Pepsi invests $550M in “healthy” energy-drink maker Celsius as functional beverages replace sugary sodas
Looks like a seltzer... hits like a double espresso. Pepsi announced a $550M stake in trendy energy-drink maker Celsius Holdings as part of a distribution deal. Celsius stock popped 11% after the Pepsi-vestment. Its stake equals about 7% of Celsius, which is now worth over $7B. The soda giant will help Celsius expand in retailers like gas stations and convenience stores, where the bulk of energy drinks are sold.
- Functionally fit: Celsius markets its sugar-free energy drinks as "healthy." Think: supplemental ingredients like ginger and green tea with no artificial preservatives. It says its drinks are "clinically proven to accelerate your metabolism."
- Gen Z-pleasing: Celsius has targeted young, on-the-go consumers with its sleek cans and flavors like "Sparkling Arctic Vibe" and "Peach Mango Green Tea."
Pre-Zoom energy… Though founded in 2005, Celsius has seen explosive growth this year as young Americans seek energy boosts for Zoom marathons, gym sessions, classes, and returning social events. In the first quarter, Celsius' US sales more than tripled to $123M. It’s not just Celsius: energy drinks have become one of the fastest-growing non-boozy bev categories. Blame long and irregular hybrid work hours, labor shortages, and (increasingly frequent) social obligations.
“Functional bevs” are the new sugar… As sodas continue declining, big bev companies have shifted investment to functional beverages — think: vitamin-packed energy drinks and enhanced waters with a “purpose” (besides just hydration or intoxication). Last year, Coke splurged $5.6B for health-focused Gatorade rival BodyArmor. In 2020, Pepsi bought Rockstar Energy for nearly $4B and launched sleep-enhancement drink Driftwell. The global functional-bev market is expected to be worth nearly $200B by 2026.