PepsiCo Acquires Prebiotic Soda Brand Poppi for $1.95 Billion
Key Points:
- PepsiCo (PEP.O) has announced the acquisition of Poppi, a prebiotic soda brand, for $1.95 billion as part of its strategy to expand in the growing health-conscious beverage market.
- The acquisition follows a decline in demand for traditional sodas and snacks, prompting PepsiCo to invest in functional beverages.
- Following the announcement, PepsiCo’s shares rose by 1.6% in early trading, reflecting investor confidence in the move.
- The deal includes $300 million in anticipated cash tax benefits, bringing the net purchase price to $1.65 billion.
- Poppi, an Austin, Texas-based brand, has experienced rapid growth, reporting a 122% increase in retail sales over the 12 weeks leading up to February 22.
- The prebiotic soda market is expanding as consumers, especially young Americans, seek healthier alternatives to traditional carbonated soft drinks (CSDs).
- PepsiCo’s rival, Coca-Cola (KO.N), has also entered the prebiotic soda space with the launch of Simply Pop, while other industry players like Celsius Holdings (CELH.O) and Keurig Dr Pepper (KDP.O) have invested in wellness drinks.
- Poppi’s formulation includes prebiotics, fruit juice, and apple cider vinegar, making it a low-calorie option with no more than five grams of sugar per serving.
- Founded by Stephen and Allison Ellsworth, Poppi was originally known as Mother Beverage and gained recognition after securing an investment on Shark Tank in 2018.
- The brand underwent a rebranding in 2020, led by investor Rohan Oza, who played a key role in its marketing and retail expansion.
- PepsiCo’s global distribution network is expected to accelerate Poppi’s growth, with co-founder Allison Ellsworth expressing optimism about the brand’s future under PepsiCo.
- Poppi recently faced legal challenges, including class-action lawsuits over alleged misleading health claims. The company denied wrongdoing but agreed to remove “gut health” references from its packaging and settled for $8.9 million.
- A court hearing on the settlement is scheduled for May 8.
PepsiCo’s acquisition of Poppi highlights the company’s strategic shift towards health-focused beverages amid declining demand for traditional sodas. The deal positions PepsiCo to compete more effectively in the rapidly growing functional beverage sector alongside rivals like Coca-Cola and emerging wellness brands. Despite legal challenges, Poppi’s strong retail performance and PepsiCo’s expansive distribution network are expected to drive further growth in the prebiotic soda market.
