PepsiCo has increased its stake in Celsius Holdings through a US$585 million deal, as the soda and snacks maker strengthens its energy drink business amid shifting consumer preferences.
Shares of Celsius, which owns a namesake energy drink and other hydration brands, jumped seven per cent in premarket trading on Friday. They have more than doubled in value this year.
PepsiCo has bought five per cent in Celsius’ preferred stock, bringing its stake to about 11 per cent after conversion. The company had paid $550 million for an 8.5 per cent stake in Celsius in 2022.
Celsius has carved out a strong following for its low-calorie, vitamin-infused drinks, as health-conscious consumers increasingly turn away from sugary sodas.
“Energy is an important growth category, and we believe this move with our partner Celsius creates a stronger multi-brand energy portfolio that is better positioned ...,” Ram Krishnan, CEO PepsiCo Beverages U.S., said in a statement.
Beverages makers have been pursuing energy and non-soda brand deals, driven by growing interest in fitness and lifestyle products.
PepsiCo said in March it would buy prebiotic soda brand Poppi for nearly $2 billion to boost its “better for you” product portfolio.
Last year, Keurig Dr Pepper bought a 60 per cent stake in energy-drink maker Ghost for $990 million to spruce up its refreshment beverages portfolio.
Celsius, which is based in Florida, on its part bought peer Alani Nutrition in an $1.8 billion deal earlier this year.
As part of the latest deal, PepsiCo will lead distribution for all three energy drink brands in the U.S. and Canada — Celsius, Alani Nu and Rockstar Energy. PepsiCo will continue to own the Rockstar Energy brand internationally.
(Reporting by Anshi Sancheti and Savyata Mishra in Bengaluru; Editing by Shilpi Majumdar)
