Forget Monster and Red Bull, Watch Celsius Now

Shares of Celsius Holdings (NASDAQ: CELH) climbed higher last week after the company unveiled an expanded partnership with PepsiCo (NASDAQ: PEP).

Under the agreement, Celsius will assume ownership of PepsiCo’s Rockstar Energy brand in the U.S. and Canada.

In exchange, PepsiCo will boost its stake in Celsius by investing almost $600 million in 5% convertible preferred stock, taking its ownership from to 11%.

On the surface, this might look like a trade of convenience. But peel back the layers, and you’ll see a shift that benefits both companies in different ways.

Key Points

• PepsiCo boosts its Celsius stake while handing over Rockstar and gaining Alani Nu distribution.

• Alani Nu powers Celsius’ rebound, with profits doubling forecasts.

• Rockstar adds stability, giving Celsius cash flow and deeper ties to PepsiCo.

Why Celsius Gains More Than Just a Brand

Celsius already had PepsiCo as its distribution partner in the U.S. and Canada, giving its flagship sparkling energy drinks the kind of retail shelf space most upstarts can only dream about. With Rockstar folded into the Celsius portfolio, the company now gets to offer a mainstream energy label alongside its better-for-you, fitness-oriented Celsius brand.

It’s worth remembering that PepsiCo originally paid over $3.8 billion 5 years ago for Rockstar, an aggressive bet at the time that hasn’t quite paid off.

Rockstar has steadily lost share to category leaders like Monster and Red Bull. But for Celsius, the economics look much different. Instead of buying Rockstar outright, it’s effectively trading a modest equity stake for a brand that still commands retail presence across gas stations, convenience stores, and big-box chains.

This is also about tightening alignment with PepsiCo. The deeper PepsiCo’s stake in Celsius, the stronger the incentive to push Celsius’ brands in a crowded beverage aisle.

PepsiCo’s Playing the Long Game

While giving up Rockstar might look like a retreat, PepsiCo gets plenty in return. It secures distribution rights for Alani Nu, the fast-growing functional beverage Celsius acquired for just shy of $2 billion earlier this year.

Alani Nu has carved out a strong niche with younger consumers, especially women, by leaning into flavor innovation and clean-label marketing.

For PepsiCo, adding Alani Nu is like landing a ticket to the hottest party in functional drinks. Nielsen data shows Alani Nu is one of the fastest-growing brands in the entire energy and wellness segment, something PepsiCo sorely needed after Rockstar’s stagnation.

A Reversal of Fortune for Celsius

This deal comes at a pivotal moment. Celsius has been a roller-coaster stock and from 2020 through 2023, revenue growth averaged triple digits annually, thanks to its sparkling energy drinks catching fire with fitness-minded consumers.

But in 2024, growth cooled dramatically, even slipping into negative territory for three straight quarters.

The Alani Nu acquisition changed the story. The company reported an 84% revenue surge last quarter. Even more encouraging, Celsius’ legacy business returned to positive organic growth, up 3%.

Earnings told an even better story, with profit nearly doubling analyst expectations.

Can Rockstar Be Re-Energized?

The big question now is can Celsius pull off another turnaround, this time with Rockstar?

Unlike Alani Nu, which was still on the upswing when acquired, Rockstar has been in decline. But Celsius doesn’t need Rockstar to set the world on fire. It only needs to stabilize the brand and leverage its existing distribution footprint.

Think of Rockstar as a cash-flow ballast, a steady seller that keeps Celsius relevant across broader demographics while Celsius and Alani Nu continue capturing high-growth niches.

And don’t overlook the intangible value: the more Celsius integrates with PepsiCo, the closer it gets to being seen as an indispensable partner. That could pay off in ways beyond simple distribution.

The Bottom Line

Celsius has already been one of 2025’s best-performing stocks, up more than 138% year to date before Friday’s pop. Now, with Alani Nu boosting growth, PepsiCo increasing its stake, and Rockstar providing a new lever for market share, the company is showing investors it has plenty of fizz left in the can.