NSRGY Nestle SA (PK)

The Challenges Facing Today's Largest Beverage Companies - Innovation & Sustainable Growth. Where Will It Come From?

History shows that every once in awhile a disruptive technology, product, or service appears on the horizon that has the potential to create a paradigm shift in consumer thinking and behavior. At first, most people dismiss it as a fad; thinking that it can't gain much traction in the marketplace, and that it will never last. Oftentimes, they are correct.

In the case of the food & beverage industry, the landscape is littered with companies that have attempted to offer innovative new products to consumers, but ultimately failed. It goes without saying that the odds of success, in developing, manufacturing and marketing a new beverage brand are not very favorable.

But for those companies that succeed in achieving the improbable, if not impossible, their early investors are often significantly rewarded as word-of-mouth spreads, brand recognition increases, sales momentum builds and investor awareness takes hold.

The only thing you have to do is find the right company, at the right time, with the right product, the right strategic business plan, the right kind of capital structure and funding mechanism, and the right management team to execute on the plan ----- and, most importantly, deliver results.

But does such a company exist today?

In recent years, some of the biggest stock market winners have come from the beverage industry. Just go back and look at the longer term charts of Monster (MNST), Cott (COT), and Jones Soda (JSDA). Each of these companies, at some point in their history, experienced a surge in share price. Investors, with lasting memories of the investment power that underlies a new consumer beverage trend, continue to search for the next big winner in this sector.

Remember, Glaceau the maker of Vitamin Water, which was purchased by Coca-Cola in 2003 for $4.2 billion dollars in cash?

http://www.nytimes.com/2007/05/26/business/26drink-web.html?_r=0

Some have opined that Coca-Cola overpaid for ownership of Glaceau's Vitamin Water brand, which some have called nothing more than filtered water, sweetener, and vitamins along with some coloring.

I only point this out to show that at six times expected 2007 revenues, Coke paid a pretty penny for a brand with no real proprietary formula, or intellectual property protection. It simply quenches thirst and provides a few vitamins.

Coke and Pepsi, the beverage market leaders, are in a unique position. Because of their size and structure, they find it much easier, cheaper, and more desirable to purchase small companies that already have proven success in launching an innovative new product.

As Tom Pirko, president of Bevmark, a consulting firm to the food and beverage industry, including Coke, says, in the NY Times article above "When you look at what's happening with Coke, they can't innovate their way out. They have to buy their way out."

The question then becomes, at what point is a small start-up beverage company worthy of the attention of the big boys?

Well, in the case of Coca-Cola, their VEB (Venture & Emerging Brands) Team looks for those "brands that have achieved approximately $10 million in revenue". This $10 million bogey appears to be the critical threshold before any small beverage company with a new, innovative, product will even begin to merit consideration by Coke's VEB group.

Another criterion that I found interesting was that in evaluating the growth of a brand, the VEB group in Atlanta, pays particular attention to those company executives that “understand the value of going deep before going wide by targeting specific regions, channels, or customer segments, versus trying to be everywhere at once”.

http://www.coca-colacompany.com/stories/the-next-big-thing-how-cokes-venturing-emerging-brands-unit-stays-a-step-ahead-of-tomorrows-thirsts

Judging from recent trade magazine articles, it also appears that a big priority for Coca-Cola, as they move forward, is in the health and wellness area; providing beverages with ingredients that are natural and good for you. Lower calorie, healthy alternatives seem to be a logical first step to achieving this newly-formed corporate mandate.

Coke's chief procurement officer Ron Lewis has even gone so far as to say: "We can't ignore the small, entrepreneurial brands popping up in unconventional outlets --- such as health and beauty spas, natural food stores, gyms, yoga studios and other places our red trucks don't visit."

http://www.beveragedaily.com/Manufacturers/Coca-Cola-A-third-of-beverage-industry-growth-could-come-from-disruptive-brands-in-categories-that-do-not-exist-today

http://www.foodnavigator-usa.com/Manufacturers/Coca-Cola-on-thinking-like-a-start-up-open-innovation-and-avoiding-Kodak-moments

The future direction of Coca-Cola (KO) and PepsiCo (PEP), for that matter, seems fairly obvious. The question becomes, where will they find the next new beverage product worthy of their attention?

