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Q4 2023 Celsius Holdings Inc Earnings Call

Participants

Jarrod Langhans; CFO; Celsius Holdings, Inc.

John Fieldly; President, CEO & Chairman; Celsius Holdings, Inc.

Paul Wiseman

Eric Adam Serotta; Equity Analyst; Morgan Stanley, Research Division

Gerald John Pascarelli; Senior VP of Beverage Equity Research; Wedbush Securities Inc., Research Division

James Ronald Salera; Analyst; Stephens Inc., Research Division

Mark Stiefel Astrachan; MD; Stifel, Nicolaus & Company, Incorporated, Research Division

Michael Scott Lavery; MD & Senior Research Analyst; Piper Sandler & Co., Research Division

Peter K. Grom; Director of Equity Research & Analyst; UBS Investment Bank, Research Division

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Sean Patrick McGowan; MD & Senior Research Analyst; ROTH MKM Partners, LLC, Research Division

Presentation

Operator

Greetings, and welcome to Celsius' Full Year 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce Paul Wiseman, Investors Relations for Celsius. Thank you may begin.

Paul Wiseman

Thank you, and good morning, everyone. We appreciate you joining us today for Celsius Holdings Fourth Quarter 2023 Earnings Conference Call. Joining me on the call today are John Fieldly, Chairman and Chief Executive Officer; and Jarrod Langhans, Chief Financial Officer. The call will open to questions following the prepared remarks.
The company released its fourth quarter earnings press release earlier this morning, and all materials are available on the company's website celsiusholdingsinc.com as well as on the SEC's website, sec.gov. As a reminder, an audio replay of this call will be available later today and can be accessed with the same live webcast link in our conference call announcement released.
Please be aware that this call may contain forward-looking statements, which are based on forecasts, expectations and other information available to management at this time. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent as required by law, Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward-looking statements. We encourage you to review in full our safe harbor statements contained in today's press release and in our quarterly filings with the SEC for additional information.
Additionally, management will share operating results on both a GAAP and non-GAAP basis. Descriptions of the non-GAAP financial measures that we use, such as non-GAAP adjusted EBITDA, and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release for the fourth quarter of 2023.
With that, I'd like to turn the call over to Chairman and Chief Executive Officer, John Fieldly, for his prepared remarks.

