PepsiCo Buys Poppi for $1.95 Billion Amid Rising Demand for Prebiotic Sodas

PepsiCo announced on Monday that it is acquiring prebiotic soda brand Poppi for $1.95 billion, further expanding its presence in the growing functional beverage market.

Over the past two decades, traditional soda consumption in the U.S. has declined, while health-conscious consumers have driven demand for prebiotic sodas, led by brands like Poppi and Olipop. Recognizing this trend, PepsiCo is making a significant move to strengthen its foothold in the market.

A Strategic Acquisition

The deal includes $300 million in anticipated cash tax benefits, effectively lowering the net purchase price to $1.65 billion. PepsiCo may also make additional payments if Poppi meets certain performance milestones within a set timeframe after the acquisition closes. However, the company has not disclosed the expected closing date, pending regulatory approval.

Pepsi’s decision to acquire Poppi follows reports that it had originally planned to introduce its own functional soda under the Soulboost brand but later scrapped those plans. Instead, the company has opted to buy Poppi, which has already built a loyal customer base.

Poppi’s Rapid Rise

Poppi was founded in 2018 by Allison and Stephen Ellsworth, the same year that Olipop was launched. Its formula contains apple cider vinegar, prebiotics, and just five grams of sugar, appealing to consumers looking for gut-friendly beverages.

By 2023, Poppi’s annual sales surpassed $100 million, solidifying its position as a leading brand in the category. The company has also made major marketing moves, appearing in Super Bowl ads for two consecutive years.

Legal Challenges and Industry Competition

Despite its success, Poppi has faced criticism for its health claims. A class-action lawsuit alleged that the brand misrepresented the health benefits of its drinks. On Friday, Poppi and the plaintiff agreed to a $8.9 million settlement, according to court filings.

PepsiCo’s acquisition comes amid growing competition in the functional beverage market. Coca-Cola recently introduced Simply Pop, its own prebiotic soda brand, while Olipop, valued at $1.85 billion, has drawn interest from major soda companies. In 2023, Olipop’s CEO revealed that both PepsiCo and Coca-Cola had inquired about a potential acquisition.

With this deal, PepsiCo is betting on the continued rise of prebiotic sodas, positioning itself at the forefront of the health-conscious soda revolution.



News Source: CNBC