PepsiCo expands health-focused portfolio with US$1.95B acquisition of Poppi

USA – PepsiCo has entered into an agreement to acquire Poppi, a prebiotic soda brand, for US$1.95 billion marking its expansion into the growing functional beverage sector. 

The deal, which includes US$300 million in anticipated cash tax benefits, brings the net purchase price to US$1.65 billion. An additional earnout consideration has also been structured, contingent on Poppi meeting certain performance milestones within a specified period.

PepsiCo’s acquisition aligns with its efforts to diversify its portfolio with health-conscious offerings. 

Ramon Laguarta, chairman and CEO of PepsiCo, stated that the company has been evolving its food and beverage range through innovation and strategic acquisitions. He emphasized that consumers increasingly seek convenient, great-tasting options that align with wellness trends.

Poppi, known for its prebiotic-infused sodas, has gained traction for its combination of prebiotics, fruit juice, apple cider vinegar, and limited sugar content. 

Each can contains no more than five grams of sugar and 35 calories, positioning it as a competitor in the functional beverage category alongside brands like Olipop, Culture Pop, and Coca-Cola’s Simply Pop.

From Shark Tank to a billion-dollar acquisition

Founded by Allison and Stephen Ellsworth, Poppi first gained national attention in 2018 after securing a US$400,000 investment from Rohan Oza on the television show Shark Tank in exchange for a 25% equity stake. 

Originally branded as Mother Beverage, the company later rebranded to Poppi and expanded its retail presence, starting with Whole Foods Market. Since then, the brand has grown significantly, surpassing US$100 million in sales by 2024 and capturing 19% of the U.S. market share in the prebiotic soda category.

Ram Krishnan, CEO of PepsiCo Beverages U.S., highlighted Poppi’s rapid rise, calling it a brand that is “ahead of the trends” with a strong consumer base and substantial growth potential. 

He noted that the integration of Poppi into PepsiCo’s distribution network would further accelerate its market reach and innovation pipeline.

Legal challenges and market expansion

The acquisition follows a legal challenge Poppi faced in 2023, when the brand was sued over allegations that its drinks contained insufficient prebiotic fiber to deliver meaningful gut health benefits. 

The lawsuit was settled for US$8.9 million, pending court approval. Despite this, Poppi has maintained its market momentum, continuing to expand its consumer base and retail distribution.

As PepsiCo finalizes the acquisition, industry analysts observe that the company’s entry into the prebiotic soda market signals a broader trend of major beverage corporations investing in health-focused and functional drink brands. 

The global better-for-you beverage market, valued at approximately US$197.3 million in 2023, is projected to reach US$484.0 million by 2034, growing at a compound annual growth rate (CAGR) of 8.5%, according to market research.

Several brands have already carved out space in the functional soda segment. Olipop, one of the category leaders, offers sodas infused with prebiotic fiber from cassava and chicory root, with flavors such as Classic Root Beer and Doctor Goodwin (a Dr Pepper-inspired variant). 

Spindrift Beverage Co., Inc., the indie brand known for its sparkling water made with real fruit juice, just launched Spindrift Soda. 

The new line, featuring five flavors—Concord Freeze, Ginger Ale, Orange Cream Float, Shirley Temple, and Strawberry Shortcake—will be available online before hitting retail stores later this year.

Just last month, Talking Rain Beverage Company—the maker of Sparkling Ice—introduced Popwell, a prebiotic and immunity-supporting beverage.  

Its lineup includes caffeine-free flavors like Blackberry Lime, Tropical Mango, and Cherry Citrus, as well as caffeinated options like Lemon Lime, Cream Soda, and Orange Cream.