PepsiCo and Celsius Holdings, maker of fitness energy drink Celsius, have formed a long-term strategic distribution arrangement that includes retail and foodservice channels.
The agreement, effective Aug. 1, transitions Celsius’ U.S. distribution to PepsiCo, which will invest in Celsius to support its growth and makes PepsiCo the preferred global distribution partner.
As part of the deal, PepsiCo will invest $550 million in Celsius in exchange for convertible preferred stock, equating to an estimated 8.5% ownership, Celsius said. In addition, Purchase, N.Y.-based PepsiCo will nominate a director to serve on Boca Raton, Fla.-based Celsius’ board.
“We are extremely pleased to partner with Celsius and excited about the opportunity for our two organizations to drive growth and innovation in the energy beverage category,” said Kirk Tanner, CEO, PepsiCo Beverages North America. “The Celsius brand’s growing momentum coupled with the strength of PepsiCo’s portfolio and go-to-market capabilities create a combination we believe will be very compelling and valuable to retailers and consumers.”
John Fieldly, Celsius president, chairman and CEO, said, “We believe the opportunity to partner with a global best-in-class distributor provides Celsius with significant near-term additional shelf space in both existing retailers as well as new expansion within the independent retailers that represent a significant portion of the U.S. convenience and gas channel where approximately 70% of energy drinks are sold.”
The agreement also provides a strategic partnership that both companies expect will accelerate growth globally, Fieldly said.
“In addition, this partnership will drive efficiencies allowing our teams to consolidate sales, marketing and distribution efforts with associated cost benefits, which we expect to recognize once the initial transition is completed,” he said.
PepsiCo brands also include bubly, Gatorade, Pepsi, Lipton, Mtn Dew, Propel, Quaker, Frito-Lay and more.
This story first appeared in WGB sister publication CSP Daily News.