China Food

PepsiCo’s latest investment of 3.7 billion in energy drinks, fuel, can it “snatch food from the tiger’s mouth” from red bull?

The latest investment of PepsiCo, a multinational food and beverage giant, has brought the fast-growing energy beverage brand Celsius (Chinese Name: burning power) into the spotlight.

As introduced by snack representative, on August 1, PepsiCo and Celsius Holdings (hereinafter referred to as Celsius), the manufacturer of energy beverage Celsius, announced that they had reached a final agreement to establish a long-term strategic distribution arrangement. Josh fieldly, President, chairman and CEO of Celsius, said that the strategic partnership between the two companies is expected to accelerate the growth of the two companies globally.

Subsequently, on August 9, Celsius, listed on NASDAQ in the United States, held a performance meeting for the second quarter of 2022 for Wall Street analysts. Xiaoshidai learned that John fieldly talked about the latest cooperation relationship with Pepsi and disclosed the income contribution of Celsius from the Chinese market.

Will PepsiCo become a new “new ally” of Celsius in the Chinese market? In China’s energy beverage market, where red bull is far ahead, will Celsius become a “new force” to disrupt the situation? Next, let’s focus on it.

Alliance Pepsi

With the joining of Pepsi, Celsius obviously has greater ambition in accelerating global expansion.

“We have told you several times before that we will continue to have exploratory discussions with large international distribution partners to promote global expansion. I am glad to say that we have now found that partner.” Fieldly said at the performance meeting.

He said that as part of the distribution agreement with Pepsi, Celsius is now Pepsi’s global preferred energy drink partner, and Pepsi has also become Celsius’s global preferred distribution partner, “and Pepsi ranks second in the global beverage distribution field”.

First, fieldly pointed out that this transformative partnership will significantly accelerate the growth of Celsius in the United States in the near future; According to the agreement, the long-term US distribution agreement came into effect on August 1. Secondly, he said that after the alliance with Pepsi, Celsius also saw “huge opportunities” in the expansion of the international market.

“Although we have just started to establish a distribution partnership with PepsiCo, and the initial focus will be on us distribution to their network, we also see a major opportunity to expand our scale in the world. Behind this is the change in consumers’ preference for products’ better for you ‘.” Fieldly said.

“Now we can achieve our international expansion goals through the distribution partnership (with Pepsi). I think it will be a matter of time and order. When we enter new markets, we want to ensure that we take appropriate measures to establish loyal consumer groups and truly become a part of their daily life.” He also referred to the UK and Germany as “near-term opportunities”.

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According to the public information, Qifeng Food Technology Co., Ltd. was established in 2015. It is a domestic consumer goods joint venture invested by Li Ka Shing’s Victoria Harbor. “It is a platform company dedicated to the development, production and marketing of high-quality food. It has strong competitiveness in the food field. At present, it has established a nationwide distribution network and sales team.”.

According to the above agreement, Qifeng obtained the exclusive license to produce, sell, promote and commercialize Celsius brand products in China; While Celsius provides continuous support in product development, brand promotion and technical expertise. “Continued support is an integral part of the exclusive license.” Celsius said.

According to the comprehensive information of xiaoshidai’s reading of several financial reports today, the term of this agreement is 50 years, and the annual royalty shall be paid by Qifeng after the end of each calendar year. The royalty is charged based on a certain percentage of the sales of Celsius brand products; However, the fees for the first five years of the agreement are fixed, totalling about US $6.9 million, and then subject to the annual minimum guarantee for the remaining term of the agreement.

“This creates a risk buffer to drive our business in China and expand our share in this important market.” Fieldly said at that time that the initial royalty was calculated based on 50% of the initial estimated sales volume.

In addition, he mentioned that in the initial five-year period, in addition to the fixed royalty, Qifeng will also repay Celsius about US $12.2 million of the invested funds. This means that in the first five years, lux will rely on Qifeng to recoup its previous net investment in the Chinese market, “thus releasing additional resources and funds”.

Let’s calculate a “general ledger”.

To put it simply, from 2019 to 2023, Celsius will receive a total of US $19 million, including US $12.25 million for investment reimbursement and US $6.9 million for royalties. Starting from 2024, the agreement will be converted into a 2% – 3% royalty based on the sales volume in addition to the minimum royalty of $2.2 million.