John Fieldly

Thank you, and welcome, everyone, to today's call. Also welcome to Paul Wiseman, who recently joined Celsius as our Senior Vice President of Communications. Celsius had a stellar 2023 fourth quarter, the best earnings year in our company's history. We have achieved nearly complete distribution coverage in the United States, topping 98% ACV, which is a major achievement, putting our products in reach of more consumers and more consumption occasions with greater flavors and size options than ever before. In 2023, Celsius set a new yearly revenue record, growing more than 102% or $664 million in sales to finish the year at just over $1.3 billion. Celsius is now truly a $1 billion brand.
Our impressive share gains in 2023 have resulted in Celsius becoming the first company to break the 10-share barrier in more than a decade. According to Circana, IRI's recent 4-week read ending February 11, 2024 in total energy U.S., Celsius held a new record of 11.5 share nationwide in MULOC. The energy drink category is now a 3-team race.
As of January 2024, Celsius had exceeded a 15 share in over a dozen U.S. markets and a few of those, we are within just a few points of our next closest competitor or have already taken them. Our strong innovation pipeline continues to delight consumers whose taste for zero sugar energy drinks has nearly tripled the overall category sales to a zero sugar majority. Although this year, we have launched 2 new core SKUs, Sparkling Raspberry Peach and Fizz-Free Blue Raspberry Lemonade. In addition, 2 new Celsius Vibe flavors, Astro Vibe and Galaxy Vibe, which has taken our Space Odyssey, truly even further with the launch of our Cosmic Vibe in 2023 in Circle K.
Celsius also launched Celsius Essential's product line, which has proven essential performance energy with essential aminos. We are executing our plans to grow the business internationally, taking a methodical approach in each new market we enter.
We're very pleased with our sales in Canada after 2 months in the country. Consumer enthusiasm and acceptance has exceeded our expectations. We're pursuing disciplined growth in our best-in-class sales and marketing organizations. And just 2 weeks ago, Celsius was recognized with the 7-Eleven's prestigious 2023 Supplier of the Year award in a nonalcoholic category. This is a tremendous achievement. And I want to thank all our dedicated team members on achieving this great top industry award. Best-in-class teams drive best-in-class results.
With nearly full distribution, we are focusing on driving growth through 3 areas: increasing total distribution points at each location, growing in nontracked channels and international expansion over the long-term horizon. Celsius was again the top driver of the energy category in dollars and units sold in MULOC, ending in the fourth quarter, up 126.6% and up 140.2% for the full year of 2023, supporting a 30.6% of all the energy category growth for the year.
Already this year, we've launched several new and exciting innovations as well as a brand update to our line of Fizz-Free beverages, which have a strong and loyal consumer base. A new Fizz-Free multipack available now in Target stores brings together refreshing selection to our consumers who prefer the noncarbonated energy drinks.
Sales of Celsius Essentials, our new line of performance-oriented and energy, a 16-ounce beverage products launched in the fourth quarter at 7-Eleven stores across the United States and our 2 new flavors, Sparkling Mango Tango and Sparkling Fruit Burst bring the Celsius Essential line to 6 unique SKUs. As of January 2024, Celsius Essentials has achieved a record 40% ACV year-to-date, February 18th, it's at 49% ACV, continuing to see greater acceptance across retailers across the country.
Also in January, our Celsius on-the-go powder claimed the position in the energy powder category according to Circana's IRI commanding a 23.1 share, having increased 5.6% compared to the prior period. We have several new on-the-go powder innovations plan for this year and see great opportunities with our [virtual] on-the-go product line.
In 2024, spring resets began in January and typically run through May. We are very pleased with the incremental space we're gaining, which will be reflected across the first and second quarters of 2024. As a reminder, planograms used for most of 2023 when our dollar sales grew 140% were created while we were holding and held approximately 4.5 share in the category. For 2024, shelf space planning was conducted with retail partners in Q3 of 2023, when we held a digital -- double-digit share position. Celsius is also now fully integrated into PepsiCo's annual planning cycle, and we anticipate ongoing close collaboration with our primary North American distribution partner and expanded key accounts team.
Our pursuit of a perfect store resulted in a 60% increase in display activity across the United States, and we placed more than over 10,000 Celsius branded coolers in 2023 and an increase of over 300% year-over-year. We intend to continue growing our base of branded coolers throughout this year.
Nontracked channels continue to be a tailwind for us as well. Club sales for the fourth quarter were $77.1 million, up 64% year-over-year. Club sales for the full year 2023 were $254.6 million, representing an $83.6 million increase year-over-year.
We achieved the #1 energy drink position on Amazon in 2023, finishing the full year revenue at $101 million, a 72.9% increase year-over-year. Our refreshing great tasting products are ideal for the meal occasion, and today, more than 12.5% of our PepsiCo sales is to the foodservice channel. For example, in 2023, we gained distribution in over 2,000 Jersey Mike stores and are authorized to sell in more than 3,000 Dunkin' Donut locations nationwide. We believe there is incremental growth opportunities for Celsius and nontracked outlets, such as vending, hospitals, corporate cafeterias and college campuses and more.
Turning to international. We began distribution in sales in Canada through Pepsi in mid-January. As we had previously signaled, after approximately 1 month of sales, we are very pleased with the results and even more so to delight our Canadian consumers who have embraced our products.
International sales reached $14.6 million in the fourth quarter of 2023 and $54.7 million for the full year.
Also in January, we announced a sales and distribution agreement with Suntory Beverage for Great Britain and Ireland. We expect sales in the United Kingdom to begin gradually starting in the Finnish channel in the second quarter.
We expect additional international expansion this year. And as previously stated, we're taking a methodical approach to our international growth, and we will be following our international growth playbook in each new market we enter.
Before I hand it over to Jarrod to discuss financial highlights for the quarter and the full year, we have several exciting marketing developments and achievements to be proud of. Celsius recently announced a renewed multiyear global team sponsorship with Formula One's iconic Ferrari racing team. Major League soccer kicked off its regular season last week, and Celsius is a proud league partner as well as key sponsor of multiple teams and players across the United States and Canada. These strategic investments placed our premium brand in the forefront of consumers who share our passion to live fit.
With that, I'll pass it over to our Chief Financial Officer, Jarrod Langhans, to discuss our fourth quarter and 2023 full year financial results. Jarrod?

