Jamie Spencer
PepsiCo announced Monday that it is acquiring prebiotic soda brand Poppi for nearly $2 billion, as it moves to capitalize on the growing demand for functional beverages.
While overall soda consumption has declined in the U.S. over the past two decades, health-focused alternatives like prebiotic sodas have surged in popularity, thanks to brands like Poppi and Olipop. This trend has attracted the attention of beverage giants such as PepsiCo and Coca-Cola, which recently launched its own prebiotic soda, Simply Pop.
Deal Details & Financials
- Acquisition price: $1.95 billion
- Net cost: $1.65 billion (after $300 million in tax benefits)
- Additional payments: Contingent on Poppi achieving performance milestones
The acquisition is still subject to regulatory approval, and PepsiCo has not provided a specific closing date.
Poppi’s Rise to Popularity
Poppi was founded in 2018 by Allison and Stephen Ellsworth, the same year as its main competitor Olipop. The brand’s formula includes apple cider vinegar, prebiotics, and just five grams of sugar, appealing to health-conscious consumers.
By 2023, Poppi’s annual sales reportedly exceeded $100 million. The brand has also invested heavily in marketing, making its second consecutive Super Bowl ad appearance in 2024 to expand its audience.
Legal & Industry Challenges
Despite its success, Poppi has faced scrutiny over its health claims. The company was hit with a class-action lawsuit alleging misleading product labeling. On Friday, Poppi and the plaintiff agreed to settle for $8.9 million, according to court filings.
Prebiotic Soda Market Heats Up
PepsiCo initially aimed to enter the prebiotic soda space with its Soulboost brand but scrapped those plans, likely paving the way for its Poppi acquisition.
Meanwhile, Olipop, valued at $1.85 billion in its most recent funding round, has also drawn interest from soda giants. In 2023, Olipop CEO Ben Goodwin revealed that both PepsiCo and Coca-Cola had inquired about a potential acquisition.
