PepsiCo vs. Celsius: Which Functional Beverage Player Has the Edge?

In the high-octane world of beverages, few rivalries are as compelling as the one brewing between PepsiCo Inc. PEP and Celsius Holdings Inc. CELH. On one side stands PepsiCo, a global behemoth with decades of dominance, an expansive product portfolio spanning snacks and drinks, and unmatched distribution muscle. Then again, Celsius is a fast-rising disruptor making waves in the booming energy drink space with a sharp focus on health-conscious millennials and high-performance branding.While PepsiCo commands a massive share of the global beverage market with iconic brands like Pepsi, Gatorade and Mountain Dew, Celsius is carving out a niche by positioning itself as a lifestyle energy brand with explosive sales growth and loyal fan following. One is a diversified titan, the other a pure-play challenger. But as the lines blur between traditional soda, sports hydration and functional energy drinks, the competition for shelf space and consumer mindshare is heating up.So, how do these two contenders stack up in terms of market share, core strategy and future positioning? Let us dive into the strengths, challenges and investment appeal of each.The Case for PepsiCoPEP continues to fortify its position as a global consumer staples powerhouse, underpinned by a diversified portfolio and commanding presence across key beverage and snack categories. With more than 40% of its 2024 net revenue generated internationally, PepsiCo has scaled a $37-billion international business, making it one of the most geographically diversified players in the sector.In North America, its beverages segment showed renewed strength, with Pepsi Zero Sugar and Gatorade Zero gaining share in their respective categories, while its functional hydration brand Propel also delivered strong growth. These figures highlight PepsiCo’s ability to hold and expand share in a dynamic, consumer-driven market.PEP is sharpening its focus on high-growth niches like zero sugar, functional hydration and sports nutrition while simplifying its go-to-market execution through larger-scale initiatives. Campaigns like “Food Goes Better With Pepsi” and product rollouts like Mountain Dew Baja Blast reflect a focused brand push. It is also expanding in under-penetrated spaces through innovations and acquisitions like its recent deal to acquire the prebiotic soda brand poppi, and by scaling multicultural and permissible offerings under brands like Simply, Siete and Sabra. At the same time, PepsiCo is adjusting to post-inflation consumer behavior with more affordable, flavorful and portion-conscious snack offerings.From a financial standpoint, PepsiCo’s resilience is shown in its core operating margin expansion in beverages and its continued push for efficiency. Despite foreign exchange headwinds and rising supply-chain costs, the company remains committed to long-term investments in automation, digital analytics, and productivity initiatives to preserve margins and drive innovation.With plans to return $8.6 billion in cash to shareholders in 2025 and a record of 53 consecutive annual dividend increases, PepsiCo is not just a beverage titan; it is also a reliable bet for income-focused investors navigating today’s volatile macro landscape.The Case for CelsiusCELH is rapidly emerging as a formidable force in the energy drink sector, powered by its laser focus on health-conscious consumers and strategic expansion into functional beverages. In first-quarter 2025, Celsius captured a combined 16.2% share of the U.S. energy drink market (via Celsius and Alani Nu), contributing to 20% of total category growth for the quarter. Notably, Alani Nu’s retail sales soared 88% year over year, crossing the $1-billion milestone and highlighting its appeal, especially among female consumers, an underserved segment in the energy drink space.With a growing international presence and new markets like the U.K., Australia, and New Zealand showing strong uptake, Celsius is positioning itself at the intersection of wellness, convenience and lifestyle-driven consumption.Strategically, Celsius is betting big on innovation and brand identity to carve deeper market inroads. Its latest product launches — CELSIUS Playa Vibe, Mango Lemonade and CELSIUS HYDRATION powder sticks — are designed to expand both shelf space and use cases, moving from impulse buys to daily lifestyle staples. The brand’s “Live Fit” identity resonates strongly with its target demographic of active, health-driven, and socially connected consumers, and its latest NIL and athlete ambassador campaigns are set to amplify visibility.With multipacks now making up more than 50% of the retail mix, Celsius is firmly entering the pantry as a household staple. In addition, its strong