Jarrod Langhans

Thanks, John. It was another great quarter in which we continue to exceed both internal and external expectations. Not only are we continuing to benefit from Pepsi's distribution system, but we're also delivering on increased SKU count, improved placement, increased displays and continuous improvement within velocities. As we look to Q1 and beyond, we will continue to invest in our growth.
Turning to our fourth quarter financial highlights. Revenue for the 3 months ended December 31, 2023, was approximately $347 million, an increase of 95% from $178 million for the 3 months ended December 31, 2022. Driven by our North American business, where fourth quarter revenues were $333 million, an increase of 97% from the same period in 2022. International revenue grew 68% to $15 million as velocity continued to increase. As it relates to days on hand with our primary distributor, our inventory turns relative to depletions was consistent with our Q3 2023 turnover.
We attribute our sales volume growth for the quarter compared to 2022 to several key drivers, including successful integration into the Pepsi distribution system, which has resulted in broader availability, increased SKU mix, and improved placement. We're also benefiting from robust expansion in our traditional distribution channels and club channels with SKU increases in placement improvements contributing significantly. Moreover, our products are now found in several new channels within CNG and foodservice.
Gross profit for the 3 months ended December 31, 2023, increased 110% to $166 million, up from $79 million in the year ago quarter. Gross profit margins in the fourth quarter were approximately 48% of revenues compared to approximately 44% for the prior year fourth quarter. The improvement in gross profit margins is attributed to efficiencies in raw material sourcing product-based reduction and benefits from improved leverage across promotional allowances. Q4 was the fifth consecutive quarter that we were operating within the Pepsi distribution system, and we expect to continue driving efficiencies while maintaining our #1 goal of keeping the shelf stock to meet strong consumer demand.
Sales and marketing expenses for the quarter were approximately $80 million, a decrease of approximately 11% compared to the fourth quarter of 2022. The decrease was due to prior year costs associated with the termination of legacy distributors as part of the transition to the Pepsi network.
We continue to invest behind our growth in Q4, incurring sales and marketing costs in line with historical rates. As a percentage of sales, sales and marketing was 23% compared to 29% in the prior year adjusted for distributor termination expenses in 2022. We plan to continue investment in our sales and marketing and plan a similar spend as a percentage of sales in the first quarter of 2024.
General and administrative expenses for the 3 months ended December 31, 2023, were approximately $27 million, an increase of 24% relative to Q4 2022. As a percentage of sales, G&A was 8% compared to 12% in the prior year as we continue to leverage our G&A against our significant growth. And looking back at prior periods, even with our historical growth rates, we do tend to see some seasonality within the fourth quarter relative to the third quarter. We saw similar activities in the fourth quarter, whereby we are not able to capitalize on the great work from our sales and marketing teams as it relates to displays on hand and other promotional activities that we are able to take advantage of during the summer selling season. Even with this, we ended the year strong and have since well exceeded the 10 share marker as noted by John earlier in the call.
Looking at the full year 2023. As you will see in the 10-K issued this morning, we made great progress in our remediation efforts around our internal control environment. We were successful in remediating the prior period controls associated with IT general controls as well as creating and delivering a much more robust [coastal] environment. Although we made huge strides in 2023, there are still a handful of areas where components of larger areas of the control environment needs some additional time to fully remediate.
With that said, I'd like to thank the entire Celsius team for the great effort and in particular, our finance and IT teams for their focus and dedication to this matter in 2023. I look forward to our continued progress in 2024.
Now to the results. Revenue for the 12 months ended December 31, 2023, was approximately $1.3 billion an increase of 102% from $654 million for the 12 months ended December 31, 2022, driven by our North American business. North America full year 2023 revenues were $1.27 billion, an increase of 105% from the same period in 2022. International revenue grew 52% to $55 million in 2023 relative to full year 2022.
Gross profit for the 12 months ended December 31, 2023, increased 134% to $633 million, up from $271 million in the prior year period. Gross profit margins in the full year of 2023 were approximately 48% of revenues compared to approximately 41% for the prior year period. The improvement in gross profit margins is attributed to lower package and raw material costs.
As things stand today, we would expect 2024 gross profit margins to be fairly consistent with the Q4 and full year margin profile, as we are confident in maintaining the great progress that was made in 2023. We are always shooting for the moon but with the uncertainty around the macro environment from both an operational and promotional perspective, we believe that it is prudent to give ourselves some additional time into 2024.
As a percentage of sales, sales and marketing was 20% in the 12 months of 2023 compared to 24% in the prior year same period, adjusted for distributor termination expenses. This demonstrated the leverage that we can obtain within our sales and marketing costs.
We made great progress in 2023, but we are now moving to the next level and the next target beyond 10% market share. And to do that, we will need to continue to invest in our growth and our brand, as seen with the multiple Super Bowl activations that we did in February, our recently announced multiyear partnership with Ferrari within Formula One as well as our multiyear MLS partnership.
G&A expense as a percentage of sales was 8% for the 12 months of 2023 versus 12% in the prior year same period. We will continue to invest in our back shop and build out a team that is value-added to our operations, sales and marketing programs. There will be opportunity to further leverage G&A in 2024 and beyond, but it will be at a thoughtful and methodical pace.
Focusing now on liquidity and capital resources. As of December 31, 2023, we had cash in excess of $755 million and net working capital in excess of $928 million. Cash flows provided by operating activities totaled in excess of $140 million for the 12 months ended December 31, 2023, which compares to $108 million in net cash provided by operating activities for the 12 months ended December 31, 2022.
We will continue to invest in our business (technical difficulty).

