The global energy drink market is growing rapidly and driving a wave of corporate consolidation and new partnerships, the most recent coming from Celsius Holdings, which announced Friday that it is expanding its distribution partnership with PepsiCo and acquiring PepsiCo’s Rockstar Energy Drink.
ResearchandMarkets estimates the global energy drink market (roughly $78 billion in 2025) will grow at a compound annual growth rate of 5.91% for the next five years to reach about $104 billion by the end of the decade.
Female customers, the trend toward health and wellness and the rise in popularity of sugar-free energy drink options are all major growth drivers for the industry, said Celsius Holdings CEO John Fieldly Tuesday at the Barclays Global Consumer Staples Conference.
“But the route to market is so critical,” he added.
New inroads for Celsius and PepsiCo
Celsius’ route to market just got a lot smoother through its expanded partnership with PepsiCo. The Boca Raton, Fla.-based energy drink company announced Friday that about 80% of its Alani Nu brand distribution will move to PepsiCo in December.
Celsius acquired the better-for-you energy drink company Alani Nu (Alani Nutrition LLC) in April for $1.8 billion. Fieldly said the acquisition strengthened the company’s ability to grow the energy drink category for those seeking “a healthier alternative to traditional, sugary energy drinks.”
As part of the deal, PepsiCo also acquired $585 million in newly issued convertible 5% preferred stock in Celsius Holdings, increasing its ownership stake in the company to approximately 11%.
In return, Celsius acquired PepsiCo’s Rockstar Energy Drink brand in the US and Canada. PepsiCo will maintain ownership of the Rockstar brand internationally. PepsiCo also will get an additional seat on the Celsius board of directors.
On Tuesday, Fieldly described Alani Nu as a female-focused brand with inviting, unique flavor profiles like Witches Brew, a Halloween-themed drink.
“The company will be a category captain of the energy drink category for Pepsi,” Fieldly said, adding that the creation of the new board seat for PepsiCo “further ties in our strategic position with them, not only from a commercial standpoint, but also at the highest level, from an investor, stakeholder standpoint.”
That will put Alani Nu in more stores, Fieldly said, calling PepsiCo’s distribution network “phenomenal.”
“The biggest opportunities are convenience, small format, restaurants, food service, hospitals, universities, which we couldn’t get to that prior, even with Celsius,” he said.
Rockstar Energy joins Celsius
The purchase of Rockstar adds variety to Celsius’ line of products, providing the company access to the industry’s traditional demographic of males ages 25 to 35.
Fieldly hopes to capture wisdom from the roughly 17 Rockstar team members who will join Celsius, some of whom have been with the company since its founding in 2001, he said.
Fieldly expects a smooth transition to PepsiCo’s distribution, noting this is the company’s second such move. Celsius first partnered in 2022 with PepsiCo on distribution for its namesake line of drinks. The partnership also included a $550 million stock investment from PepsiCo, earning the company its first seat on the Celsius board.
“Now, we had challenges with Celsius, but we were also told when we moved Celsius into the PepsiCo’s distribution network, it was one of the most seamless transitions that folks have seen,” Fieldly said.
Celsius on the rebound
Celsius was in a much tougher position a year ago, according to Fieldly, who said the category was still in a negative growth rate, but it began to stabilize in the first half of this fiscal year.
That growth continues, according to Celsius Holdings Chief of Staff Toby David, who said in the last four weeks, growth has hit roughly 17% to 18%.
Customers are “pivoting out of cold coffee, and some of these other coffee beverages and into energy, and we’re seeing a lot of that right now,” David said.
Celsius is also working to capture customers engaged in the “cultural shift toward fitness, health, wellness and active lifestyles,” the company said. Fieldly added that Celsius also plans an advertising campaign with the National Football League.
Celsius also is restructuring its marketing efforts, building out specialized marketing and merchandising teams focused on convenience, foodservice and mass, which Fieldly said will help make Celsius “more capable within these retailers and really be able to improve the execution.”