performance in foodservice, with placements in 18,000 Subway stores and more than 1,800 Home Depot locations, underscores its ability to win across channels.Financially, Celsius maintains a strong balance sheet with nearly $1 billion in cash and minimal debt, even after the Alani Nu acquisition. As it scales operations, unlocks supply-chain leverage, and rolls out high-margin innovation, CELH is laying the groundwork for sustained growth in the fast-evolving $1.4-billion hydration and modern energy market. For growth-focused investors, Celsius offers a compelling blend of market disruption, brand momentum and category leadership.Price Performance & Valuation of PEP & CELHPepsiCo shares have trended lower year to date, pressured by soft demand in its North America convenient food segment and investor concerns over rising supply-chain costs and potential tariff impacts on global inputs. In contrast, the Celsius stock has shown steady year-to-date gains, supported by strong underlying business momentum and continued category growth. Year to date, PEP shares have declined 13.9%, whereas the CELH stock has rallied 56.3%. Image Source: Zacks Investment Research From a valuation perspective, PepsiCo currently trades at a more modest forward price-to-earnings (P/E) multiple of 16.22X, significantly lower than Celsius’ 42.65X. On the surface, this may suggest that PepsiCo is more attractively priced. Image Source: Zacks Investment Research However, a lower valuation does not automatically signal a buying opportunity; it can reflect underlying concerns about growth prospects or operational challenges. While the company remains a stable dividend payer with a diversified portfolio, the question for investors is whether this discount represents untapped value or signals persistent headwinds that can limit the upside in the near term.Then again, Celsius’ valuation appears rich, but for good reason. Its premium multiple reflects strong brand equity, exceptional gross margins and a laser focus on fast-growing segments like sugar-free, functional energy and hydration. Its consumer-first approach, digital-savvy marketing, and expanding retail footprint underscore why investors are willing to pay up. For long-term investors seeking exposure to a high-growth, category-disrupting brand, Celsius offers a compelling case despite its premium price tag.While PepsiCo’s broad footprint insulates it from volatility, it slows agility. Celsius, by contrast, is still in its high-growth phase, with a significant runway across international markets, hydration powders, multipacks and co-branded retail.How Does Zacks Consensus Estimate Compare for PEP & CELH?PepsiCo’s EPS estimates for 2025 and 2026 moved down 0.3% and 0.2%, respectively, in the last 30 days. PEP’s 2025 revenues are projected to rise 0.4% year over year to $92.2 billion, and EPS is expected to decline 3.6% year over year to $7.87. Image Source: Zacks Investment Research Celsius’ EPS estimates for 2025 have moved down 12.9% in the past 30 days. Its 2026 estimate declined by a penny in the last seven days. CELH’s 2025 revenues and EPS are expected to increase 60.3% and 15.7% year over year, respectively, to $2.2 billion and 81 cents per share. Image Source: Zacks Investment Research PEP vs. CELH: Who Stays on Top?Both PepsiCo and Celsius bring distinct strengths to the table — PepsiCo with its global scale, diversified portfolio and dividend reliability, and Celsius with its focused strategy, innovation-driven growth and rising presence in the functional beverage space. Each company reflects a different investment profile: one rooted in stability, the other in acceleration. While PepsiCo’s broad footprint insulates it from volatility, it also slows agility. Celsius, by contrast, is still in its high-growth phase, with a significant runway across international markets, hydration powders, multipacks and co-branded retail. However, looking at the stock performance and forward-looking appeal, Celsius emerges as the stronger investment case. CELH also commands a premium valuation, backed by strong brand resonance, rapid market share gains and expanding global reach. Its impressive year-to-date return and strong year-over-year earnings growth expectations highlight growing investor confidence in the brand’s momentum and execution capabilities, especially in the high-growth functional energy segment.For investors seeking dynamic growth and future earnings potential, Celsius stands out as the more compelling pick in the evolving beverage landscape. Celsius currently carries a Zacks Rank #3 (Hold), while PEP has a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PepsiCo, Inc. (PEP): Free Stock Analysis Report Celsius Holdings Inc. (CELH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks