Fresh Take: Behind Poppi's Eye-Popping Price Tag After PepsiCo Deal
Photo byThe food deal market is bumping after PepsiCo gobbled up yet another better-for-you brand with this week's Poppi acquisition for a total of $1.95 billion.
That eye-popping price tag is a drop in the bucket for Pepsi, which has some $20 billion in earnings annually. But it's a huge deal for emerging food and drink brands and their founders. One investor described it to me as 'a new north star' for any entrepreneur or investor looking for an exit.
Poppi has become quite the success. What started in 2018 as a farmers market brand selling apple cider vinegar drinks from Austin-based couple Allison and Stephen Ellsworth has transformed into the brightly colored cans of prebiotic soda that now sell nationwide, thanks especially to the brand pivot incubated within Poppi chairman Rohan Oza's CAVU Consumer Partners. Combine that marketing prowess with Poppi's lineup of familiar and exciting flavors, and you can understand why the brand became a hot target for the beverage conglomerates that dominate what we drink.
BNP Paribas' Kevin Grundy, who covers Pepsi along with other consumer brands, says Americans drink around 180 gallons of beverages a year, and that's why Pepsi shelled out for Poppi. The brand resonates with a core consumer that skews younger and has found repeat sales in an up-and-coming and attractive category.
'It's filling a void in their portfolio,' says Grundy. 'Beverage consumption is a zero-sum game.'
Drink or be drank, in other words. Which is why Grundy says PepsiCo, Coca-Cola, Keurig Dr Pepper and other package goods conglomerates will continue to pay up, as long as the insurgent brand can deliver where it counts.
And the food industry is built on great rivalries—so don't forget about Olipop. The Poppi acquisition could actually be a good thing for Olipop, which has roughly the same amount in retail sales as Poppi. Now it could be an even hotter acquisition target.
More on the Poppi deal coming from me soon! Enjoy the weekend! Spring is here!
— Chloe Sorvino, Staff Writer
This is Forbes' Fresh Take newsletter, which every Friday brings you the latest on the big ideas changing the future of food. Want to get it in your inbox every week? Sign up here.
An exceptional new restaurant joined my neighborhood and I couldn't be more thrilled. Sunn's is chef Sunny Lee's homey take on daily banchan and Korean comfort food. I've been dreaming of these rice cakes ever since my meal.
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