous sectors trying to lessen their carbon footprint. Celsius's
collaboration with PepsiCo is an example of how companies in different industries can benefit
from collaborative distribution and could serve as a model for long-term viability in distribution.
For its potential expansion into Mexico, Celsius must continue their sustainable path.

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 FINANCIAL MANAGEMENT

International Financial Management

Table 1. Celsius Financial Ratio

When conducting financial analysis, it is not only Celsius that is analyzed but also
Monster Energy and the European division of Coca-Cola. These two companies are selected for
comparison because Celsius aims to enter the market as an energy drink brand, hence the choice
of two companies with similar products that are already listed on the stock market. Since Celsius
started much later, some data is only available from 2014 onwards. The following data analysis
will explore the company's solvency, debt ratio, market capability, and other aspects. All the data
was collected from Eikon, Yahoo finance and macro-trends.

Debt Ratio:

Compared to Monster Energy and Coca-Cola (Euro), Celsius has shown a more volatile
debt ratio, indicating inconsistent leverage and financial risk management. While Monster
Energy demonstrated a decreasing trend, suggesting a move towards less reliance on debt, and
Coca-Cola exhibited a high but decreasing ratio, Celsius's figures fluctuated significantly,
peaking in 2018. This could imply a less stable financial structure in Celsius's operations relative
to the other two companies.

14
 Figures 3&4. Debt Ratio and ROA

ROE (Return on Equity):

Compared to the other two companies, Celsius has shown a concerning pattern in ROE,
with negative values indicating potential issues in generating profit from shareholders' equity.
While Monster Energy and Coca-Cola maintained a positive ROE, reflecting their ability to
profitably utilize equity, Celsius's drastic drop in 2021 suggests significant internal or market
challenges impacting shareholder value.

ROA (Return on Assets):

Compared to Monster Energy and Coca-Cola, Celsius has shown inefficiency in asset
utilization, with negative ROA figures for several years. This contrasts with the positive returns
of the other two companies, especially Monster Energy, which indicates a more effective use of
assets in generating earnings.

Figures 5&6. ROE and Profit Margin

Profit Margin (PM):

Compared to Monster Energy and Coca-Cola, Celsius has shown a weaker profit margin,
often dipping into the negative, which highlights challenges in covering operational costs
through sales. In contrast, Monster Energy's increasing profit margin suggests effective cost
control and Coca-Cola's stability indicates consistent operational performance.

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 Currency Ratio:

Compared to Monster Energy and Coca-Cola, Celsius's currency ratio has been more
erratic, suggesting fluctuations in its cash flow stability or currency exchange impacts. Both
Monster Energy and Coca-Cola have shown more stable currency ratios, with Monster Energy,
in particular, indicating an upward trend and potentially stronger liquidity.

Figures 7&8. Current Ratio and EPS

Earnings Per Share (EPS):

Compared to Monster Energy and Coca-Cola, Celsius has shown a troubling trend in
EPS, with persistent negative values and a significant drop in 2022. This is in stark contrast to
the positive EPS of the other two companies, which indicates that they have been consistently
generating profits, a sign of financial health that Celsius has not demonstrated.

Sustainability and ESG:

Celsius has published an ESG report in 2021, where they discuss the environmental,
social and governance aspects. Celsius takes pride in their attempts of sustainable production and
supply chain, as laid out in the previous chapter.

The soft drink industry has quite likely a relatively high climate risk. Climate change
would increase resource scarcity, especially with water. Extreme weather events can also lead to
resource scarcity, and disrupt supply chains, leading to shortages in materials. As the regulatory
demands are increasing due to the need to control climate change, there might be more

16
regulations imposed in the food and beverage industry. It might be expensive to comply with
new standards.

Based on Celsius’ ESG report, the company is thriving while increasing their active steps
in ESG aspects. Their actions in sustainable production are also more cost effective, with
maximizing transport and space efficiency.

Celsius is really focused on the social aspect of their product. Celsius is serious about the
health benefits of the product, such as boosting metabolism and burning fat. Their product aligns
with a healthy lifestyle that battles the obesity epidemic. There are several clinical tests made to
support their health claims, and Celsius has even been discussed as a weight loss product (Diaz,
2023). This can be seen as the aspect of how Celsius can differentiate from its competitors and
drive a competitive edge. There are increasing trends in consumer behavior changes to favor
healthy products, and sustainable products. If Celsius positions their brand strongly in both of
these categories, they are most likely able to gain a good amount of market share in comparison
to the competitors that are failing to do both.

For their own interest, Celsius could start or enter programmes that show that they care
about the climate risk. This would not only polish their reputation in the eyes of consumers, but
also, they would do their part to mitigate climate change, decreasing the climate risk. Such
programmes could include water stewardship programmes, that ensure the sustainable use of
water in their productions, and ensure enough clean water in their local areas, and collaborating
with other companies along the supply chain to find sustainable solutions.

The United Nations Sustainable Development Goals are a collection of 17 global goals
designed to be the guidelines to achieve a better and more sustainable future for all by 2030
(United Nations, 2023). Celsius could concentrate on these guidelines in their operations to
ensure sustainable business strategy.