Question and Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Mark Astrachan with Stifel.

Mark Stiefel Astrachan

Two questions for me. One, just on gross margin, maybe talk a little bit about why it stepped back in 4Q relative to 3Q, even after adjusting for the promotional allowance accrual last quarter, meaning I would have expected to see a little bit better. Was there some sort of one-offs in that number? And how do we think about progression of that into '24?
And then the second question, I appreciate the commentary on inventories from a channel standpoint with your largest customer. But if I take a look at what the sales look like in the [scanner] data track channels in addition to what you disclosed in the regulatory filings on Amazon and Costco sales, I still get a fairly big disconnect between what it looks like you should have sold in the quarter and what you actually did, meaning that you undershipped somewhere in the channel. So maybe you could help with that, too.

John Fieldly

Yes. Thank you, Mark. I'll join in on the first part of the question, and I'll throw it over to Jarrod as well. I think when you look at the overall margins, I think we're really pleased with the margins, especially for the full year, up over 660 basis points. Just a phenomenal job on behalf of the team on supply chain and our key accounts team. We're maintaining a pricing promotional architecture within the category.
When you look at the, really the fourth quarter, we did launch a new line, our Celsius Essentials line, which are the 16-ounce line, and we had a variety of innovational launches that were executed during the quarter. So I think we're pretty pleased with where the margins came in, and there's opportunities to improve going forward. But at this point in time, I think that's a -- team did a really good job for the year.
And in regards to inventory by channel, we did have some seasonal impact in Q4 that we did experience. We did have good results on Amazon and within the club channel, but we did see especially impacted mainly in food and really large format. A lot of our volume, we've done a great job on half of our distribution partner as well, really keeping the amount of cases on display up. We're still gaining -- we hope to gain additional placements and additional expansion in the upcoming sets that are being reset. But we do rely heavily, especially in large format on display activity. And when you look at the fourth quarter, we do see a lot of display activity coming from seasonal items that we're competing with outside of the summer or the rest of the year. So those are some headwinds we experienced in the fourth quarter, but I'll throw it over to Jarrod for any additional highlights.

Jarrod Langhans

No, you're right, John. It's -- when we're looking at kind of just more of a days-on-hand perspective with our largest distributor, we did have the innovations that we filled the pipe with that would offset, I would say maybe some reductions you're talking about, Mark. But on a net-net basis, the days on hand in total for us was in good shape. And to John's point, the Q4 tends to be a little bit pressured just because of the inventory on hand across our retail customers and our mass and grocery customers.

Mark Stiefel Astrachan

Got it. Maybe just one follow-up then. If we think about the innovation in your comments you just made about the net-net kind of equaling out. It sounds like you're saying that the innovation offset the legacy products. Is that the case as you think about the shelf resets and incremental distribution, meaning it can't be a 1:1, so you're going to add more space. So why wouldn't the Pepsi system take more of the products, meaning taking innovation plus the legacy because you've got to backfill the legacy sales?

John Fieldly

Yes. I think when we looked at our #1 customer, we look at their inventory levels, they're fairly consistent with Q3 to Q4. So even though we did take some innovation on. So it's -- I think if we look at the scan data, we had really strong scan data in the fourth quarter, and it's -- we'll see how this continues to evolve.

Jarrod Langhans

Yes, it's a good question, Mark. I think, we can just tell you where we were as of 12/31 and on a net-net basis, in total, our days on hand were consistent and in good shape. And as we got to January, we started rolling out all of the innovation that you can see all across the U.S., and it's been very successful and being very good and it has been incremental thus far.

Operator

Our next question comes from the line of Peter Grom with UBS.