I believe the answer lies in Boca Raton, Florida, at a small company named Celsius Holdings, Inc. (CELH).

Celsius Holdings, Inc. first came to my attention in the summer of 2007 when I read an article by Herb Greenberg, currently of CNBC notariety, who at the time was writing a column on the Market Watch web site of the Wall Street Journal.

http://blogs.marketwatch.com/greenberg/2006/10/coke_formally_i/

http://blogs.marketwatch.com/greenberg/2006/10/more_on_cokes_c/

While I was impressed with what Coca-Cola was doing, I was more intrigued with the fact that Coke was not the first to market with this new innovative product; a company in Florida called Elite FX already had a calorie-burning beverage named Celsius. Elite FX even went so far as to conduct a placebo-controlled, double blind cross-over clinical study, to substantiate its calorie-burning marketing claims. This study validated the efficacy of Celsius and the "thermogenesis", i.e., the raising of the body's metabolism, which takes place shortly after drinking the product, and lasts for approximately three hours.

Those clinical studies, which were done at the request of then CEO Steve Haley, proved to be instrumental in giving Celsius a distinct scientific advantage over Coca-Cola (KO) and Nestle's (NSRGY) Enviga product. Mr. Haley’s foresight and vision would provide a critical step forward in the marketing of his company’s products. For this decision alone, he deserves much credit and recognition.

The introduction of calorie-burning beverages creates a whole new category in the industry; one that more than a few beverage company executives and outside consultants feel is in its early stages of development.

If you think about it, the industry has gone from high-fructose corn syrup products, where calorie counts typically range from around 140-160 calories, to lower calorie beverages (light beers for example) and other light beverages, to zero-calorie beverages. The question then becomes where do we go from here?

Why Stop at Zero Calories? – The Negative-Calorie Category Comes of Age:

Since the initial study in 2005, Celsius has conducted six additional studies, many at the prestigious University of Oklahoma Health Sciences Center, under Dr. Jeffrey Stout, PhD, Director of Metabolic and Body Composition. Many of these studies have been published by the ISSN (International Society of Sports Nutrition) in the Journal of the International Society of Sports Nutrition, and the Journal of Strength and Conditioning Research. Links to the various scientific studies may be found here:

http://www.celsius.com/thermogenic-scientific-studies

These types of studies have become increasingly important in today's age of scrutiny by regulators and legislators. In fact, it was because Coca-Cola and Nestle's Enviga product had no underlying proof for its calorie-burning claims, that they were ultimately forced into a $650,000 settlement with 27 state attorneys, including Connecticut Attorney General Richard Blumenthal, and ultimately wound up pulling their product from the marketplace.

http://www.bevnet.com/news/2009/2-27-2009-enviga

It's important to note that there is a huge difference between conducting a study on the efficacy of one or two ingredients in a product versus the actual product as delivered to consumers. Some have attempted to apply the efficacy of a single ingredient (such as caffeine) to a product consisting of many ingredients. The problem with this approach is that it is not all-inclusive or comprehensive enough to validate a marketing claim. All of Celsius' scientific studies were conducted on the actual Celsius product formula, as delivered in Ready-to-Drink cans, or powders that simply dissolve when added to water.

The Enviga settlement also served to tighten up what could and could not be said with regard to claims for calorie-burning beverages.

This was also part of the approval by the National Advertising Division (NAD) of The Better Business Bureau, as a comprehensive review of the marketing claims made by Celsius. Here is a direct quote from the NAD --- Specifically, "NAD found that the advertiser (Celsius) could support claims that referenced the taste of Celsius and the product's ingredients, as well as claims Celsius supplementation results in 'increased metabolism,' 'calorie burning,' 'fat loss,' 'decrease in body fat,' 'greater endurance performance' and 'greater resistance to fatigue (increased energy)'."

