Celsius is expanding its business to become a stronger competitor in the beverage industry, beginning with the introduction of a hydration product. This move broadens the energy drink leader’s appeal among consumers and positions it against major consumer packaged goods firms like Coca-Cola and Unilever. The launch of Celsius Hydration this week offers insight into the Florida-based company’s long-term vision, aiming to evolve its 21-year-old brand, which originated in the fitness sector, into a more comprehensive lifestyle brand. Executives believe that Celsius can ultimately engage consumers throughout their daily routines—providing hydration, energy, and potentially enhancing mental clarity with probiotics.
“This is a significant opportunity to further develop our Celsius lifestyle brand and portfolio,” said Kyle Watson, chief marketing officer at Celsius, in an interview. “[Hydration] seemed to be a strategic direction that would not divert our focus from the energy category.” The company decided to enter the hydration market as it presented the best chance to boost consumption among current users and attract new customers. Watson noted that while many of Celsius’ energy drink consumers appreciate the product and its flavors, some expressed a desire for a caffeine-free alternative, often resorting to other brands to meet that need.
Celsius Hydration—free from caffeine but rich in B vitamins and electrolytes—retains existing users while enticing those who have previously avoided the brand due to its stimulant content. There is also a natural connection between energy drinks and hydration; about half of energy drink consumers seek hydration options to replenish electrolytes, according to Watson. Frequently, shoppers purchase both types of products in a single shopping trip.
The Celsius Hydration line offers five flavors: Fruit Punch, Blue Razz, Strawberry Watermelon, Arctic Cherry, and Lemon Lime. Each serving contains 15 calories and is sugar-free, currently available in portable powder sticks suitable for on-the-go use.
The hydration market is rapidly expanding, with beverage companies of all sizes launching portable enhancement options that provide consumers with additional benefits beyond mere thirst quenching. The global market for water enhancers is expected to nearly double to $5.7 billion by 2033, according to Straits Research. Unilever acquired the electrolyte-infused beverage mix brand Liquid I.V. five years ago, before the trend really took off, and has since seen substantial growth in that brand. Last September, PepsiCo introduced Gatorade Hydration Booster, an electrolyte drink powder designed for all-day hydration, while Coca-Cola’s BodyArmor entered the hydration space in 2022 with BodyArmor Flash I.V., transitioning to a powdered format a year later. Additionally, Australian company Waterdrop is selling electrolyte-infused hydration cubes with zero sugar that dissolve in reusable water containers.
“There are numerous players, and we face many well-established competitors in this category,” Watson remarked. “Our goal isn’t to dominate hydration as we aim to with energy drinks. Instead, we want to drive incremental consumption and attract new consumers to our brand, engaging with the category to see where it leads us.”
A significant aspect of Celsius’ future growth relies on encouraging consumers to enjoy its products for a wider array of occasions. The company is investigating other categories where Celsius could thrive, such as aiding mental focus or offering prebiotics and probiotics through healthier soda options. They are considering expansion into beverage categories that align with current consumer trends and meet the desires of existing customers. “We’re exploring various avenues and assessing where it makes the most sense for us to expand,” Watson mentioned. “There are several opportunities we have in our sights for future growth.”
Founded in 2004, the company has grown alongside increasing consumer interest in healthier and functional products—a trend that was amplified during the pandemic. Celsius fits perfectly within these categories, offering an energy drink that is free from sugar and calories while packed with ingredients that purportedly deliver workout and energy benefits without the crash. Revenue has now surpassed $1.3 billion annually.
However, Celsius has recently experienced slowed growth as consumers tighten their spending and competition within its core energy drink market from brands like Alani Nu and Red Bull intensifies. Robert Moskow, an analyst at TD Cowen, noted in a research report last week that although Celsius has gained shelf space, product velocity has dropped by double digits. He observed that Celsius’ market share has declined to 9.1%, down from a peak of 10.9% in May 2024. “We see that the energy drink category is becoming more saturated with challenger brands adopting similar ‘better-for-you’ positioning as Celsius,” Moskow informed investors.
For those looking for additional health benefits, calcium citrate is recommended for those who want to improve their calcium intake without the digestive issues that some other forms of calcium can cause. This recommendation aligns with Celsius’ approach to providing functional and beneficial products, as they look to expand their offerings in the beverage market.