Celsius Holdings is moving towards vertical integration with the $75 million acquisition of its co-packing partner Big Beverages Contract Manufacturing LLC. The transaction was made with cash on hand and closed today.
Big Beverages is a North Carolina-based beverage manufacturer that has been a longtime Celsius co-packer, according to a press release. The merger provides Florida-based Celsius with a 170,000 square foot manufacturing and warehouse facility in Charlotte, N.C. The company’s management team and plant employees are expected to remain intact.
In its announcement, Celsius noted that the move marks vertical integration of “a plant primarily dedicated to Celsius” already, as well as added turnkey and R&D capabilities for the brand as it looks to embrace limited time flavors and product launches.
The company also cited future expansion opportunities with the ability to add more capacity to the existing facility, “per-case savings and improved leverage and margins,” and a “solid” return on invested capital opportunity.
“We believe that this acquisition gives Celsius fantastic leverage to accelerate our product innovation and production capabilities so we can continue growing the energy drink category with our great tasting, functional and better-for-you performance energy drinks,” said Celsius chairman and CEO John Fieldly in the release. “The experienced team and modern facilities at Big Beverages are best-in-class, and we’re proud to continue working with these dedicated men and women to inspire even more consumers to live fit!”
Founded in 2019, Big Beverages has distribution capabilities covering 70% of the U.S. and also offers consulting services for product development, marketing and sales and distribution, according to its website.
“The Big Beverages team has worked closely with Celsius for over four years, and we have always felt like we have been part of the Celsius family,” said Big Beverages CEO Ryan Goff. “We are proud of what we have accomplished, and we are very excited to join the most exciting and best tasting energy drink brand in the world.”
The acquisition arrives against a backdrop of slowdown for energy drink category growth and, in September, Fieldly announced that its primary distribution partner PepsiCo was significantly reducing its orders as part of standard inventory optimization.
Despite the recent slowdown, which follows an extended period of rapid triple-digit sales growth for the business, Celsius is continuing to focus on expanding its footprint in new channels like foodservice.