PepsiCo Acquires Prebiotic Soda Brand Poppi for $1.95 Billion

Prime Highlights:

PepsiCo has acquired prebiotic soda brand Poppi for $1.95 billion, including $300 million in anticipated tax benefits.

Launched in 2018, Poppi crossed $100 million in annual sales by 2023, capitalizing on the rising demand for health-focused beverages.

Key Background:

In a strategic move to tap into the growing health-conscious beverage market, PepsiCo has announced the acquisition of the prebiotic soda brand Poppi for $1.95 billion. The deal includes $300 million in anticipated cash tax benefits, bringing the net purchase price to $1.65 billion. Additionally, Poppi’s founders, Allison and Stephen Ellsworth, may receive further payments based on performance milestones after the deal closes, although the exact timeline for regulatory approval remains uncertain.

Poppi, launched in 2018, has seen significant growth, capitalizing on the rising demand for functional drinks. By 2023, the company had crossed $100 million in annual sales. The brand has gained attention for its unique formula, which includes apple cider vinegar, prebiotics, and only five grams of sugar. This growth in the prebiotic soda sector, alongside its competitor Olipop, has attracted the interest of major soda giants like PepsiCo and Coca-Cola. Coca-Cola recently introduced its own prebiotic soda, Simply Pop, as part of the growing category.

PepsiCo’s decision to acquire Poppi comes after plans to launch its own functional soda under the Soulboost brand were reportedly canceled. With the acquisition, PepsiCo gains a foothold in a market that has resonated with health-conscious consumers seeking alternatives to traditional sodas.

While Poppi’s popularity has surged, the company faced challenges, including a class-action lawsuit over its health claims. The lawsuit, which alleged that the drinks were not as healthy as advertised, was settled for $8.9 million on Friday. Despite such setbacks, Poppi’s continued success demonstrates its ability to compete in an increasingly crowded market. This acquisition aligns with PepsiCo’s ongoing efforts to diversify its portfolio and capture a larger share of the growing functional beverage sector.