In today’s competitive beverage industry, no company can afford to fall behind its competitors in product development or marketing strategy. That’s why PepsiCo has invested $550 million into energy drink maker Celsius, to stay ahead of the game. This investment will give PepsiCo distribution rights across North America and help Celsius expand internationally, thanks to the resources available through the new partnership. For more details on this story, read our full article here!
PepsiCo announced Monday a $550 million investment in energy drink maker Celsius Holdings as part of a long-term distribution agreement with the smaller company.
Shares of Celsius spiked 11% after the announcement, bringing its market value to $7.45 billion.
The company expects to gain more shelf space in existing retailers and expand more into independent stores, such as gas stations. Pepsi will help with distribution starting Monday.
Pepsi’s investment in Celsius translates into an 8.5% stake in the company. The food and beverage giant will also nominate a director to serve on Celsius’ board.
In the wake of the recent pandemic, Celsius, founded in 2005, has seen exponential growth for its energy drinks in the U.S. Revenues soared by 217% to $123.5 million in the first quarter.
The company tries to make their drinks seem healthy by pitching them to younger consumers who are active and exercising. The ingredients in Celsius drinks, such as ginger and green tea, make it different from any other drink because there are no artificial preservatives or sugar. Furthermore, they claim that the beverages can have thermogenic properties, meaning that drinking them will have the potential to increase metabolism and even to help people lose weight.
Pepsi’s commitment to energy drinks strengthens its position in the fast-growing beverage segment. The category is one of the fastest growing beverage segments outside of alcohol, and Pepsi has been doubling down on energy drinks in recent years as soda consumption declines. Celsius recently overtook the brand as the fourth most popular energy drink in the United States after buying Rockstar in early 2020 for $3.85 billion.
Pepsi has previously supported an up-and-coming beverage, Bang Energy, through an exclusive distribution agreement. Despite this, the relationship soured, culminating in a legal battle won by Pepsi. In June, the two companies parted ways. There were rumors that Pepsi would buy Monster Beverage or Celsius to expand its energy drink business.