PepsiCo announced Monday a $550 million investment in energy drink maker Celsius Holdings as part of a long-term distribution deal with the smaller company.
Shares of Celsius closed up 11% on the news, bringing its market value to $7.45 billion.
Celsius is expecting to gain more shelf space in existing retailers and expand more into independent stores, such as gas stations. Pepsi will assist with the distribution starting Monday.
Pepsi’s investment in Celsius translates to a minority stake of roughly 8.5% in the company. The food and beverage giant will also nominate a director to serve on Celsius’ board.
Celsius, which was founded in 2005, has reported explosive growth for its energy drinks during the pandemic. In the first quarter, its U.S. revenue soared 217% to $123.5 million.
The company pitches its beverages as “healthy” energy drinks, targeting younger consumers who are active and exercise. Celsius drinks include ingredients such as ginger and green tea and no artificial preservatives or sugar. The company also claims that the beverages have thermogenic properties, meaning that drinking them can help increase metabolism and burn calories.
