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From Coca-Cola to local Canadian brewers, the prebiotic soda industry is booming. Here's why

From Coca-Cola to local Canadian brewers, the prebiotic soda industry is booming. Here's why

CBC19-02-2025

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Coca Cola is introducing a line of prebiotic sodas, marking the legacy beverage brand's first foray into the "functional" soft drink market led by upstarts Olipop and Poppi — and further tightening competition as more Canadian brands launch their versions of the fizzy drinks.
The company announced on Tuesday that it would introduce the sodas, called Simply Pop, which it said will have prebiotic ingredients aimed at digestive health. They'll first be available in the U.S. before expanding to other markets later this year.
Prebiotic sodas usually pair low-sugar and high-fibre content with ingredients meant to promote gut health — similar to kombucha and other fermented drinks. They're referred to as "functional" because they're sold as a wellness product, though some health professionals have tempered expectations of their health benefits.
Olipop co-founder and CEO Ben Goodwin said in a statement shared with CBC News that it was validating to see the "modern soda category" had gone mainstream, and would have a bright future with Coca-Cola entering the market.
"It's a massive honour that the largest soda brand in the world has decided that the category … is a great place for them to seek growth," Goodwin said.
Coca-Cola, which will launch the sodas in three flavours, is making its entry into a market thirsty for younger drinkers and people opting out of alcohol. But even as the beverage giant goes probiotic, smaller Canadian brands are intent on carving out their own niche.
Why the drinks are seeing a surge
The prebiotic soda market is dominated by California company Olipop and its Texas-based competitor, Poppi. The latter was founded when its creators made a 2018 appearance on the business pitch reality show Shark Tank. Both brands have grown exponentially since then: Olipop was most recently valued at $1.85 billion US, while Poppi claims it made over $100 million US in sales in 2023. A spokesperson for Poppi had no comment in response to Coke's announcement.
Coca-Cola, for its part, thinks the overall category could generate $2 billion US in sales before 2030. Its research showed that Gen-Z and millennial consumers in particular "were really interested in juice and prebiotic sodas," said Becca Kerr, chief executive of nutrition at The Coca-Cola Company, in a news release.
"Since many brands in this category are new, they were looking to align with names they know and trust for both quality and taste. This was particularly true for those curious about prebiotic sodas but who hadn't yet taken the leap," she said.
Many consumers are trying to drink less pop and soda, but are still looking for fizzy alternatives with a health component, said Aleena Mazhar Kuzma, senior vice-president, managing director and partner at Toronto marketing agency FUSE Create.
There hasn't yet been consensus on the positive health benefits of these drinks, but experts say they generally don't do harm, which is why some consumers say they enjoy them as a guilt-free treat in moderation.
However, Poppi is currently facing a class-action lawsuit from a consumer who says the company's drinks aren't as "gut-healthy" as its marketing would have consumers believe, and that the increased sugar consumption that would come with regularly drinking its products outweighs the benefits of its prebiotic fibre ingredients.
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Meanwhile, young adults in Canada are drinking less alcohol, according to Statistics Canada, and Gen Z is particular isn't imbibing as much as the generations before them. Studies conducted in the U.S. have shown similar patterns. Beverage retailers like Poppi, Olipop and sparkling water brand Bubly are skewing their products to a younger audience by branding their drinks as "bright and vibrant and fun, but also kind of functional," said Kuzma.
That demographic is "reaching for something that is fun to drink, but isn't going to compromise their health objectives," she said.
A good old-fashioned rivalry between Poppi and Olipop has also drawn some comparisons to Coke vs. Pepsi, or the American beer wars between Budweiser, Miller and Coors. The feud came to a head recently, when Poppi launched a marketing campaign in which it sent vending machines full of its sodas to influencers, sparkling backlash from the public and taunting from Olipop.
The controversy has largely played out online, another nod to the brands' interest in younger consumers.
"I think Poppi and Olipop are both much like Coke and Pepsi. They're cheeky, they're young, they're social-first, they like getting involved in [online] conversations and cultural trends," said Kuzma.
Canadian brands getting fizzy with it
Both Poppi and Olipop are available for sale across Canada, but several Canadian companies have crafted their own prebiotic sodas as the category grows in popularity.
At the Henderson Brewing Company in Toronto, co-founder Steve Himel wanted to create a drink inspired by the pop shops that he frequented as a child in the '70s and '80s. Using flavour blends from the company's sour beers, he conceived Solly's Craft Soda, a prebiotic soft drink made entirely with Canadian ingredients.
"That was the ethos of the craft beer movement in the first place — it's all about buying local," said Himel in an interview with CBC News. "It's all about, what are the people in your community making and how can you support them?"
Solly's, he explained, appeals to people who grew up drinking fountain soda but have left it behind for health reasons, and parents who want to keep drinks that are sweet but "measured" in the fridge for their children.
"The challenge for us has been trying to find a provincial or national distributor, like a grocery chain, to come on board and support Solly's. [There is] a lot of competition. I think that in Canada these products still remain untested in terms of their broad appeal," he said.
Other Canadian prebiotic soda brands include those from Montreal-based companies Buddha Brands and kombucha-maker RISE, which introduced a gut-focused beverage line called Better Soda in 2023; Toronto brands Crazy D's and Geez Louise, the latter of which makes flavoured sparkling water with prebiotic fibres; and Cove Soda, founded in Halifax, which says its beverages are geared to a "new generation of soda drinkers."
"Coke will be cheaper and have a thousand times more points of distribution, so that does give them a huge edge," said Himel. But he's not betting on the beverage giant's long-term success in the prebiotic soda market.
"The consumer that is interested in these types of products, and are willing to pay a bit more for them, will also be interested in more of a 'craft' product," he said.
Himel thinks craft soda drinkers are also more likely to support local and small businesses over big corporations — and the prospect of a trade war with the U.S. has more people questioning the origin of the products they buy.

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