Pepsi is investing $550 million in Celsius as it dives deeper into the ever-growing energy drink industry.
- My play is Pepsi and Celsius energy drink. PepsiCo announcing a $550 million investment in the energy drink maker, Celsius Holdings, as part of a long-term distribution deal. The first quarter Celsius US revenue exploded, more than 200% to $123 million.
Energy drinks are one of the fastest growing non-alcoholic beverage categories. Pepsi's investment translates to a roughly minority stake of 8.5%. They'll also nominate a director to serve on the Celsius board.
And the news did fuel shares of CELH up 11-plus% on the day. They are up 45% in the last 12 months. PepsiCo shares also bounced a little bit, up 1% on the day. Seems like a pretty good fit for both companies, Rachelle.
RACHELLE AKUFFO: I mean, look, you already have the caffeine with Pepsi, so I guess it's a natural transition into energy drinks. And you know what? Maybe it's a sign that we're very tired. Maybe this is also why what's fueling it. You're also having people coming back to gyms, people working out. So I think maybe this is a good growth opportunity for Pepsi in this space. So I'll be keeping an eye on that one.
- I think it's a great opportunity for PepsiCo. In just a few short years, we've seen how popular Celsius drinks have gotten. I know-- I know, a lot-- my husband is a huge consumer of the Celsius drink. He swears by it. I think you drink it, too, right?
- I do drink it as well. Yeah, I've got one over there at the desk.
- A lot of people love it. It makes sense for Pepsi. They had a earlier interest in the energy drink space. They bought Rockstar Energy back in 2020 for $3.8 billion. So they're really expanding their space there. And it's getting more and more popular.
- Your play has been really unique that they are the healthy alternative to the other energy drinks with less sugar. That is certainly a claim that people are open to at this moment. And there you see the stock pop. All right, come--