To my knowledge, there is no other brand that has gone through this kind of exhaustive process to validate their marketing claims.

http://www.cspnet.com/category-management-news-data/beverages-news-data/articles/bbb-advertising-division-confirms-celsius

To take things one step further, Celsius was even challenged in the courts regarding their marketing claims, and the efficacy of their product's calorie-burning properties. Their victory, pursuant to Judge Terry A. Green's ruling, was a precedent, in my opinion, for any other potential future challenges to the brand.

 

As Celsius attorney Joel B. Rothman said "We shut down the plaintiff's class action litigation by showing that the plaintiff did not have standing to pursue a case against Celsius," Rothman said. "It's a big win in a state that's known as a haven for class-action lawsuits."

http://www.naturalproductsinsider.com/news/2011/10/judge-rules-in-favor-of-celsius-holdings-in-claim.aspx

http://www.arnstein.com/15DCB1/assets/files/documents/8-11-11_RothmanLaw360_CelsiusArticle.pdf

Okay, so I think that we have established that the Celsius brand is on solid-footing regarding both the legitimacy of its marketing claims, and the efficacy of those claims to "burn more calories and provide lasting energy."

So now the question is how does the product resonate with consumers and how will management go about building the brand?

The first question is a relatively easy one. You need do nothing more that click on over to Amazon.com to see what people who use the product are saying:

http://www.amazon.com/Celsius-Raspberry-Acai-Green-12-Ounce/product-reviews/B007R8XGKY/ref=cm_cr_pr_top_recent?ie=UTF8&showViewpoints=0&sortBy=bySubmissionDateDescending

Celsius products enjoy an average 4.2 out of 5.0 stars rating, with about 325 people weighing in with their opinion of the product.

Celsius made a decision in the fall of 2013 to stop taking direct orders for Celsius products on their web site, and decided to contract out to Amazon to be their primary direct on-line retailer.

http://www.celsius.com/live-healthy/celsius-announces-a-new-way-to-shop-online

I believe that this was a smart move for a couple of reasons. First, everybody knows and trusts Amazon as an on-line retailer. Their prices are very competitive, and for those that use Celsius products on a regular basis, there are even ways to reduce shipping costs. Secondly, Celsius management was able to reduce their overall costs (something they have been focusing on for awhile) by eliminating the labor and materials to handle orders and the shipment of those orders out to customers.

The management team at Celsius has even recently implemented production of Celsius products in Dusseldorf, Germany as another way to reduce shipping costs to international distributors in the European Union, Middle East and African regions of the world. They have future plans to do the same for distribution already announced in China & Brazil.

 

http://www.marketwatch.com/story/celsiusr-commences-production-in-dusseldorf-germany-2014-01-13

It's not just consumers who feel that the products are deserving of strong reviews for taste, innovation and proven results. The beverage industry has also given Celsius products numerous accolades. Celsius has garnered thirteen (13) international awards in the functional beverage category, including "Best New Natural Functional Beverage", "Best New Fitness and Sports Beverage" and "#1 Food & Beverage Trend".

That last award, won in 2007, is especially interesting because that same year the highly-respected international research company Datamonitor named the category of calorie-burning beverages as the number one food and beverage trend for 2007.

http://www.gizmag.com/go/6831/

While the folks over at Datamonitor might have been a bit ahead of the curve, and premature on their call, they certainly are not without a good deal of market research, industry databases, relevant information and expert analysis to arrive at such a conclusion. In my opinion, their thesis is correct; they just have miscalculated the timing of the trend.

So who are the people behind Celsius, and can they build this venture into a successful and profitable company?

First and foremost, I believe that one of the keys to how Celsius got this far has been the result of the personal commitment and capital of Carl DeSantis.

http://www.celsius.com/live-healthy/calorie-burning-celsius-announces-strategic-partnership-with-former-rexall-sundown-chairman-carl-desantis

http://www.businesswire.com/news/home/20090406005367/en

http://www.prnewswire.com/news-releases/calorie-burning-celsius-announces-strategic-partnership-with-former-rexall-sundown-chairman-carl-desantis-64887052.html

http://www.marketwired.com/press-release/carl-desantis-increases-investment-to-153-million-in-celsius-1210014.htm

http://www.marketwired.com/press-release/Celsius-Expands-Marketing-Through-Additional-Financing-From-Desantis-NASDAQ-CELH-1289070.htm

For those who may not be familiar with Mr. DeSantis, he is the founder, and former Chairman & CEO of Rexall-Sundown, a vitamin and supplement company that was sold in 2000 to Royal Numico for $1.8 billion.

