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PepsiCo buys Poppi for $1.95B to gain foothold in functional drinks

PepsiCo buys Poppi for $1.95B to gain foothold in functional drinks

Express Tribune18-03-2025

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PepsiCo (PEP.O) announced its acquisition of Poppi, a prebiotic soda brand, for $1.95 billion, as the company seeks to strengthen its position in the growing "healthier soda" category. The deal comes as PepsiCo faces declining demand for its traditional sodas and snack products.
Following the announcement, PepsiCo's shares rose 1.6% in early trading. The move signals PepsiCo's strategic push into the health-conscious beverage market, a segment where young consumers are increasingly favoring functional drinks over conventional sodas.
Healthier beverages on the rise
Consumers, particularly young Americans, are turning to healthier sodas and energy drinks, driving beverage giants to innovate. Rival Coca-Cola (KO.N) has expanded its Simply brand to introduce a prebiotic soda called "Simply Pop". Other players, including Celsius Holdings (CELH.O) and Keurig Dr Pepper (KDP.O), have also made investments in the wellness drinks market.
PepsiCo's acquisition of Poppi is aimed at bolstering its presence in the prebiotic soda market, a subcategory of carbonated soft drinks (CSD) that is experiencing rapid growth. Prebiotic sodas contain beneficial ingredients that support gut health, an emerging consumer trend.
The Poppi advantage
Poppi, an Austin, Texas-based brand, has gained traction in recent years. The company reported a 122% increase in retail sales in the 12 weeks leading up to February 22, now holding about 1% of the total US carbonated soft drinks market, according to BNP Paribas.
PepsiCo emphasized that Poppi's formulation—a mix of prebiotics, fruit juice, and apple cider vinegar—makes it a low-calorie soda with no more than five grams of sugar per serving.
J.P. Morgan analyst Andrea Teixeira noted that the deal would help PepsiCo strengthen its CSD portfolio, which has lost market share to Coca-Cola and Keurig Dr Pepper in recent years.
Poppi's journey: from Shark Tank to PepsiCo
Founded by Stephen and Allison Ellsworth, Poppi was originally known as Mother Beverage before its rebranding in 2020. The couple pitched their soda on Shark Tank in 2018, securing the backing of investor Rohan Oza, co-founder of CAVU Consumer Partners.
Oza played a key role in rebranding Poppi, giving it its signature brightly colored, fruit-forward cans, and expanding its retail presence.
'We're beyond thrilled to be partnering with PepsiCo so that even more consumers across America, and the world, can enjoy Poppi,' said Rohan Oza.
Financial terms of the deal
PepsiCo disclosed that the $1.95 billion acquisition includes $300 million in anticipated cash tax benefits, bringing the net purchase price to $1.65 billion. The company did not reveal additional financial details of the agreement.
Allison Ellsworth: excited for the next chapter
Poppi's co-founder Allison Ellsworth expressed enthusiasm about the deal, highlighting that PepsiCo's global distribution would help expand Poppi's reach.
'We can't wait to begin this next chapter with PepsiCo to bring our soda to more people – and I know they will honor what makes Poppi so special while supporting our next phase of growth and innovation,' she said.
Ellsworth first developed Poppi in 2015 in her kitchen as a healthier soda alternative. She experimented with fruit juices, apple cider vinegar, sparkling water, and prebiotics, selling her creations at local farmer's markets before gaining national recognition.
Legal challenges: class-action lawsuit settlement
Despite Poppi's rapid success, the company has faced legal challenges. Last summer, multiple class-action lawsuits were filed against the brand, alleging that its products did not provide the gut health benefits promised in marketing materials.
Poppi denied the allegations but agreed to remove references to 'gut health' from its packaging in late 2023.
According to a court filing last week, Poppi has agreed to an $8.9 million settlement fund for affected consumers. A hearing on the settlement is scheduled for May 8.
PepsiCo strengthens functional beverage portfolio
The acquisition of Poppi aligns with PepsiCo's broader strategy to diversify its product offerings beyond traditional sodas. As rising prices continue to impact demand for Pepsi sodas and Lay's snacks, the company is investing in fast-growing health and wellness segments.
With consumers shifting toward functional beverages, PepsiCo is positioning itself to compete with emerging brands and long-standing rivals like Coca-Cola.

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