Should PepsiCo's (PEP) Deeper Investment in Celsius Signal a New Strategy for Energy Drinks?

• In August 2025, Celsius Holdings and PepsiCo agreed to deepen their partnership, with PepsiCo investing US$585 million for an 11% stake in Celsius, distributing the Alani Nu brand in the U.S. and Canada, and transferring U.S. and Canadian rights to Rockstar Energy to Celsius.
• This collaboration gives PepsiCo exposure to the fast-growing, health-focused energy drink segment, particularly targeting fitness-oriented and female consumers through expanded distribution channels.
• We'll examine how PepsiCo's expanded energy drink partnership with Celsius Holdings could influence its health-focused growth narrative.

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PepsiCo Investment Narrative Recap

To own PepsiCo stock, an investor has to believe in the company’s ability to adapt its massive global snacks and beverages business toward higher-growth, health-focused segments while extracting productivity gains from its scale. The recent Celsius Holdings partnership deepens PepsiCo’s presence in energy drinks and could reinforce the company’s health-forward narrative, but it isn’t likely to materially change the short-term catalyst, which remains PepsiCo’s progress expanding its “permissible” snack and beverage lineup; the largest risk continues to be slow adoption of healthier product lines relative to shifting consumer preferences.

Among recent announcements, the July 2025 launch of Pepsi Prebiotic Cola is especially relevant, it fits squarely within PepsiCo’s goal to diversify beyond traditional sugary drinks, supporting both the health-focused growth story and the recent distribution moves with Celsius Holdings. These initiatives may bolster the case for margin improvement and top-line growth if healthier alternatives gain significant traction, but success is not assured as changing consumer habits often takes time.

On the other hand, investors should be aware that slow adoption of healthier products may...

Read the full narrative on PepsiCo (it's free!)

PepsiCo's narrative projects $101.2 billion in revenue and $11.8 billion in earnings by 2028. This requires 3.3% yearly revenue growth and a $4.2 billion earnings increase from $7.6 billion today.

Uncover how PepsiCo's forecasts yield a $153.05 fair value, a 3% upside to its current price.

Exploring Other Perspectives

Thirty Simply Wall St Community members estimated PepsiCo’s fair value between US$129.62 and US$177.37. While many see strong potential, some warn that slow consumer adoption of new healthier products could limit future growth and returns.

Explore 30 other fair value estimates on PepsiCo - why the stock might be worth 13% less than the current price!

Build Your Own PepsiCo Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your PepsiCo research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free PepsiCo research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate PepsiCo's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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