PepsiCo Buys Poppi for $1.95 Billion, Enters Functional Beverage Market

PepsiCo, a global leader in the food and beverage industry, has officially acquired Poppi, a prebiotic soda brand, for a whopping $1.95 billion. The deal is part of PepsiCo’s strategic move to expand into the functional beverage category, which has seen a surge in consumer demand for health-conscious drinks.

“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,” PepsiCo Chairman and CEO Ramon Laguarta said in a statement.

Net Purchase Price Adjusted to $1.65 Billion After Cash Benefits

PepsiCo revealed that the transaction includes $300 million in anticipated cash benefits, effectively bringing the net purchase price down to $1.65 billion. The acquisition is expected to help PepsiCo capitalize on the growing trend of functional beverages, a market that has been expanding due to increasing consumer awareness of gut health and wellness.

Poppi’s Journey: From Kitchen Experiment to Billion-Dollar Brand

Poppi’s Founding and Rise to Popularity

Poppi's co-founder, Allison Ellsworth, started the brand in Austin, Texas, in 2015, initially calling it Mother Beverage. She was inspired to create a healthier soda alternative that retained the fizzy, refreshing nature of traditional soft drinks but incorporated prebiotics for gut health. Her unique formula combined fruit juices, apple cider vinegar, sparkling water, and prebiotics.

She began selling her drinks at local farmer’s markets, and the product quickly gained popularity.

Shark Tank Boost and Rebranding to Poppi

In 2018, Ellsworth and her husband took their business to Shark Tank, where investor Rohan Oza saw its potential and invested in the brand. This partnership led to a major rebranding, giving birth to Poppi with its vibrant, fruit-themed packaging that caught consumers’ attention.

“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,” Ellsworth said.

Oza, who co-founded CAVU Consumer Partners, has played a key role in Poppi’s expansion. His firm has also invested in other well-known beverage brands such as Oatly and Bai.

“We’re beyond thrilled to be partnering with PepsiCo so that even more consumers across America, and the world, can enjoy Poppi,” said Rohan Oza.

Poppi’s Legal Battle and Settlement Over Gut Health Claims

Consumer Lawsuits and Labeling Controversy

Despite its rapid success, Poppi faced legal challenges in 2023. The brand was hit with multiple class-action lawsuits, with consumers alleging that the company's marketing claims about gut health benefits were misleading.

In response, Poppi denied any wrongdoing and removed references to ‘gut health’ from its packaging in late 2023 to comply with regulations and avoid further legal complications.

$8.9 Million Settlement Agreement

According to a recent court filing, Poppi has agreed to a settlement totaling $8.9 million, which will be used to compensate affected consumers. A hearing on the settlement is scheduled for May 8.

Despite this legal hurdle, Poppi’s popularity remains strong, and with PepsiCo’s global distribution network, the brand is expected to reach millions of new consumers worldwide.

Why This Acquisition Matters for PepsiCo

Expansion into the Functional Beverage Market

PepsiCo’s acquisition of Poppi aligns with its broader business strategy to diversify into the functional drinks segment, which has witnessed significant growth due to the rising demand for gut-friendly beverages.

By acquiring Poppi, PepsiCo is not only securing a fast-growing brand but also expanding its portfolio to cater to health-conscious consumers seeking low-sugar, probiotic-rich, and prebiotic-enhanced beverages.

Stock Market Reaction to PepsiCo’s Move

Following the announcement of the Poppi acquisition, PepsiCo’s stock rose nearly 2% in morning trading on Monday, reflecting investor confidence in the move.

With this acquisition, PepsiCo is poised to become a major player in the functional soda space, leveraging Poppi’s appeal among health-conscious millennials and Gen Z consumers.