PepsiCo, a multinational food, snacks, and beverages company, recently announced an investment of USD 550 million in energy drinks maker- Celsius Holdings. The investment forms a part of a long-term distribution deal with Celsius.

Through this deal, Celsius is anticipating garnering more shelf space amongst existing retailers and seeking expansion into independent stores like gas stations. Meanwhile, PepsiCo would support the product distribution soon.

Reports suggest that PepsiCo’s investment in the energy maker translates to a minority share of 8.5% in the company. Furthermore, the firm would also nominate a director to serve on Celsius’ board.

For the record, Celsius reported an explosive growth in its energy drinks sales during the pandemic, with the US revenue reaching $123.5 million, depicting a 217% hike in the first quarter. The company’s drinks include ingredients like green tea, ginger, and no artificial sugar or preservatives. Celsius claims that its beverages boast of thermogenic properties enabling the consumers to burn calories and enhance metabolism.

According to official sources, the agreement would help PepsiCo strengthen its ties to energy drinks. The segment is one of the fastest growing drinks segments outside alcohol, and the company has been doubling down on energy in recent years as soda consumption has drastically fallen.

Speaking of the latest partnership by PepsiCo, the company announced collaboration with Vital Pharmaceuticals’ Bang Energy of late, via an exclusive distribution agreement. However, the deal was taken down in June this year, paving way for the company to seek acquisition of other energy brands to expand its market share in the energy drinks category.

Post this news, the shares of Celsius closed at 11%, bringing its market valuation to USD 7.45 billion.

Source Credit- PepsiCo takes $550 million stake in energy drink maker Celsius (cnbc.com)