Peter K. Grom

So I was hoping to get some perspective on how you're thinking about the market share trajectory from here. Obviously, things sort of leveled out towards the latter portion of '23, but we've actually seen some nice improvement to start the year. Maybe just to start, is the improvement we've seen year-to-date, largely a function of kind of that innovation you touched on rather than shelf resets. And then I guess with more resets to come, how would you think investors should think about the share trajectory as we look out to March and into the spring. Jarrod, you mentioned that you've now surpassed 10%. You're now focusing on a new target. So just any color on what that new target might be from a share perspective.

John Fieldly

Yes. No. Thank you, Peter. I mean we're not going to give any forward guidance on the future share, but we do look at the current trajectories and where we are currently at within different category -- within a variety of segments and the categories. And you mentioned Amazon. We disclosed Amazon. We're close to a 20 share within the energy category on Amazon. And then -- if you also look at -- I mentioned in my script, we have 12 key markets that we're tracking ahead of 15 share within the category and that's MULOC data. So there is a good trajectory there.
I think the biggest opportunity for us when you look at it is really in convenience. And we've built this brand going through the variety of channels. And the last -- the biggest opportunity is in convenience, where you about 56% 57% of all sales are sold.
So that's where we anticipate the biggest resets to take place. In the coming resets, right now, in the convenience channel, we are just at a 10 share. So we're really excited about the opportunities you have there versus if you just look at the food category, we're roughly around a 16 share within the energy category.
So those are some recent data points that we have that, that we've shared within the script as well as in the earnings release. And we've talked before, we're somewhere between the average, as Jarrod mentioned, we're about we closed at about a 10 share, and we're on close to a 20 share within Amazon. So we're working hard. The team is working hard and we're executing, and that doesn't include the new 16-ounce Essentials line, which is just getting started this year, which we're excited about.

Peter K. Grom

No, that's really helpful. And then I guess just on follow-up just on international. Can you maybe help us understand how we should think about the contribution from a revenue perspective. Are you exploring any additional markets for this year? Or would anything else kind of be more of a '25 narrative? And then just within that, I'm sure a lot of people and you've gotten this question a lot, but just, maybe explain why Suntory was the distributor of choice for the U.K. and Ireland?

John Fieldly

Yes. Thank you, Peter. I think number one, when we look at international expansion, we just went into Canada. We talked about that into -- on the script. We're really excited on the consumer acceptance. We're also excited about the -- we're in 7-Eleven in Couche-Tard. It's product is doing really well, and we're expanding. So our partner is excited. Canada should be a big market. U.K., did announce Suntory for our partner there. They -- we're looking for the best partners to align with on our go-to-market strategy. One thing that was very attractive about Suntory is their access to the gym community.
And we're really focused on a methodical approach as we expand and grow, really about building awareness, trial, that foundational base of loyalty and then scaling. So as we look to see the size and the timing and sequencing of international, I think that's -- we'll know that as we go through these markets and expand in these markets. And how quickly we are accepted, we can move as fast as we can. But we want to be very cognizant on entering new markets through a methodical approach about building that loyal foundation before we go and overall scale. So those are the comments there in regards, and we're really excited about our partnership with Suntory.

Operator

Our next question comes from the line of Michael Lavery with Piper Sandler.

Michael Scott Lavery

You touched on unmeasured channels as one of your big opportunities and gave some examples, corporate cafeterias, universities vending. There's lots of physical distribution points under all that. And I just would love to get a sense of how we should think about how quickly -- how close to hand those are? How quickly those could ramp up, kind of what the trajectory might look like for momentum in those areas?

John Fieldly

Yes. I think everyone is really excited about that. When you look at our PepsiCo revenues, over 12% is coming from really the foodservice. Internally here, we think there's a big opportunity there. We see that Celsius is much broader opportunity when you look at the TAM versus, say, traditional energy, we're seeing consumers -- consumer consumption increase outside of that energy need state. We're seeing the product being paired with sandwiches and smoothies and bowls and a variety of opportunities for fast casual.
So I think it's a little bit too early for us to really know how big that opportunity is. We have a -- we'll probably know over the next 12 to 24 months as we further expand in some additional quick service as well as expand in additional foodservice accounts and then universities and hospitals as well is a huge opportunity for us. Not able to quantify that at this time, but we do see it as big opportunity.

Michael Scott Lavery

Okay. And just on the Canada, U.K., Ireland launches, as we think about margins for 2024, obviously, you'd spend ahead of really ramping those revenues. And so all else equal, should we expect a dip in EBITDA margins for -- or EBIT margins for 2024 versus 2023? Or can you just give us a sense of how to think about the spending or what's in your plans for how that looks?

