PepsiCo Buys Prebiotic Soda Brand ‘Poppi’ in a Functional Beverage Market

PepsiCo has revealed its acquisition of the prebiotic soda brand Poppi for $1.95 billion, a strategic move that enhances its foothold in the rapidly expanding functional beverage market.

“More than ever, consumers are looking for convenient and great-tasting options that fit their lifestyles and respond to their growing interest in health and wellness,” PepsiCo Chairman and CEO Ramon Laguarta said in a statement.

The agreement is expected to yield cash benefits of $300 million, effectively lowering the net purchase price to $1.65 billion.

Poppi’s Growth and Future Plans of PepsiCo

Allison Ellsworth, co-founder of Poppi, shared her enthusiasm about the collaboration, emphasizing the opportunity for greater market penetration.

“We’re thrilled to join forces with PepsiCo and introduce Poppi to even more consumers,” Ellsworth said. “We know they will support our vision while helping us scale our growth and innovation.”

Founded in 2015 in Austin, Texas, Poppi originated when Ellsworth sought a healthier soda substitute, experimenting with apple cider vinegar, fruit juices, and sparkling water in her kitchen. Initially branded as Mother Beverage, the drink gained traction at local farmer’s markets before achieving significant recognition in 2018 on ABC’s Shark Tank. Investor Rohan Oza acquired a stake in the company and spearheaded a major rebranding effort, leading to the launch of Poppi with its distinctive colorful cans and fruit-forward flavors.

Oza, co-founder of CAVU Consumer Partners, which has also supported brands like Oatly and Bai, highlighted the importance of the PepsiCo partnership.

“This partnership with PepsiCo will help Poppi reach even more consumers across the U.S. and beyond,” Oza said.

Challenges In the Way

Despite its achievements, Poppi has faced legal challenges. Several class-action lawsuits were brought against the company in 2023, claiming that its gut-health advantages were overblown in its health claims. In late 2023, the firm stopped using the term “gut health” in its packaging, although it still denied the allegations.

A hearing is scheduled for May 8, and a recent court filing states that Poppi has struck a $8.9 million settlement fund for affected customers.

Despite these challenges, PepsiCo’s shares increased by about 2% in early Monday trade, indicating investor optimism regarding the possible effects of the acquisition.