PepsiCo has announced that it is buying a stake in energy drink producer Celsius Holdings.
PepsiCo has paid Celsius $550 million for 8.5% of the company and will also become Celsius’ main distributor. The deal sent the stock of both companies higher, with PepsiCo increasing 1.7% and Celsius 11%.
Celsius, a relatively new company founded in 2004, has its headquarters in Florida. It offers several lines of energy drinks including Celsius Live Fit, Celsius Heat, Celsius BCAA, and Celsius Stevia. It also has a line of powder stick packets that can be added to water to make an energy drink on the go.
PepsiCo, angling to increase its position in the energy-drink market, previously had a similar arrangement with Bang Energy, owned by Vital Pharmaceuticals. Six months after the agreement, Bang Energy sued PepsiCo for allegedly violating the terms of the agreement. The agreement was officially terminated last month.
As one of the fastest-growing beverages categories, the $80-billion energy-drink market provides a major opportunity for PepsiCo. PepsiCo already offers its own line of energy drinks, Rockstar.
Celsius produces sugar and preservative free energy drinks, setting them apart from competitors like Monster, distributed by Coca-Cola.