PepsiCo said on Monday it would acquire prebiotic soda brand Poppi for $1.95 billion, a move aimed at strengthening its position in the growing “healthier soda” market amid slowing demand for its traditional beverages and snacks.
Following the announcement, shares of PepsiCo rose 1.6% in early trading.
The acquisition comes as younger consumers increasingly favour wellness-oriented products, including healthier sodas and energy drinks, prompting beverage giants to adapt. Rival Coca-Cola has also entered the segment with a new prebiotic soda under its Simply brand called “Simply Pop.”
Other industry players such as Celsius Holdings and Keurig Dr Pepper have made similar moves by acquiring smaller energy and wellness drink companies, tapping into the rising demand for gut health-focused beverages.
According to Reuters, PepsiCo’s latest deal marks a significant step in its efforts to diversify its portfolio as price hikes continue to weigh on sales of its core products, including sodas and Lay’s snacks, leading the company to issue a weaker annual profit outlook.
Prebiotic sodas have emerged as one of the fastest-growing categories in the U.S. carbonated drinks market, driven by consumer interest in functional ingredients. J.P. Morgan analyst Andrea Teixeira noted the deal helps in “establishing a foothold in the fast-growing ‘modern’ soda segment and shoring up a CSD portfolio that has been losing share for years to Coca-Cola and Keurig Dr Pepper.”
According to PepsiCo, Poppi’s beverages combine prebiotics, fruit juice, and apple cider vinegar, offering a low-calorie alternative with no more than five grams of sugar per serving.
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The Austin-based brand has seen rapid growth, with retail sales surging 122% year-over-year in the 12 weeks through February 22. It now holds about a 1% share of the total carbonated soft drinks category, according to BNP Paribas.
Founded by Stephen and Allison Ellsworth, Poppi was originally launched as Mother before being rebranded in 2020. The founders gained early exposure on the show Shark Tank in 2018 and secured investment from Rohan Oza, co-founder of CAVU Consumer Partners.
PepsiCo said the transaction includes $300 million in expected cash tax benefits, bringing the net purchase price to $1.65 billion. Additional terms of the agreement were not disclosed.
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