As competition intensifies in the energy drink market, Celsius is making significant investments to enhance its position against major competitors like Red Bull, Monster, and emerging trendy brands. “Being a sole player in the energy segment, especially when up against larger entities, puts us at a disadvantage, as we cannot utilize pricing promotional strategies across different brands,” Fieldly explained during an interview at the Consumer Analyst Group of New York conference in Florida. “This investment enables us to compete at a higher level, which is essential for driving our growth and market share.”
Founded in 2018 by fitness influencer Katy Hearn, Alani Nu has seen its revenue surge to $600 million last year, fueled by its popular products and support from social media influencers. According to Circana data shared by Celsius, sales in U.S. retail and convenience stores jumped 78% year-over-year during the four weeks ending January 26. Fieldly noted that Alani Nu is “highly profitable.” Despite both Celsius and Alani Nu being sugar-free and appealing to a substantial female demographic, Fieldly emphasized that the risk of one brand cannibalizing the other’s sales is minimal, estimating that only up to 14% of energy drink consumers switch between the two brands.
Once the acquisition is finalized, Celsius is projected to hold a 16% share of the $23 billion energy drink market, increasing from its current 11%. “Our primary goal is to enhance incrementality within the energy category and foster growth,” Fieldly stated. “When considering the expansion of usage occasions within energy drinks, the opportunities are vast, and both brands are well-positioned to benefit.”
Robert Moskow, an analyst with TD Cowen, expressed skepticism about the advantages of the acquisition for Celsius. In a research note, he mentioned that management might be underestimating the overlap between Celsius and Alani Nu among sugar-free energy consumers and affluent young women. He also pointed out that the loyalty of shoppers to the six-year-old Alani Nu might not be as strong as Celsius anticipates, given the brand’s ties to social media, which is known for its low entry barriers and high turnover rates. “We are concerned that management may have rushed into this deal to counteract the slowdown in its core business,” Moskow remarked.
Fieldly minimized the idea that the acquisition was a hasty response to recent challenges faced by Celsius. “We had a slow start to the year,” he admitted, “but we have a solid innovation campaign and strategy set to launch this year. We are highly confident that Celsius is well-positioned to take advantage of the health and wellness trends in the energy sector.”
Energy drinks have gained a reputation as highly caffeinated beverages sought by individuals needing a boost, such as construction workers or college students pulling all-nighters. However, the rising consumer interest in healthier and functional options has increased demand for beverages that cater to health and wellness. Few companies have thrived as much as Celsius, with revenue skyrocketing to $1.4 billion in 2024 from just $17 million nearly a decade ago. Celsius has also established itself as a savvy marketer and innovator, with unique flavor combinations like Green Apple Cherry, Kiwi Guava, and Mango Passionfruit that have helped it stand out from competitors.
Yet, Celsius faces increasing competition, as Red Bull and Monster heavily invest in the sugar-free segment. Keurig Dr Pepper has also expanded its energy drink footprint by acquiring Ghost for more than $1 billion last year, while Molson Coors recently took a majority stake in Zoa. Additionally, inflation has impacted consumer spending on energy drinks, particularly in convenience stores.
The acquisition brings Celsius a substantial presence in supplements and food through Alani Nu’s protein shakes and bars. Approximately $120 million of the expected $2 billion in sales from the merged company will come from non-ready-to-drink products. “This is a significant business opportunity, allowing us to explore expanded avenues and adjacent categories,” Fieldly stated.
In line with its strategy to broaden its offerings beyond the original energy drink line, Celsius recently launched a caffeine-free hydration product to increase brand consumption among existing users and attract new customers who may have previously avoided the brand due to its stimulant content. This is part of a larger trend in health and wellness, where interest in products like Citracal Slow Release 1200 mg has also surged.