Why candy makers stocks are rallying in the US

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People are stressed and exhausted. The past two and a half years, filled with public health crises, recession and inflation, have been so eventful that news of a possible alien invasion has barely come out. The nights are clear and the days are restless, and we need an extra boost to keep us moving.

This may help explain why investors are excited about candy, soda and chips. Hershey’s shares are up 19% this year. Coca-Cola is up nearly 10%. Pepsi rose 4%.

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While the overall market fell by 10%. Inflation has taken a toll on retail sales, but people are fighting back – and tasting, too.

This is good news not just for the giants of the consumer goods industry, but also for lesser-known players. Consider Celsius Holdings, whose energy drinks are all over the US these days.

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“The reality is that we all need more energy,” said John Fieldly, CEO of Celsius. “We are working harder and working longer, and we are never disconnected.” Celsius sales are up 137% since last year, and the company reported earnings of 12 cents a share for the last quarter, up from just one cent last year.

Earlier this month, Celsius announced that PepsiCo would make a $550 million investment in the energy drink maker and become its preferred distribution partner.

“The general feeling in the industry is that people have come out of a stressful period of uncertainty and are finding comfort in certain drinks and snacks. Even if inflation leads to higher prices, they refuse to give up these little luxuries,” said Duane Stanford, editor and publisher of Beverage Digest, a business newsletter covering the soft drinks industry.

The appetite for energy drinks is growing. “It’s profitable, and big soda companies want to be in it. One of the ways we do that is through these partnerships,” Stanford said.

Celsius sells itself as the ultimate little luxury, the solution to both burnout and anxiety. Celsius claims to give its consumers “healthy energy” without jitters or retraction and includes ingredients like green tea extract and ginger root.

Coffee has become the choice of many younger consumers who don’t relate to the energy drink market’s extreme sports image, Stanford said. That’s why brands like Celsius are trying to appeal to a wider audience and Gen Z consumers who have been turned off by marketing male bravery.

Pepsi’s portfolio also includes Rockstar and Mountain Dew Rise. But Coca-Cola, which partners with Monster Energy, is currently better positioned in the energy drink industry than Pepsi, says Nik Modi, a beverage analyst at RBC Capital Markets.

Celsius is currently the fifth most popular energy drink on the market, behind Monster, Red Bull, Bang Energy Drink and Rockstar, but Stanford says Pepsi is betting it will expand quickly and capture market share.

Source: CNN Brasil

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