USD 1 million in the first half of the year

Since the franchise cooperation with Qifeng was reached in 2019, the Chinese market has become a stable source of income for Celsius to “maintain revenue in drought and flood”.

According to the latest semi annual report read by xiaoshidai today, Celsius has recognized the income from the above-mentioned agreement with Qifeng over time (Note: it includes the repayment of investment fees and royalties). In the second quarter of 2022 and the second quarter of 2021, the total revenue recognized was about US $500000 and US $500000 (about RMB 3392800).

In addition, in the first half of 2022 and the first half of 2021, Celsius confirmed that the total revenue contribution from China was about US $1 million (about RMB 6.7855 million) and US $800000 (about RMB 5.4284 million), respectively, which were reflected in the revenue from Asia.

Let’s take another look at Celsius

PepsiCo’s latest investment of 3.7 billion in energy drinks, fuel, can it “snatch food from the tiger’s mouth” from red bull?

另外,他提到,在最初的5年期限内,除固定的特许经营使用费外,启丰还将偿还Celsius约1220万美元的已投资金。这意味着,在最初的5年里,燃力士将靠启丰回笼其此前对中国市场的净投资,“从而释放额外的资源和资金”。

我们来算一笔“总账”。

简单来说,2019年-2023年,Celsius将一共进账1900万美元,其中包括1225万美元的偿还投资费用,以及690万美元的特许权使用费。自2024年开始,协议将转换为在220万美元最低特许权使用费的基础上,还有一笔基于销量的2%-3%的特许权使用费。

上半年100万美元

自从2019年与启丰达成特许经营合作以来,中国市场就成为了Celsius“旱涝保收”的稳定收入来源。

小食代今天翻阅的最新半年报显示,Celsius随着时间的推移确认来自上述与启丰达成的协议的收入(注:包括偿还投资费和特许权使用费两部分)。2022年第二季度和2021年第二季度,确认的总收入分别约为50万美元和50万美元(约合人民币339.28万元)。

另外,2022年上半年和2021年的上半年,Celsius确认的来自中国的总收入贡献分别约为100万美元(约合人民币678.55万元)和80万美元(约合人民币542.84万元),这均反映在来自亚洲的收入中。

不妨再来看下Celsius国际和全球的业绩表现。

小食代留意到,Fieldly在业绩会上表示,该公司创纪录的第二季度环比2022年第一季度增长18%,标志着燃力士连续第16个季度取得增长。国际市场的销售额约占本季度总销售额的5.6%,同比下降25%至860万美元,主要受到北欧的负面影响,该市场收入从去年同期的1080万美元下降到730万美元。

他又指出,北欧销售额的下滑,被其他国际市场的增长所部分抵消,后者从去年同期的68万美元大幅增长957%,至大约为130万美元的销售总额,其中包括来自中国的收入,即特许权使用费(royalties)。


小食代介绍过,今年上半年,红牛中国的销售额高达121.97亿元。而长期以来,红牛也牢牢占据了中国能量饮料市场的主要市场份额。根据欧睿国际发布的《Energy Drinks in China》数据显示,2019年中国能量饮料市场中,红牛以57%的份额独占鳌头,接近第二名的4倍。

不过有意思的是,和红牛、东鹏特饮、乐虎、魔爪等竞争对手不同,Celsius旗下除了能量饮料,还销售粉剂型固体饮料产品等产品。一名熟悉情况的业内人士今天告诉小食代,目前在中国市场,罐装能量饮料业务由启丰负责运营,而粉剂产品由启丰的子公司启劲运营。

小食代留意到,Celsius与百事公司最新达成的分销协议,并不包括粉剂产品。“On-The-Go粉剂产品由我们内部管理,这并不包括在与百事公司达成的分销协议中。我们的粉剂在许多零售商那里和在电商上表现不错,这主要是提供给我们的核心消费者,目前占我们收入的一小部分。所以,这也是产品组合方面的一个机会(包括相比起罐装即饮,重量很轻的粉剂更容易运输)。”Fieldly说。

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