 

http://www.prnewswire.com/news-releases/royal-numico-to-acquire-rexall-sundown-for-us18-billion-72875007.html

Carl started Sundown, as a mail-order vitamin business out of his house, at a very young age, working along with his wife. He eventually merged the company with Rexall, a chain of drugstores mostly located throughout the mid-western part of the United States, which he purchased, and the rest, as they say is history.

Carl even penned an autobiography titled "Vitamin Enriched", which provides a history of his entrepreneurial spirit, strong work ethic and determination to succeed. These attributes ultimately led to the pinnacle of his career; building a multi-billion dollar business, and selling it to a large international corporation. You can find Mr. DeSantis' book at Amazon.com. If nothing else, you'll get a sense of Carl DeSantis' resolve and fortitude in business matters, and his strong moral character.

http://www.amazon.com/Vitamin-Enriched-Prescription-Founder-DeSantis/dp/1890819034/ref=sr_1_2?ie=UTF8&qid=1392335539&sr=8-2&keywords=vitamin+enriched+books

Carl has always been an entrepreneur, and his South Florida Company, CDS Ventures, has multiple holding of various public and private companies. They first started financing Celsius Holdings when Steve Haley was the CEO, and most recently added another $2.2 million in funds, this past September, after seeing the progress made by his newly-appointed management team brought in during late 2011 to replace Steve Haley, the founding CEO (more about this later).

http://www.marketwatch.com/story/cds-ventures-of-south-florida-llc-increases-stake-in-celsius-holdings-inc-and-extends-debt-instruments-on-results-2013-09-10

However, don't think that because Carl is wealthy he just decided to invest in Celsius on a whim. Before making the decision to invest in this company, Carl and his group performed extensive and thorough due diligence on the product and its claims. This was to avoid a rather embarrassing situation that occurred with a Rexall-Sundown product called Cellasene.

http://www.palmbeachpost.com/news/business/delray-beach-based-company-dives-into-crowded-en-1/nL64z/

Celsius During Steve Haley's 7-Year Tenure as CEO. What Went Wrong & Why?:

Under former CEO Steve Haley, the company conducted its first clinical study of Celsius in 2005, and afterwards, the company began to slowly market its products through traditional distribution channels.

As a result of the company receiving unexpected national attention, a false-sense of grandiosity suddenly appeared in the C-suite and the Board Room. Out of that, the "build-it-and-they-will-come" mentality grew, and the costly decision to go national with distribution was made.

Celsius, the calorie-burning beverage, appeared on literally hundreds of local CBS, NBC and ABC affiliate news channels, as well as appearances on Food Network's Unwrapped, NBC's Today Show with Matt Lauer and hit-show The Doctors.

http://www.youtube.com/watch?v=GO5ztWClww4&playnext=1&list=PLA05173E858256AD2&feature=results_video

Using a distribution model which required the payment of high-cost slotting fees to retailers in exchange for shelf space, the company quickly found that the "pay-to-play" strategy was resulting in excessive and exorbitant marketing costs.

Without having first established the brand, with strong reorders and customer sell-through, the company quickly found itself burning through cash at an alarming rate. After the company raised $13 million in capital through an offering of shares in May of 2010, and secured a listing on the NASDAQ after affecting a 1:20 reverse split, the company embarked on an aggressive marketing campaign and wound up squandering just about all of the capital raised in the May 2010 stock offering.

http://articles.sun-sentinel.com/2010-05-07/business/fl-desantis-drink-20100507_1_nasdaq-capital-market-rexall-sundown-carl-desantis

Looking back, it appears that not properly laying the groundwork for the brand resulted in slower than expected sales, while marketing expenses, in the form of slotting fees, ballooned. The company found itself in the position of losing huge amounts of money on a quarterly basis. In addition, almost half of the company's revenues were coming from Costco Wholesale Clubs, where margins were razor thin, and consumers had to make a commitment to purchase Costco's only Celsius offering; a 15-pack of Outrageous Orange or Raspberry-Acai Green Tea flavor.