John Fieldly

Yes. I'll turn that over to Jarrod for additional comments.

Jarrod Langhans

Yes. So they're going to be a little different. Canada where most of the population is, I think, within 80 miles of the U.S. border and also being so close. We actually already had a co-packer in Canada that we were using as a backup for our U.S. business. So that rollout and that growth, we think, will be at a different trajectory than the U.K., which we're kind of launching from 0. So there will be investment in both markets as we build brand awareness and as we really build out the system. We won't have the same scale and leverage advantages within the manufacturing as we do in the U.S. So there is going to be some costs and some investment there. But it will be, let's call it -- it's not going to be a significant component of either our growth or our cost infrastructure this year. So we do believe that the numbers that we discussed on our prepared remarks, we'll be able to handle those investments as well.

John Fieldly

Yes. And I'll just -- in regards to -- when you look at it, Michael, one thing we've noticed is the brand awareness, even though we're not in the U.K., there is an underlying brand awareness just associated with -- the world is really so small these days, a one click away. So a lot of our influencers and social media activations are actually being picked up with our potential consumers in the U.K. So we had a little bit -- we have more brand awareness than we actually had initially anticipated based on our research. So we're excited, we think it's going to be a great market for us.

Operator

Our next question comes from the line of Gerald Pascarelli with Wedbush Securities.

Gerald John Pascarelli

Great. Just one on gross margin. Another quarter in the high 40s here. But in the energy category, you've already had a larger competitor take a rate increase. There's sentiment that your larger competitor will ultimately follow suit. So in the event this happens, how do you think about managing your price gaps relative to peers? I guess, just curious on your thoughts around a potential rate increase this year as that would obviously imply upside to your high 40s margin target? Any color there would be great.

John Fieldly

Yes. Thank you, Gerald. There's opportunities. We want to be a premium-priced product. I think if you look at it per ounce basis, we feel we're very competitively priced. There's a variety of different levers than just taking frontline pricing. So we have our pricing promotional strategies that we utilize as well. We just -- we're launching a new line extension as well with our Celsius Essential 16-ounce. And then you also -- you have your pricing architecture by channel as well so in pack size.
So there's ways to navigate that. I think we're very pleased with the way we finished the year with margins and we're really focused on driving share and revenue growth and continue to drive consumer consumption and ultimately, that daily consumption we're looking for. And we're just really getting started here. When you look at just now a 10 share in the energy category in convenience. So there's a long runway ahead. But it's something we watch closely. At this point, we're not going to make any comments on future any price increases at this time.

Gerald John Pascarelli

Understood. Just one more for me. I think your nonmeasured channel revenue came in a little better than expected, specifically related to Amazon at least what we were modeling for. In a lower seasonal quarter, your 4Q absolute revenue is almost in line with your second quarter, which obviously benefited from Prime Day. So any incremental color on the drivers in the quarter within that channel would be helpful if you could provide any.

John Fieldly

Yes. I mean Amazon, we had a great -- in the quarter, it was a great period. And there is a lot of timing as well within shipments and how the Amazon kind of controls or feeds inventory through their warehouses based on their algorithms. So we're going to keep shipping them. We're going to -- we're #1 energy drink right now, roughly about a 20 share in the energy category. I don't really have much color than that, but continue to drive further revenues through that channel. It is an omnichannel world, and that's something we really focus here at Celsius. We want to deliver Celsius to consumers when they want it, how they want it.

Jarrod Langhans

I think it does show too, that there is still opportunity for continued growth within the Amazon channel. So it's not necessarily slowing down suddenly just because we got to a certain spot within that. So I do see that as a continued growth opportunity for us as we look out into 2024.

Operator

Our next question comes from the line of Sean McGowan with ROTH Capital Partners.

Sean Patrick McGowan

A couple of quickies here. On the sales and marketing, give some good color on what we expect in the first quarter. And I think that rate of 23% is a little higher than you had talked about for some periods in the past. Is that a good number to use for the full year of '24?

