PepsiCo has boosted its stake in Celsius Holdings as part of a multi-faceted deal that sees the energy-drinks business acquire brand rights to Rockstar.
The move increases PepsiCo’s stake in Celsius to roughly 11%.
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In a joint statement today (29 August), the companies confirmed PepsiCo would pay $585m for 5% convertible preferred stock.
Celsius has also acquired the Rockstar Energy brand in the US and Canada from PepsiCo as part of the new agreement.
Following the deal, PepsiCo will manage distribution in the US and Canada of the Alani Nu brand, which Celsius bought in February for $1.8bn.
PepsiCo continues to own Rockstar in its international markets.
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By GlobalDataThe Gatorade maker also plans to select an additional director for Celsius’ board as a result of the deal.
“This agreement leverages the respective strengths of Celsius Holdings and PepsiCo to scale the combined energy drink portfolio with a more unified commercial strategy”, a joint statement from PepsiCo and Celsius said.
John Fieldly, chairman and CEO of Celsius Holdings, added: “Stepping into the role of PepsiCo’s strategic energy drink captain in the US is expected to be a pivotal milestone in our journey to shape the future of modern energy and grow our brands within a leading beverage distribution system.
“With a proven functional beverage portfolio and a stronger long-term partnership with PepsiCo, we believe that Celsius Holdings is well-positioned to deliver greater innovation, sharper execution and sustained brand growth. Together, we will reach more people, in more places, more often, with a total energy portfolio that offers options for every consumer and creates greater value for all our stakeholders.”
PepsiCo acquired a 8.5% stake in Celsius in 2022 for $550m. As part of the agreement at the time, PepsiCo was to take on the US distribution of Celsius’ products and was to become “the preferred distribution partner globally for Celsius”.
Ram Krishnan, the CEO of PepsiCo’s US drinks business, said the deal “marks the next step in PepsiCo reshaping its brand portfolio to position us for long-term growth”, and would generate “a stronger multi-brand energy portfolio that is better positioned to serve different consumer cohorts”.
The companies said the move gives Celsius “the opportunity to drive the strategic direction of a unified energy portfolio through seamless planogram design, SKU prioritisation and promotional execution”, while PepsiCo can “further scale and expand distribution, streamline commercial strategy, reach different consumer cohorts and better serve customers”.
The Alani Nu brand is also expected to see “expanded geographic reach” being distributed by PepsiCo in US and Canada, as well as “enhanced foodservice penetration and access to new channels”.
They added adding Rockstar to Celsius’ portfolio “will contribute to a total energy portfolio approach that appeals to a broader range of consumers with varied tastes and lifestyles”.
