PepsiCo is taking a bigger stake in the energy drink space.
The beverage company has made a $550 million investment in Celsius Holdings, an energy drink maker that recorded a first-quarter domestic revenue increase of 217% to $123.5 million.
The long-term distribution deal gives Pepsi a minority stake of about 8.5%. The company will nominate a director to serve on Celsius’ board.
Celsius adds to PepsiCo’s energy drink portfolio, which already includes Rockstar as well as Mountain Dew drinks Amp, Game Fuel, and Kickstart.
- Celsius targets young, active consumers who exercise. The brand has a line of energy drinks, performance energy drinks, recovery fuel, and other beverages.
- The brand claims its drinks have thermogenic properties that help accelerate metabolism and burn calories, and don’t use artificial preservatives or sugar.
In Pepsi’s earnings call earlier this month, CEO Ramon Laguarta said that “in beverages, non-sugar is growing three times the speed of full sugar.”
Celsius isn’t the first energy drink company Pepsi has invested in recently. The company bought Rockstar for $3.85 billion in 2020. This year, Celsius overtook Rockstar as the fourth-most popular energy drink in a U.S market, worth reportedly $16 billion.
Pepsi entered an exclusive distribution agreement with Bang Energy in 2020, but the relationship ended in June following a legal dispute between the companies.