Jarrod Langhans

I think I referred to Q1 and Q4 in my prepared remarks. And if you look at our Q1 activations and activity, we've got the Super Bowl activations we did that that we believe were very successful. We've actually got a Jake Paul fight this weekend down in Puerto Rico with another number of influencers that we support. We kicked off the MLS last week or a couple of weeks ago. We kicked off the F1 partnership. So we've got a number of things that are really rolling in Q1 to keep the momentum going.
As we look at a full year basis, historically, we've been in the 22% to 24% range. We were at 20% on a year-to-date basis in 2023. I think those are kind of the data points to stick to. If we've got opportunity to invest ahead of growth, we're going to continue to invest it. We're going to spend our money wisely. John and I require an ROI on everything we do. So we're not going to spend foolishly. But if we see opportunity to push growth, we'll push growth, if we don't see it, we'll continue to lever.

Sean Patrick McGowan

Okay. And then on the Essentials line, could you give us, I mean, that's pretty rapid acceleration of ACV. Where do you think that goes? And basically, more generally, what is the plan for additional SKUs and additional outlets for that line. I'm seeing it in its own cooler or a separate cooler in some stores. Do you think this can double that? Can you get to a 80% plus ACV by the end of the year?

John Fieldly

That's -- well, we've never launched a new line with our new distribution partner, PepsiCo. So I think we have a lot to learn. We are working hard. We think it can definitely be incremental. There is a lot of opportunity in there. That 16-ounce Celsius Essentials has been really well recepted by consumers. What's great? It's not cannibalizing existing sales. So we are bringing in additional new consumers and converting new consumers into the Celsius portfolio. So that has us really excited. It's not -- we're not trading our existing consumers. So the initial data.
It's still early. When you look at it, you're only talking like 8 weeks, 12 weeks of data we have at best in certain stores. So we really need to get a little bit more data underneath our belts as we move into -- get through Q1 and most importantly, see what these resets bring that are coming out. So I think this summer, we'll have a better read on how this portfolio is going to perform the Celsius Essential line within our overall global portfolio.

Jarrod Langhans

Yes. It's a great product. You should get out and taste it, if you haven't yet.

John Fieldly

It tastes great.

Sean Patrick McGowan

I have some in my office.

Operator

Our next question comes from the line of Eric Serotta with Morgan Stanley.

Eric Adam Serotta

Great. So could you give a little bit more granularity as to what drove the step-up in Pepsi revenue through the foodservice channel? I think it had been running at 10%, now it's at 12.5%. I think Jersey Mikes and Dunkin' are still very early days, and I'm not sure if those go through Pepsi, so maybe you could clarify that. But what specific channels are you seeing traction in, in foodservice through Pepsi?
And then a broader question, in terms of the new SKUs that you're adding, particularly on the Vibes and the core flavors, what are you seeing in terms of incrementality there? How are the sort of legacy flavors and by legacy core and Vibes flavors performing as you're introducing these new SKUs? And then sort of what do you see as the limit for SKU count or flavor variety here, you're still a long way from Monster and Red Bull?

Jarrod Langhans

I'll start with the foodservice one. John can have the -- all the other ones. So foodservice, I look at that as just continued momentum. I mean, if you look at our club program, once we start launching with them, we've got good progress, good momentum, but then you really see the volumes and velocity is growing. We're seeing the same thing across foodservice. We also had the college program fully in place in Q4. So as we talked about last quarter over the summer season, it tends to die down a bit when the college campus is empty out.
We're also seeing great progress in the other channels within foodservice that we're in. You mentioned, Mikes, you mentioned Dunkin', there's also hospitals. There's a variety of other food establishments. And so we're just continuing to see ongoing momentum across that channel, and we're really seeing that grow and be built out. And our distributor has really been helping significantly with that. So continued momentum, and we're doing great there. But let me throw the other ones over to John.

John Fieldly

Yes. And just a further detail on that. I think we're also seeing great momentum. And you talked about the step up and Jarrod, you mentioned college universities as a big opportunity and seeing growth there. But also vending. Keep in mind, vending is also going through that foodservice and the vending, we've expanded in vending. We're seeing great results in vending.
And at-work micro markets, we talked about those prior on several calls prior. The at-work micro-market opportunity is really good. I mean you see a lot of opportunities at work locations. So you're seeing the product continuing to scale. And I agree with you, Eric. I think seeing that go from 10% to 12%, just shows you the growth opportunity we have on an overall basis in this nontracked channel opportunity.
Looking at new SKUs, the Vibe line, we're excited about the Vibe line, talk about the success we had, I mentioned on the comments on the call earlier that Cosmic Vibe, we launched at Circle K and really going intergalactic with the theme of Space -- the Space Odyssey with our 2 new Vibe flavors to have a Space team. We're really excited on rolling that out. We're going to have some events coming up at Coachella and a variety of neat things to -- that you, guys, will be able to see.
The Vibe line is going to be a totally separate line. We're going to scale and grow that. I think there's a lot of opportunities to bring out innovative flavors and experiences with every sip. And then our core flavors, the team continues to come out with great flavors. I mean, you look at core, even expanding the core into our no Fizz line as well, where there's Blue Raspberry Lemonade that we launched at 7-Eleven in Q1 has been phenomenal. I mean the product tastes great and really expands this non-Fizz or non-carb opportunity that could be in wholly another revenue stream and ultimately an extension of our portfolio as well.
So we're monitoring the SKUs. Obviously, you need to do SKU rationalization. So that's something we talk internally at innovation meetings. We'll be doing that each year. We want to -- we'll cut our, as I call it, our tail or slow-moving SKUs. But we do see consumers looking for new innovation and staying within our portfolio, which is great. So our new Sparkling Peach, Raspberry Peach is phenomenal, great flavor. Eric, try it, please go out and try it. I think you'll enjoy as much as we do.