Carl, in an attempt, to stop the bleeding took steps to remedy the situation by reducing the salaries of those in the executive suite, and establishing a special board committee to evaluate strategic alternatives. The company also implemented a new strategic operating plan aimed at right-sizing the company. Translation: cut all but the most essential expenses on both the marketing and operation side of the business.

http://www.sec.gov/Archives/edgar/data/1341766/000121390010005096/f8k120210_celsius.htm

At that point in time, things looked very bleak. However, much to the surprise of many, sales continued to show resiliency despite the cutting off of all marketing and advertising by the company. The stock, on the other hand, languished and slowly drifted lower, from a high of $14, and a market cap of north of $100 million, as investor expectations were dashed.

The last official 10-Q was filed on May 10, 2011. The Company also announced its intention to deregister as a reporting company under the Securities Exchange Act of 1934, as amended. The company said in an 8-K Filing "The Company believes that given its downsized level of operations, it is in the best interests of its shareholders not to incur the expenses associated with being a reporting company. It's the company's intention to continue to issue quarterly financial information. The Company's shares and warrants will continue to trade in the over-the-counter market following deregistration."

Nine days later the company filed a Form 15-12B effectively withdrawing its requirement to file reports with the Securities & Exchange Commission. In my opinion, this move officially ushered in the end of the Steve Haley era, and paved the way for Carl to bring in a fresh and focused management team with experience in turning around troubled companies.

In November of 2011 it was announced that Steve Haley was stepping down as the CEO of Celsius Holdings, Inc. and being replaced by Gerry David, a seasoned executive with extensive experience in corporate turnarounds, start-up companies and those companies with fast growth prospects. As part of Steve Haley's exit, Carl DeSantis agreed to buy a substantial portion of the equity position held by Mr. Haley, thus increasing his ownership to a majority of 52 percent of the common stock of Celsius Holdings, Inc.

http://www.bevnet.com/news/2011/changes-roiling-functional-beverage-category

http://www.bevnet.com/magazine/issue/2012/big-changes-at-o-n-e-celsius-and-starbucks-buys-evolution-juice

Celsius Redux. The Rebuilding and Rebranding Process Begins Under New Management:

Gerry David wasted no time in executing a comprehensive strategic business plan to turn around the struggling fortunes of this once promising little beverage company. One of Mr. David's first initiatives was to re-brand the Celsius product by changing the marketing strategy, as well as changing the look and feel of the product.

He also scaled down the number of flavors to a more manageable, SKU-friendly, number of five. The five flavors that remained were Sparkling Cola, Sparkling Berry, Sparkling Orange, a non-carbonated Peach-Mango Green Tea, and a non-carbonated Raspberry-Acai Green Tea flavor. Gone were a non-carbonated Outrageous Orange flavor, non-carbonated Lemon Iced Tea and non-carbonated Strawberry-Kiwi.

Celsius' new management team felt that having a fresh, exciting and upscale look with enhanced graphics and a look of continuity across the five flavors was critical to the re-branding of the product. Focus groups conducted with beverage distributors agreed.

http://www.bevnet.com/news/2012/celsius-gets-a-makeover-and-unveils-new-packaging

http://www.healthcarepackaging.com/package-design/structural/redesigned-can-energizes-celsius

 

If you ever have a chance to see the old look of the cans, you will find that their look resembled a PowerPoint presentation with too many different fonts, italics and bold type scattered about. I've heard it described as being very noisy looking and very unappealing to the eye; not something desirable when you are on a shelf competing for the consumer's attention with hundreds of other beverages.

