PepsiCo Acquires Poppi: A Homegrown Health-Conscious Beverage for $1.95 Billion

PepsiCo is set to acquire the Dallas-born prebiotic soda brand Poppi for an impressive $1.95 billion. Poppi, which has appealed to health-minded consumers as “the future of soda,” has gained significant popularity.

Allison and Stephen Ellsworth founded Poppi in 2016, crafting their creation in the kitchen of their Dallas home. Their unique beverage is a blend of fruit juices, apple cider vinegar, probiotics, and the artificial sweetener stevia.

The Ellsworths initially launched the drink under the name Mother Beverage at farmers markets around Dallas. They soon caught the attention of Whole Foods, and their fortunes took a turn when they pitched on Shark Tank in 2018. “Shark” Rohan Oza, known for his work with Bai and Vita Coco, invested $400,000 for a 25% stake in the company.

Eventually, they relocated to Austin and rebranded the company as Poppi.

This acquisition underscores the growing interest in the “healthier soda” market, as Pepsi faces declining demand for its traditional drinks and snacks.

With a shift towards fitness and lifestyle products, younger Americans are gravitating towards healthier sodas and energy drinks. In response, Coca-Cola has expanded its Simply brand to include a prebiotic soda named “Simply Pop.”

Other companies like Celsius Holdings and Plano’s own Keurig Dr Pepper are also tapping into this niche by acquiring smaller wellness and energy beverage brands.

For PepsiCo, this purchase enhances its foothold in the healthy drinks domain, especially as it deals with reduced demand due to multiple price hikes impacting its soda and Lay’s snack sales, and leading to a weaker annual profit forecast.

Prebiotic sodas are rapidly rising in popularity within the carbonated drink sector, driven by a focus on gut health.

Poppi combines prebiotics, fruit juice, and apple cider vinegar to offer a low-calorie soda with five grams or less of sugar per serving, according to PepsiCo.

The Austin, Texas-based company’s retail sales saw an incredible 122% increase year-over-year in the 12 weeks leading up to February 22, now commanding about a 1% share of the total carbonated soft drinks market, as reported by BNP Paribas.

PepsiCo revealed that the deal for Poppi includes $300 million in anticipated cash tax benefits, bringing the net purchase price to $1.65 billion, though further details of the agreement have not been made public.