Operator

Our next question comes from the line of Jim Salera with Stephens.

James Ronald Salera

I wanted to drill down a little bit on the coolers because I have been in Cleveland, Ohio, and I was very surprised to see a Celsius branded cooler very prominently displayed at the cash wrap of the local grocerier. And so can you just talk about kind of the channel strategy there? How you want to get those coolers placed? And then maybe as a part 2 to that question, just any color you can offer on incremental uplift, velocity, repeat rates, trial buys in locations that do have the branded fridges?

John Fieldly

Yes. Jim, it's a big, big initiative we've had over the years trying to get more cooler placement. If you've been tracking the company over the years, we've been historically sold warm. So we had to build a loyal consumer that would actually have to take the product home and chill it and then drink of the daily lifestyle and routine. And that really shows to the loyalty around the Celsius consumer.
Cold availability is key to the success in order to compete in the energy category, especially with the impulse purchases. That is the biggest opportunity for us, and kind of mentioning it prior to the question, when we look at the convenience channel, that impulse purchase is key to the success of where we want to go and who we want to be in the category.
So we have -- we placed about 10,000 coolers. We are investing in more coolers. We're working on placing more coolers. We want to be right at checkout. Eye-level is critical. We're talking to a variety of retailers as well, to gain additional checkout coolers. So I think that's a big opportunity. Most recently down in South Florida, if you look at Publix, we've gained checkout coolers, and we're looking to gain additional checkout coolers on the next reset.
So that's a big opportunity. We do see uplift. If you're by the register and you're cold, kind of the saying we say internally here, if it's cold, it's sold. So the other thing is stacking high and watch it fly. Some comments we make around displays. But definitely a lift, the exact lift is hard to say because each channel and each store in each region is quite different on the velocity levels, but there is a substantial lift.

James Ronald Salera

Okay. Great. And maybe one follow-up on that. Are all of the actual use in the cooler consistent across the portfolio? Or do you guys make changes on that based on channel, local geography? Like could we see a Celsius lines in there? Or some of the other product innovations show up in the coolers?

John Fieldly

Yes. That's a great question. So we do have planograms and progressions we work on based on the size of the cooler. There is a little bit of regional seasonality that based on a retailer, we do exclusive flavors. So like at Circle K, we did our Cosmic Vibe. I talked about 7-Eleven, the new launch with the Raspberry Lemonade so -- Fizz-Free.
So you will see potentially unique flavors and given coolers, but we do have a standard national planogram that's being followed, probably not always followed to the tea, but that is something we work on as an overall organization and work with our PepsiCo partners to keep the progressions in the coolers in accordance to our planogram.
So the core should be have its own planogram, the Vibe should have a planogram and also our Fizz-Free line should have a planogram as well as our Celsius Essentials 16-ounce. So that's kind of how our go-to-market strategy.

Operator

That's all the time we have for questions. I'd like to hand it back to John Fieldly for closing remarks.

John Fieldly

Thank you, Doug, and thank you, everyone, for joining us today on our Celsius Holdings Fourth Quarter 2023 Earnings Call. I'd like to thank and close by thanking all of our employees. Your dedication to Celsius has helped to create the success we're enjoying today. And together, we'll continue to provide essential energy to more consumers so they can pursue their own live fit lifestyles with a cold Celsius in their hands. Celsius will be participating in several upcoming conferences details of which will be published on our Investor Relations corporate website. We look forward to seeing many of you there.
Thank you for your interest in Celsius. Stay healthy and live fit.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.