PepsiCo announced on Monday its acquisition of the prebiotic soda brand Poppi for a staggering $1.95 billion. This strategic move positions PepsiCo within the rapidly expanding functional beverage market, tapping into the growing consumer demand for health-conscious drink options.
According to PepsiCo Chairman and CEO Ramon Laguarta, “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.” This acquisition aligns with PepsiCo's vision to enhance its portfolio with products that resonate with modern health trends.
The deal includes an estimated $300 million in anticipated cash benefits, effectively reducing the net purchase price to $1.65 billion. This financial structure illustrates PepsiCo's commitment to investing in innovative brands that have the potential for significant growth in the beverage sector.
Allison Ellsworth, co-founder of the Austin, Texas-based Poppi, expressed her enthusiasm about the partnership, stating, “We can’t wait to begin this next chapter with PepsiCo to bring our soda to more people – and I know they will honor what makes Poppi so special while supporting our next phase of growth and innovation.” Under her leadership, Poppi has evolved from a kitchen experiment to a recognized player in the beverage industry.
Ellsworth created Poppi, originally known as Mother Beverage, in her kitchen in 2015. Frustrated by the aftereffects of traditional soda, she combined fruit juices, apple cider vinegar, sparkling water, and prebiotics to create a refreshing alternative. The brand gained significant traction in 2018 after Ellsworth and her husband showcased it on the hit TV show “Shark Tank.” An investor from the show, Rohan Oza, subsequently took a stake in the brand and helped rebrand it as Poppi, featuring its distinctive brightly-colored, fruit-forward cans.
Despite its success, Poppi has faced challenges, including multiple class-action lawsuits filed last summer. Consumers alleged that the products did not deliver the promised gut health benefits. In response, Poppi denied these claims and removed "gut health" references from its packaging in late 2023. Recently, a court filing revealed that Poppi has agreed to a settlement, establishing an $8.9 million fund to compensate consumers, with a hearing on the matter scheduled for May 8.
Following the announcement of the acquisition, PepsiCo shares experienced nearly a 2% increase in morning trading on Monday. This positive market reaction underscores investor confidence in the potential of Poppi to enhance PepsiCo's beverage offerings and broaden its consumer base.
As PepsiCo integrates Poppi into its extensive portfolio, the collaboration promises to deliver innovative beverage solutions that cater to the health-conscious consumer, paving the way for future growth in the functional beverage market.
