In the latest move to diversify its beverage portfolio, PepsiCo earlier this month invested $550 million into Celsius Holdings, the maker of the eponymous energy drink. The deal, which includes a long-term distribution agreement, gives the Pepsi owner an 8.5% stake in the company and director's seat on its board. It is intended to boost Celsius' growth agenda, eventually driving efficiencies and consolidating efforts in other areas like marketing.
A closer relationship with Celsius should help PepsiCo tap into the surging energy drink market, which is being driven by better-for-you products. Celsius ranked fifth behind Red Bull, Monster, VPX and PepsiCo-owned Rockstar in a recent IRI report, with over $500 million in sales — a mammoth 220% change over the prior year. Celsius CEO John Fieldly said the upward trajectory is part of a "mega-trend of health and wellness" across CPG.
"It continues to gain speed, and this deal really qualifies that," said Fieldly in an interview. "Celsius has broader positioning and massive opportunity, and not only in the U.S., but globally. This is a global opportunity at our hand and the same health and wellness trends we see in the U.S. are global trends… especially coming out of the pandemic."
Fieldly spoke with Marketing Dive about the brand's positioning, where it fits in PepsiCo's portfolio and what the deal means for its marketing moving forward.
The interview has been edited for clarity and brevity.
MARKETING DIVE: How will the PepsiCo deal affect the Celsius brand positioning?
JOHN FIELDLY: We've been able to build a really loyal consumer base around the brand and to connect with consumers in a meaningful way, where Celsius becomes part of a daily lifestyle and a daily routine. We're just not another energy drink; we're more than that to our core consumers.
When we look at our marketing positioning, we're not really going to change our positioning. We're going to continue to drive home this "Live Fit" mantra, that when we bring essential energy, it's essential energy for life. We're going to continue leveraging that.
What it does do is it broadens our distribution, so that's going to require somewhat of an increase in our overall marketing. That's where the investment comes in. As we further scale and get more distribution, we'll change some of our tactics for more of that broader consumer. We've always been very targeted, really focusing where our distribution is to build a daily consumer around our distribution, and that mentality is not going to change. But we're just going to have to somewhat alter some of our tactics to get a little more top of the funnel.
Do you anticipate being able to leverage PepsiCo's marketing capabilities?
FIELDLY: We're only days into the relationship. We are a little bit early on, but they seem to be really open to us having access to their marketing teams and some of the agencies they use, as well as some of their digital teams as well.
We're the number two energy drink on Amazon. We're going to continue to maintain our e-commerce business and our club business where we do extremely well, but we'll have access to their teams and that collaboration. I think there are a lot of opportunities on stadiums and sports marketing initiatives. They're really excited about the brand, so I think there'll be a lot of integration over the next 12 to 24 months.
PepsiCo has several other energy drinks in its portfolio, including Rockstar and Mtn Dew Energy. How does Celsius fit in?
FIELDLY: We're going to be the leading functional energy brand in their portfolio and really going after better-for-you performance as well. I think we're well positioned there. It's always a competitive environment, but I think the investment really aligns with most of our interests. Rockstar is really a traditional energy drink play, so I think we complement that, and we'll be able to drop some extra cases for them along the way.
What marketing opportunities does the distribution deal present?
FIELDLY: PepsiCo has access to 61% of the college population where they have exclusive contracts, so that's going to bring us to college campuses, and we know we're resonating extremely well with 18 to 24-year-olds, the next generation in the energy category. We align really well with their health and wellness goals for their lifestyle.
Food service is another big opportunity. We're more than just an energy drink. You're seeing a lot of consumers drink Celsius with their lunch, which expands the usage occasion. PepsiCo has a massive food service department that really opens us up to fast-casual restaurants, cafeterias and office buildings. It really is a transformational partnership for the company.
Speaking of colleges, tell me about Celsius University.
FIELDLY: We recently had 21 students graduate from 21 different colleges as part of our university ambassador program, Celsius University. We put them through a two-day program and educated them about brand marketing strategies and a variety of brand-building tactics. They are also mentored by some of our excellent team members within our marketing department that further grow their skill sets to be great marketers as they go through their college careers.
The program will be mentoring them and doing internships as well. It’s a paid position — they'll be working at the campuses — and it will be scaling and growing. It's a program that gives back to the community and creates some opportunity for students out there to really work with a fast-growing CPG brand.