In a significant move within the beverage industry, PepsiCo announced on Monday that it is acquiring the prebiotic soda brand Poppi for nearly $2 billion. This acquisition highlights the growing trend of health-conscious beverages, particularly as traditional soda consumption has seen a decline in the United States over the past two decades.
Despite the overall drop in soda consumption, the prebiotic soda category has gained traction, primarily due to innovative brands like Poppi and Olipop. Over the last five years, these newcomers have successfully attracted health-conscious consumers seeking alternatives to sugary sodas. This surge in popularity makes the prebiotic soda market particularly appealing to major players like PepsiCo and its rival, Coca-Cola, which recently launched its own prebiotic soda line, Simply Pop.
PepsiCo plans to acquire Poppi for a total of $1.95 billion, which includes $300 million in anticipated cash tax benefits. This effectively lowers the net purchase price to $1.65 billion. Additionally, PepsiCo will be obligated to make further payments if Poppi meets specific performance milestones after the acquisition is finalized. The timeline for closing the deal remains uncertain, as it is pending regulatory approval.
Founded in 2018 by Allison and Stephen Ellsworth, Poppi has quickly made a name for itself in the beverage market. Its unique formula features apple cider vinegar, prebiotics, and only five grams of sugar per serving. By 2023, Poppi's annual sales reportedly exceeded $100 million, demonstrating the brand's robust growth. The company also showcased its marketing prowess with a second consecutive appearance during the Super Bowl, aiming to expand its reach to an even broader audience.
Despite its impressive sales growth, Poppi has faced challenges, including backlash regarding its health claims. Recently, the company was involved in a class-action lawsuit alleging that its drinks were not as healthy as advertised. On Friday, court filings indicated that Poppi and the plaintiff reached a settlement of $8.9 million to resolve the lawsuit.
This acquisition is a strategic move for PepsiCo, positioning the company to tap into the booming market of functional beverages. As consumer preferences continue to shift towards healthier options, PepsiCo's purchase of Poppi underscores its commitment to innovation and meeting the evolving demands of today's health-conscious consumers.