Another key component of Mr. David's new marketing strategy was to move from a business model of selling four packs of Celsius to new consumers, to one of selling refrigerated single cans, to allow consumers to sample the product first without having to make a commitment to purchase volume of something they had never tried before. As part of this strategy, the company ended its distribution relationship with Costco. That was a bold move, considering the revenue generated from having a presence in 316 of Costco's signature outlets was hefty.

The decision to drop Costco from the ranks of Celsius' distribution partners, in early 2012, was a difficult choice, but one that ultimately strengthens the company for two reasons. First, it removes the frightening dependence on a single source for almost fifty-percent of annual revenues. Second, the very thin margins from the Costco relationship were a drag; pulling down the overall, blended margins across all distribution channels.

Looking at the revenue numbers over the past few years, it seems that the broadening out of the distribution base has stabilized revenues, and created a more predictable stream of income for the company.

Here is a breakdown of the financial results reported by the company over the past four years:

Period Revenues Net Gain/(Loss)

Q4 2013 $2.93 million ($494,000)

Q3 2013 $2.33 million ($698,000)

Q2 2013 $3.02 million ($228,000)

Q1 2013 $2.34 million ($405,000)

Q4 2012 $1.93 million ($329,000)

Q3 2012 $1.4 million ($764,000)

Q2 2012 $1.8 million ($1,119,000)

Q1 2012 $2.5 million ($536,000)

Q4 2011 $1.8 million ($716,000)

Q3 2011 $2.5 million ($278,000)

Q2 2011 $2.0 million ($456,000)

Q1 2011 $2.2 million ($459,632)

Q4 2010 $135,000 ($5,581,748)

Q3 2010 $1.8 million ($5,036,886)

Q2 2010 $4.1 million ($3,026,284)

Q1 2010 $2.3 million ($5,852,484)

Q4 2009 $2.4 million ($7,759,029)

However, the new strategic focus didn't end there. Mr. David decided to partner with one of the country's most aggressive distributors, GBS Smash Brands, to expand distribution in a new direction which included health clubs, colleges and universities and other non-traditional distribution outlets.

http://www.bevnet.com/news/2012/celsius-enlists-gbs-smash-brands-to-pump-up-new-growth-strategy

In addition, Mr. David beefed up the Celsius Ambassador Program, whereby free samples of Celsius were given out, along with an incentive to buy-one-get-one-free with the retail purchase of a single can. Taste is one of the most important consumer criteria in any beverage, and it has been shown that most people who try Celsius enjoy the taste and will purchase the product. He also made the Ambassador Program profitable, something that was never done under Mr. Haley.

Sampling is a big part of getting consumers to try and eventually buy Celsius. The company has used a number of sampling programs, partnering with subscription box companies such a Bulu Box and Goodies Co. (a Wal-Mart affiliate), among others.

I mentioned how under Celsius' previous management, thousands of dollars were spent on slotting fees and marketing expenses, resulting in an unusually high-cost structure to bring in each new customer. A new, less expensive and creative way to find and secure new customers was necessary, and Gerry David found it in digital marketing and social media.

http://www.bevnet.com/news/2013/celsius-growth-led-by-refined-distribution-digital-marketing

A very important and instrumental part of developing a digital marketing and social media strategy was to partner with a public relations firm that had all the right characteristics necessary to launch, manage and monitor an effective PR campaign. For this extremely important task, Celsius chose 5WPR with offices in New York and Los Angeles, as their PR Agency of Record.

http://www.prnewswire.com/news-releases/5w-public-relations-named-pr-agency-of-record-for-celsius-inc-143289876.html

In his most recent commentary on FY 2013 results, CEO Gerry David had this to say: "as a result of our marketing initiatives we are attracting new daily consumers and industry-wide brand recognition. Celsius Public Relations efforts have generated over 750 million impressions in 2013 while our digital radio campaign continues to deliver 7.8 million ads each month that are focused in our "Drill Deep" markets."

