• 🌡️ Celsius Turns Up The Temperature
• 🏃 Diageo Names New President of U.S. Spirits
• 🏭 FedUp Foods Brews Up New Facility
• 🏛️ Reyes Sues KDP For Franchise Non-Renewal
• 📈 NIQ: FMBs, Spirits-Based RTDs Grab Shelf Space
• 🆕 Round 2 Spirits, Now Pouring Agave-based Vodka?

The number-three U.S. energy brand brought the heat in Q1 as Celsius bested expectations in its latest earnings report this morning, announcing 37% revenue growth to $355.7 million and record first quarter gross profit of $182.2 million – a 60% increase.

🔋 As of April 14, the Florida-based brand held an 11.5% share in the U.S. energy drink market in MULO and convenience stores, up one point from Q4 2023 and roughly four points higher from Q1 2023.

📦 Club channel sales were among the strongest growth drivers, representing $63 million (+36%) in the quarter, while Amazon grew 30% to $28 million and case volume in foodservice jumped 186% thanks to the brand’s distribution agreement with PepsiCo.

🗣️ What they’re saying: “Our category share … reflects the early impact of shelf space gains that we are earning from company-record and ongoing retailer resets, which we believe will serve as a flywheel for our continued growth,” said CEO John Fieldly in a statement.

FedUp Foods, one of the largest fermented beverage manufacturers in North America, announced it will be opening a new manufacturing facility late this summer in Wilmington, North Carolina. This will be the private-label kombucha, tepache, and prebiotic and probiotic soda makers third production plant.

😏 The facility also opens the company up to functional cold brew coffee and possibly fermented food, according to a video posted on LinkedIn by co-founder and EVP of strategy and development Zane Kareem Adams.

🍻 The Wilmington plant will bring more scale and, once fully operational, have a capacity of 200,000 barrels of fermented drinks per year.

⬆️ Founded in 2008 and headquartered in Asheville, North Carolina, FedUp Foods makes and distributes its own beverages like Wild Pop and Buchi while also serving as co-man for other functional beverages.

After bringing in a new CFO last week, Diageo’s North America U.S. spirits team is now also getting a new president. Current president of reserve & new business commercialization, Stephen Rust, will take over the role from Gregorio Gutierrez, who has held the position since 2022 and is leaving to pursue other opportunities. 

• Rust has been with Diageo North America since 2004 and held a variety of posts during that time including running the company’s past route-to-market strategy, supporting the acquisition of the Casamigos brand and overseeing its coordination with the Ketel One family. 
• As president of U.S. Spirits, Rust is now tasked with upping the spirits giant’s U.S. outlook, where its premium brands have suffered as consumers trade down. 
• During the first half of the fiscal year North American sales dropped 2%; previously reliable tequila powerhouses, Don Julio and Casamigos, also saw sales decline in North America. 

Reyes Coca-Cola Bottling (RCBB) has filed suit against Keurig Dr Pepper (KDP) accusing the beverage giant of “unlawfully refusing to renew” its franchise distribution agreement in California.

🤝 The two parties had been partnered since signing a five-year agreement in 2017, with the deal automatically renewing for additional ten-year periods. The existing deal was scheduled to run through October 2025, but RCBB claims that KDP violated California state law when it gave notice of non-renewal on April 29 without presenting cause.

🚚 Reminder: Dr Pepper-brand products are still distributed by Coca-Cola and Pepsi-affiliated houses, so why pull out of Reyes? Citing Brett Cooper of Consumer Edge, Beverage Business Daily suggests that it could indicate a strategic pivot for KDP to slowly bring those drinks back in-house, assuming volumes in relevant markets are sustainable.

🥤 And why shouldn’t they? The core brand has been driving performance and innovation; per NielsenIQ data, KDP’s soft drink portfolio has outperformed the category in both regular (+5.1%) and low-calorie (+8.1%) formats over the last 52 weeks.

RTDs are a unique mega category, with changes in demographics, inflation and a desire for convenience and flavor driving growth into spirits-based RTDs and FMBs in particular, according to a new report from NIQ. Here are some of the top drivers of the rise of RTDs:

• Almost half (44%) of consumers say if prices continue to rise they will cut back on bev-alc purchases.
• However, friction-free retail is more important than price: consumers tend to favor speed of purchase more than any other shopping aspect when it comes to bev-alc shopping. 
• These days consumers are concerned less about the alcohol base of RTDs and are instead drawn to their flavors, cocktail varieties, and the convenience of consumption, according to the report. 

Nevertheless, we broke down which subsegments are seeing the greatest amount of growth right now. Read the full story on BevNET for the full rundown.

Earlier this year we reported on a new Texas-based spirits company from the founder of Patrón Tequila and former Southern Glazer’s Wine and Spirits (SGWS) leadership. Well, they’ve now introduced their first product, and it’s a bit of a head scratcher. 

🍸 Today, Round 2 Spirits introduced the Weber Ranch 1902 Vodka, a vodka distilled from 100% Blue Weber Agave… a.k.a. the source material for tequila. 

🌵 The agave for Weber Ranch is grown and harvested in Jalisco, Mexico, distilled once and then the vodka is further distilled in Texas by the former production director of Patrón’s Mexico plant, Antonio Rodriguez, who is now Weber Ranch’s master distiller.

🤔 If you’re wondering why it’s not called a tequila, that’s because denomination of origin laws prohibit agave spirits made outside Mexico to be called tequila. But clearly the aim here is to disrupt the largest spirit category by volume (vodka) with the flavors of a spirit that until recently has been on a fast-rise. 

🚰 We’ve seen similar moves with malt-based ranch waters or other cocktails mimicking the margarita, but this might be the first U.S. agave spirit that’s being nestled within another major spirit label.