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 DISCUSSION AND LESSONS LEARNED

In the comprehensive study of Celsius Holdings, Inc., several key findings and pertinent
lessons have emerged, offering a nuanced understanding of the company's business practices and
market strategy. Firstly, the company's strategic positioning as a hybrid of energy and health
drinks, emphasizing natural ingredients and eschewing excessive sugar and artificial
components, has been instrumental in aligning with the burgeoning consumer demand for
healthier beverage options. This unique market positioning distinguishes Celsius in a crowded
sector.

The potential expansion of Celsius into the Mexican market is underscored by factors
such as the nation's expanding middle class, heightened health awareness, and favorable
economic policies, particularly the United States-Mexico-Canada Agreement (USMCA). The
company's strategy to penetrate this market, leveraging the extensive distribution network of
PepsiCo and adopting a localized approach to branding and partnerships, is both pragmatic and
well-conceived.

In terms of supply chain management, Celsius has demonstrated a commitment to

sustainable practices, including domestic sourcing and environmentally conscious packaging
solutions. The partnership with PepsiCo is a critical component, enhancing both the efficiency
and sustainability of Celsius' distribution network.

Financially, Celsius exhibits a complex portrait marked by fluctuating debt ratios and a
negative Return on Equity (ROE). These financial indicators necessitate vigilant management
and strategic planning to ensure ongoing fiscal health and market competitiveness.

The incorporation of Environmental, Social, and Governance (ESG) considerations into

Celsius' operational framework is a significant stride forward. The company has adeptly
navigated regional ESG standards, upholding transparency in reporting and adhering to ethical
labor practices, thereby reducing its carbon footprint.

However, Celsius has not been impervious to controversy, particularly concerning the
health claims of its products. The company's response, involving the settlement of lawsuits and

18
bolstering of transparency measures, is pivotal in maintaining consumer trust and safeguarding
the integrity of the brand.

Based on these findings, several recommendations are proposed to enhance Celsius'

business practices. Firstly, there is a need for Celsius to fortify its financial stability, possibly
through revenue stream diversification, cost optimization, and exploration of strategic
partnerships or investments. Further, an intensification of global marketing initiatives, tailored to
local consumer preferences and cultural nuances, particularly through digital platforms, is
advisable.

The expansion of sustainable practices is another area of opportunity, including the

advancement of recycling programs and investment in renewable energy sources for
manufacturing processes. Continued investment in research and development to innovate product
lines and adapt to regional tastes, especially in emerging markets like Mexico, is also
recommended.

Additionally, implementing a robust risk management framework to proactively address

supply chain vulnerabilities, regulatory compliance, and market fluctuations is critical. Finally, a
deeper commitment to ESG principles, aligning with global sustainability objectives such as the
United Nations Sustainable Development Goals, and active participation in climate risk
mitigation initiatives would further strengthen Celsius' market position and brand reputation.

In conclusion, while Celsius has effectively carved a niche in the competitive energy
drink market with its health-centric brand identity and strategic partnerships, opportunities for
improvement in financial management, global expansion strategies, and an enhanced focus on
sustainability and ESG practices are evident.

CONCLUSION

The study's conclusions are heavily reliant on the available data. Limited access to
internal company data, such as detailed financial records or proprietary strategic plans, may
restrict the depth and accuracy of the analysis.

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 In conclusion, this study on Celsius Holdings Inc. provides a multifaceted view of the
company's strategies, challenges, and opportunities in the dynamic energy drink market.
Celsius's strategic positioning as a hybrid of energy and health drinks has been pivotal in its
success, resonating with the growing consumer demand for healthier beverage options. The
company's expansion into the Mexican market is poised for success, given the favorable
economic conditions and PepsiCo's robust distribution network. However, Celsius faces
challenges in financial stability, marked by fluctuating debt ratios and a negative Return on
Equity (ROE), which necessitate careful management and strategic oversight.

The company's commitment to sustainable supply chain practices and adherence to

Environmental, Social, and Governance (ESG) standards is commendable and positions Celsius
favorably in an increasingly eco-conscious market. However, controversies around health claims
highlight the need for greater transparency and integrity in marketing and product development.

Recommendations for Celsius include diversifying revenue streams, optimizing costs,

enhancing global marketing efforts, expanding sustainable practices, and investing in research
and development to innovate and adapt to regional preferences. Implementing a robust risk
management framework and deepening commitment to ESG principles are also crucial for long-
term success.

Ultimately, while Celsius has successfully established itself in the competitive energy
drink market with its unique health-centric branding and strategic partnerships, there is
significant potential for improvement in financial management, global expansion strategies, and
sustainability practices. This analysis not only sheds light on Celsius's journey but also offers
valuable insights for similar companies navigating the complexities of the global beverage
industry.

20
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APPENDICES

Appendix 1: Sketch of the supply chain

Appendix 2: Overview of the revenue performance in 2023

Appendix 3: Celsius Financial Ratio

25
Appendix 4&5: Current Ratio and EPS

Appendix 6&7: ROE and Profit Margin

Appendix 8&9: Debt Ratio and ROA

26