Celsius' Alignment With PepsiCo and Alani Expansion Bode Well for Growth, but Competition Intense

Celsius is poised to grow in the energy drink category in North America, as recent partnership agreements with PepsiCo further align the interests of the two parties for long-term growth in the category. In addition, the acquisition of Alani Nu has unlocked opportunities to tap demand from female consumers. That said, we remain skeptical that Celsius benefits from a durable competitive position underpinned by brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.