Perhaps the most important change that was made to the Celsius marketing strategy was to eliminate the previously held notion that the company needed to take distribution nationwide, versus concentrating on a few markets where the idea was to "drill deep"; penetrate and concentrate on establishing a repeat customer base by achieving product "sell-through". The use of Pandora has been very instrumental in helping Celsius attract and retain new customers who are encouraged to visit the company web site where they can purchase the product and see the results that others are achieving in terms of weight-loss, increased energy, along with more stamina and endurance when exercising.

Some of the success stories achieved by ordinary people are truly amazing. I'm sure these personal testimonials convince many who visit the company web site to try the product. Celsius also has its own team of sponsored athletes who compete in a number of different sports.

http://www.celsius.com/live-healthy/weight-loss-success

You will remember earlier in my report I quoted executives at Coca-Cola's VEB unit who said that "the VEB group in Atlanta, pays particular attention to those company executives that understand the value of "going deep before going wide" by targeting specific regions, channels, or customer segments, versus trying to be everywhere at once.

This new multi-layered strategy, of doing just that, appears to be yielding significant results.

http://www.bevnet.com/news/2014/multi-layered-strategy-catalyzes-celsius

While there has certainly been significant progress made by the C-suite at Celsius, some of the most powerful and influential changes may have recently taken place at the Board Level. In April of 2013, it was announced that three new individuals had joined the Celsius Board of Directors; Kevin Harrington, Kathleen M. Dwyer and Nick Castaldo.

http://www.marketwatch.com/story/celsius-holdings-inc-appoints-three-new-board-members-2013-04-15

These three individuals have very strong credentials, and each has demonstrated a track-record of success in their respective careers. Kevin Harrington's desire to join the Board is based on his ability to recognize growing consumer trends, and products that meet the needs of the marketplace. He was one of the original members of the hit television show "Shark Tank", and has successfully helped launch over 500 new consumer products.

http://upstart.bizjournals.com/entrepreneurs/hot-shots/2013/08/07/kevin-harrington-shark-tank-advice.html?page=all

His presence on the Celsius Board has caused some to speculate that "with Kevin Harrington on board, the competition will heat up, and the big boys (Coke and Pepsi) will pay close attention".

http://www.palmbeachlwp.com/news/work/celsius-drinks-adds-harrington-to-board/

If, in the case of Coca-Cola, their VEB (Venture & Emerging Brands) Team looks for those "brands that have achieved approximately $10 million in revenue", the boys in Atlanta may, in fact, have begun watching this upstart little beverage company very closely.

Most recent Q4 and FY 2103 results show continued strong revenue growth (topping $10 million for the first time in the company’s history), improving margins, and double-digit growth in multiple channels, while international expansion plans are gaining traction.

http://www.nasdaq.com/press-release/celsius-holdings-inc-reports-fourth-quarter-and-yearend-2013-results-20140206-00221

http://www.nasdaq.com/press-release/celsiusr-partners-with-dubai-franchising-of-uae-international-investments-for-exclusive-20140225-00279

Investors might find the shares of Celsius Holdings, Inc. particularly compelling, given its potential growth prospects and most recent quarterly results. The company is currently selling for roughly 0.7x annual revenue, well below the industry average of 1.5x - 2.0x, and substantially below the 6x number that Coca-Cola paid for Glaceau in 2007.

Shares of Celsius Holdings, Inc. are very thinly traded as a result of having only 20,179,032 shares outstanding as of 12/31/2013.

Approximately, 52%, or 10,493,096 of the outstanding shares are held by majority stakeholder, Carl DeSantis, through his corporate entity CDS Ventures of South Florida, LLC, leaving only approximately 9,685,935 for purchase in the public float.

CDS Ventures of South Florida, LLC also owns debt instruments totaling approximately $7.6 million, some of which are convertible into shares of Celsius Holdings, Inc. common stock. Potential investors are strongly encouraged to review the company filings for details regarding the terms and conditions of these instruments, along with conversion privileges as they relate to these various debt obligations.

Disclaimer: The principals of Altitrade Partners are long shares of Celsius Holdings, Inc. (CELH). This report expresses only those opinions of individuals who are affiliated with Altitrade Partners. Altitrade Partners has not received any form of compensation from Celsius Holdings, Inc., or any other third-party in exchange for writing this report.

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