Citi Raises Celsius Holdings Price Target to $73, Keeps Buy Rating Amid Partnership with PepsiCo.

Citi raised Celsius Holdings' price target to $73 from $60 and maintained a Buy rating after the company announced that Alani Nu will move to PepsiCo's distribution system in the US and Canada. Pepsi also increased its stake in Celsius to 11% from 8.5%. Citi views the agreement as a positive for Celsius as it scales the Alani Nu brand.

PepsiCo's recent investment in Celsius Holdings, elevating its ownership stake to 11%, signals a significant shift in the energy drink landscape. The $585 million deal, announced on August 29, 2025, includes the acquisition of the Rockstar Energy brand and the integration of Celsius's Alani Nu into PepsiCo's extensive distribution network, spanning 18,000 U.S. retail outlets [1].

This strategic partnership aims to capitalize on the growing demand for low-sugar energy drinks, valued at $87 billion in 2024, and projected to grow at a 7.2% annual rate through 2030 [2]. By leveraging PepsiCo's distribution scale and Celsius's innovative functional beverages, the partnership is poised to disrupt the market, currently dominated by traditional soda and legacy energy drink brands.

The synergy between the two companies is evident in their complementary strengths. Celsius, with its innovative functional beverages like hydration powders and plant-based energy drinks, gains access to PepsiCo's sprawling retail infrastructure. Meanwhile, PepsiCo benefits from Celsius's agility in product development and its 17.3% market share in the ready-to-drink (RTD) energy category [3]. This partnership eliminates 250 independent distributors, streamlining operations and reducing costs while expanding market reach [4].

The financial implications for shareholders are equally compelling. Celsius's Q2 2025 revenue surged 84% year-over-year, driven by the partnership's operational efficiencies and brand diversification [5]. Analysts project PepsiCo's earnings to grow at a 10.8% annual rate, bolstered by its expanded presence in the functional beverage segment [6]. By offloading the Rockstar brand—a legacy asset it struggled to integrate post-2019 acquisition—PepsiCo has freed up capital to reinvest in high-growth areas while Celsius gains a broader consumer base [7].

Critically, this partnership aligns with broader industry trends. As traditional soda declines at a -0.9% CAGR through 2025, PepsiCo's pivot to low-sugar, functional beverages like Celsius and Alani Nu ensures long-term relevance [8]. The global energy drink market, valued at $87 billion in 2024, is expected to grow at a 7.9% CAGR through 2032, driven by health-conscious consumers seeking alternatives to sugary colas [9].

For investors, the collaboration represents a dual win: PepsiCo's established scale and distribution amplify Celsius's growth potential, while Celsius's innovation pipeline injects dynamism into PepsiCo's portfolio. The 5.34% intraday surge in Celsius shares following the partnership announcement reflects market optimism about this synergy [10].

References:
[1] https://www.ainvest.com/news/pepsico-strategic-deepening-celsius-holdings-catalyst-energy-drink-market-dominance-2508-25/
[2] https://www.ainvest.com/news/celsius-holdings-strategic-realignment-pepsico-high-growth-catalyst-energy-drink-market-2508/
[3] https://www.ainvest.com/news/celsius-holdings-strategic-transformation-era-pepsico-michael-del-pozzo-board-leadership-2508/
[4] https://uk.finance.yahoo.com/news/pepsico-increases-stake-celsius-585-203730487.html
[5] https://www.ainvest.com/news/celsius-holdings-celh-surges-5-34-pepsico-partnership-strategic-brand-expansion-2508/
[6] https://finance.yahoo.com/news/pepsico-pep-expands-energy-drink-172035230.html
[7] https://www.cnbc.com/2025/08/29/pepsico-boosts-stake-in-energy-drink-maker-celsius.html
[8] https://www.ainvest.com/news/pepsico-strategic-bet-celsius-era-energy-drink-market-2508/
[9] https://www.nasdaq.com/articles/celsius-stock-goes-rock-star-rockstar
[10] https://www.ainvest.com/news/celsius-holdings-soars-10-71-pepsico-partnership-revenue-surge-2508/