This time roughly three years ago, PepsiCo was standing amidst the rubble of its distribution deal with Bang – a partnership that was supposed to help the soda giant jump to the front of an energy drink category where it was increasingly left behind. That memory only stands to emphasize the turnaround they’ve executed since, culminating in this morning’s announcement of Celsius Holdings as PepsiCo’s “strategic energy lead in the U.S.,” including management of Celsius, Alani Nu and now Rockstar Energy. What does that mean? In one fell swoop, Pepsi and Celsius now control three brands representing around a 20 point share of the energy drink category. In leading the group, Celsius Holdings will drive a unified strategy across the energy portfolio through “seamless planogram design, SKU prioritization and promotional execution,” the company said. Of course, nothing says commitment like a big check: Pepsi is buying up $585 million in preferred stock from Celsius, boosting its stake to 11%. It’s an exchange similar to the one we saw between Monster and its distribution partner Coca-Cola back in 2015, where the former gained control of NOS and Full Throttle in exchange for handing over an equity stake and its existing non-energy drink business. The announcement also confirms the future of Alani Nu distribution, one of the most pressing questions since Celsius bought the brand for $1.8 billion in February. Alani’s massive success – sales hit $301 million (+129%) in Q2, with share up 3.2 points from the same period last year – has come mainly on the back of independent beer DSDs (many of which have been predicting it would eventually leave their portfolios). It’s already the category’s fastest-growing brand, but influencer-favorite Alani still has room to expand: as noted by analysts at Jefferies, Alani’s penetration in c-stores is only at 69% (vs Celsius at 98%). We’ve of course seen that cycle in energy drinks – building through DSD, then exiting to strategic – many times before. But whereas previous exits have opened up opportunities for smaller brands to fill the gaps on distributor’s trucks, the conditions now may be different now. We won’t see the actual effects until early next year. But whether you’re a Celsius-chugging congressperson or just someone who loves drinks that taste like Witch’s Brew – Pepsi wants to be your caffeine dealer. Read the full story on BevNET for all of the context and category considerations. | 
