PepsiCo to Acquire Prebiotic Soda Brand Poppi for $1.95 Billion

PepsiCo announced Monday that it will acquire the prebiotic soda brand Poppi for approximately $1.95 billion. The deal highlights the growing appeal of healthier soda alternatives, a market segment that has gained significant traction over the past few years.

According to CNBC, the prebiotic soda category, driven by emerging brands like Poppi and Olipop, has seen a surge in popularity among health-conscious consumers. While traditional soda consumption in the U.S. has been on the decline for nearly two decades, functional drinks, which offer digestive and health benefits, are gaining momentum. This shift in consumer preferences has drawn the attention of major beverage companies like PepsiCo and Coca-Cola, with the latter recently launching its own prebiotic soda line, Simply Pop.

The acquisition of Poppi aligns with PepsiCo’s strategic focus on diversifying its offerings. CNBC reports that Pepsi had previously planned to introduce a functional soda under its Soulboost brand but ultimately scrapped those plans, a decision that seems to have cleared the path for the Poppi deal.

PepsiCo’s acquisition price of $1.95 billion includes $300 million in anticipated cash tax benefits, reducing the net purchase cost to $1.65 billion. The deal also includes performance-based milestones, meaning PepsiCo could make additional payments depending on Poppi’s success following the acquisition. However, the company did not disclose the expected timeline for closing the deal, which is contingent on regulatory approval.

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Poppi, founded in 2018 by Allison and Stephen Ellsworth, has quickly become a leader in the growing prebiotic soda market. The brand’s beverages feature apple cider vinegar, prebiotics, and only five grams of sugar, appealing to consumers seeking a healthier alternative to traditional sodas. By 2023, Poppi’s annual sales reportedly exceeded $100 million, showcasing the brand’s rapid growth and success.

Poppi’s rising profile was further cemented with its second consecutive Super Bowl ad appearance earlier this year, signaling the brand’s growing marketing presence and its aspirations to reach an even broader audience.

However, despite its success, Poppi has faced criticism over its health claims. The company was recently involved in a class action lawsuit alleging that its drinks were not as healthy as advertised. According to court filings, Poppi and the plaintiff reached a settlement on Friday for $8.9 million.

The prebiotic beverage market continues to be highly competitive. As noted by CNBC, Poppi’s rival, Olipop, was valued at $1.85 billion during its latest funding round in February. Olipop’s founder and CEO, Ben Goodwin, also mentioned in 2023 that both PepsiCo and Coca-Cola had shown interest in acquiring the brand.

Source: CNBC