Celsius Takes Control Of Energy Drink Aisle With PepsiCo Partnership

Celsius Holdings Inc. (NASDAQ:CELH) is tightening its grip on the energy drink aisle as a revamped distribution deal with PepsiCo (NASDAQ:PEP) elevates the company to category captain status, giving it greater control over shelf space and product placement while unlocking new growth opportunities through the addition of Alani Nu and Rockstar to its portfolio.

Piper Sandler analyst Michael Lavery reiterated an Overweight rating on Celsius with a $69 price forecast, citing the deeper PepsiCo partnership, the addition of Alani Nu, and ongoing product innovation as key drivers.

The analyst noted that Celsius previously negotiated shelf space with PepsiCo annually, but the new deal secures guaranteed visibility, giving it control over planograms and SKU prioritization in Pepsi-designated coolers.

Also Read: Goldman Says Celsius Is Brewing Up A Growth Story Worth Watching

Under the agreement, Celsius will gain expanded presence, Alani Nu is expected to secure larger displays, and Rockstar will receive an optimized assortment focused on faster-selling products. Lavery highlighted Alani Nu as a significant growth driver, noting its strong momentum.

The brand will enter PepsiCo's distribution system on December 1, following a surge in U.S. retail sales of 120.8% in the four weeks ended August 10. The analyst added that Alani Nu, already well-placed in grocery and mass channels, will now be positioned on large in-store displays for the first time.

Broader category trends are also favorable. Consumers are shifting away from higher-priced iced coffee purchases toward energy drinks, with category sales climbing 16.7% over the past 12 weeks.

Piper Sandler emphasized Celsius' solid profitability, pointing to second-quarter EBIT margins of 27.2% and gross margins of 51.5%. The firm warned that tariffs could pressure results in the second half of 2025 but maintained that Celsius' targets of mid-50% gross margins and 30% EBITDA margins are achievable, with possible upside.

Rockstar, meanwhile, continues to face headwinds, with U.S. retail sales down 11.1% in the 12 weeks ended August 10, following a 14% decline in the prior period. Even so, the analyst said that its inclusion in the PepsiCo partnership strengthens Celsius' bargaining power and improves incentive terms, adding scale to the distribution network.

While acknowledging risks from intensifying competition and evolving consumer preferences, Piper Sandler remains constructive on Celsius' outlook. The firm projects revenue of $2.42 billion and earnings of $1.02 per share in fiscal 2025, rising to $3.32 billion and $1.35 per share in 2026.

Price Action: CELH shares were trading lower by 1.14% to $55.43 at last check Tuesday.

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