Recent headlines talked about the Texas AG investigating Alani Nu (A subsidiary of Celsius Holdings, $CELH) for allegations of marketing energy drinks to teenagers and minors. This led to a 6% drop on Thursday. The claim came after a 17 year old passed away, and family blamed it on high caffeine intake from Alani drinks, alleging that Alani specifically markets to and misleads teenagers/minors.
Here is why the case will not pan out for the family with anything more than a settlement, and why Alani is in the right:
-Alani has very clear labels on their drinks stating that the product is "Not recommended for children or people sensitive to caffeine," both of which the 17 year old was. There was no deceptive or clearly misleading marketing, like seen in previous cases such as Panera Bread.
-Alani Nu caffeine content (200 mg) is on-par with other energy drinks like Monster and Celsius.
-The family claims that the victim had been drinking Alani Nu for a long time. So, the family and victim were clearly aware of Caffeine's effects and possible dangers.
-Family is blaming Caffeine for the victim's death, but this will not hold up in court as no causative cause between chronic caffeine intake and the victim's death can be proven. It would take significant documentation showing the victim was completely healthy & unaffected by family cardiac history or genetic factors, prior to them starting to drink the product. Then, it would take significant documentation of the exact opposite after the victim started drinking to even try to claim a causative effect. The family has none of that.
I would wager that the victim likely had a genetic condition and/or significant family cardiac history, both of which will be uncovered by Alani Nu during investigation, rendering the case null.
Now, moving on from this case, let's look at why CELH is a good investment overall.
Celsius' Holdings products have a significant foothold in the energy drink market, which has only been growing. Previously, Coca Cola ($KO) and Pepsi ($PEP) both tried to break into the market with their own energy products in the past, but both failed. So, KO placed its bets on Monster ($MNST), and PEP placed its bets on CELH. Red bull is independent and private, but is worth mentioning as a major player.
MNST and Red Bull control about 40% of market share each (Total ~80%).
Despite being relatively new as a company (Red bull 39 years, Monster 24, Celsius 22), Celsius has obtained a significant market share of about 20% in the US, and has only been growing through acquisitions of companies like Alani, as well as expansions heavily supported by Pepsi.
Unlike MNST and Red Bull, however, Celsius's market share is almost exclusively in the US, and so their growth opportunity comes from international expansion, which is being actively supported by Pepsi. This will not be hard because Pepsi is actively providing them the platform and connections needed for global reach. There is enormous upside potential once Celsius begins selling overseas.
CELH PE is ~19, which is significantly less than its competitors. Market cap is also lagging behind. This is likely due to relatively low revenue growth (~7%) with Celsius's main products, and most of their growth being driven by their acquisitions and their sales. Still, their revenue is growing and has not shown signs of weakness, and their acquisitions have been extremely successful and only expected to succeed further the company works through a full integration.
Pepsi is quite invested into Celsius's success, with investments of 550mil and 585mil in August 2022 and August 2025, respectively. Further investments are HIGHLY likely, and a possible full-absorption of Celsius by Pepsi is also a possibility in the long-term.
Q2 2026 will look at a fully integrated Alani/Rockstar/Celsius company, and will give a clear picture of how much growth these recent acquisitions have offered and how well they are expected to continue to perform.