PepsiCo announced on Monday its plans to purchase the prebiotic soda brand, Poppi, for $1.95 billion. This acquisition will allow PepsiCo to tap into the rapidly expanding functional beverage market, offering them a brand with significant growth potential.
Ramon Laguarta, PepsiCo’s Chairman and CEO, emphasized the increasing consumer demand for convenient and flavorful options that cater to their health and wellness inclinations. In a statement, he highlighted the importance of aligning with such trends.
The deal includes $300 million in expected cash benefits, resulting in a net purchase cost of $1.65 billion for PepsiCo. Allison Ellsworth, co-founder of Poppi based in Austin, Texas, expressed enthusiasm about the partnership, noting that it will help broaden the brand’s presence and impact.
Ellsworth initially developed Poppi, originally named Mother Beverage, in her kitchen in 2015 out of her love for soda, all while seeking a healthier alternative. Her creation, a blend of fruit juices, apple cider vinegar, sparkling water, and prebiotics, initially found its market at local farmers’ markets.
Poppi’s breakthrough came in 2018 when Ellsworth and her husband debuted on the show “Shark Tank.” Investor Rohan Oza saw the potential and invested in the original brand, Mother Beverage, prompting a major rebranding that led to Poppi’s catchy, vibrant cans.
Oza, co-founder of CAVU Consumer Partners, expressed excitement about the PepsiCo partnership, emphasizing that it would enable Poppi to be enjoyed by a broader audience both in the United States and globally. CAVU has also invested in well-known brands like Oatly and Bai.
Despite its success, Poppi faced some challenges. Last summer, it was hit with multiple class-action lawsuits from consumers who claimed that the company’s products did not provide the gut health benefits as advertised. In response, Poppi removed references to “gut health” from its packaging at the end of 2023. Recently, the company agreed to a settlement, including an $8.9 million fund for consumer payments, with a hearing scheduled for May 8.
Following the news of the acquisition, PepsiCo shares experienced a nearly 2% increase in Monday morning trading.
