PepsiCo announced Monday it has agreed to acquire prebiotic soda maker Poppi for $1.95 billion, marking the food and beverage giant's latest move to expand its presence in the fast-growing functional drinks segment.
The transaction includes $300 million in anticipated cash tax benefits, bringing the net purchase price to $1.65 billion. PepsiCo will also make additional payments if Poppi achieves certain post-acquisition performance milestones. The deal is subject to regulatory approval, with no immediate timeline provided for its closing.
"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.
Founded in 2018 by Allison and Stephen Ellsworth, Poppi quickly became one of the dominant players in the prebiotic soda space, alongside rival Olipop. The Austin, Texas-based brand's formula features apple cider vinegar, prebiotics, and just five grams of sugar. Poppi has reported rapid growth in recent years, surpassing $100 million in annual sales by 2023.
Allison Ellsworth welcomed the deal, saying, "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."
Poppi's ascent was propelled by a 2018 appearance on Shark Tank, where investor Rohan Oza took a stake in the company-then called Mother Beverage-and led a rebrand to the now-recognizable brightly colored Poppi cans. Oza, also co-founder of CAVU Consumer Partners, said Monday, "We're beyond thrilled to be partnering with PepsiCo so that even more consumers across America, and the world, can enjoy Poppi."
Poppi made its second straight Super Bowl appearance earlier this year, signaling its growing ambitions and brand reach. However, it has faced challenges. In recent months, the company has been the target of multiple class-action lawsuits over claims its beverages do not deliver the gut health benefits highlighted in its marketing.
Last week, Poppi and plaintiffs moved to settle the lawsuits, agreeing to establish an $8.9 million fund for consumer payments. The company denied the allegations but removed references to "gut health" from its packaging in late 2023. A hearing on the settlement is scheduled for May 8.
The broader functional beverage market has drawn heightened interest from major soda manufacturers, as traditional soda sales continue to decline in the U.S. Coca-Cola recently entered the prebiotic space with its Simply Pop line. PepsiCo had reportedly been exploring its own functional soda under the Soulboost brand before shifting focus to acquisition.
Olipop, Poppi's primary competitor, was valued at $1.85 billion in February following its latest funding round. CEO Ben Goodwin confirmed last year that both PepsiCo and Coca-Cola had expressed interest in acquiring the company.
PepsiCo shares rose nearly 2% in morning trading Monday following the announcement.
