Introduction to the Acquisition
PepsiCo said Monday that it is buying prebiotic soda brand Poppi for nearly $2 billion. While soda consumption has broadly fallen over the last two decades in the U.S., prebiotic sodas, fueled by industry newcomers Poppi and Olipop, have won over health-conscious consumers over the last five years.
The Prebiotic Soda Market
The category’s growth makes it attractive for Pepsi and its rival, Coca-Cola, which recently launched its own prebiotic soda brand, Simply Pop. Pepsi had reportedly aimed to launch its own functional soda under its Soulboost brand, but it cancelled those plans, likely paving the way to a deal with Poppi.
Details of the Acquisition
Pepsi said it plans to acquire the upstart Poppi for $1.95 billion. The deal includes $300 million of anticipated cash tax benefits, making the net purchase price $1.65 billion. Pepsi will also have to make additional payments if Poppi achieves certain performance milestones within a set time frame after the acquisition closes. The company did not say when the deal is expected to close, pending regulatory approval.
About Poppi
Poppi’s founders Allison and Stephen Ellsworth launched the brand back in 2018, the same year that Olipop was founded. Poppi’s formula includes apple cider vinegar, prebiotics and just five grams of sugar. By 2023, Poppi’s annual sales reportedly crossed $100 million. The company recently made its second straight Super Bowl appearance with an ad during the big game, demonstrating both its deep pockets and a desire to reach an even wider audience.
Challenges Faced by Poppi
But as Poppi’s sales have grown, it has also attracted backlash for its health claims. For example, the company faced a class-action lawsuit that alleged that its drinks weren’t as healthy as its packaging claimed. Poppi and the plaintiff moved to settle the suit on Friday for $8.9 million, according to court filings.
Comparison with Rival Olipop
For its part, rival Olipop was valued at $1.85 billion during its latest funding round, which was announced in February. In 2023, Olipop founder and CEO Ben Goodwin told CNBC that soda giants PepsiCo and Coca-Cola had already come knocking about a potential sale.
Conclusion
The acquisition of Poppi by PepsiCo marks a significant move in the prebiotic soda market. With the growing demand for health-conscious beverages, this deal is expected to boost Pepsi’s presence in the market. However, the company will need to address the concerns surrounding Poppi’s health claims to maintain its reputation and customer trust.
FAQs
Q: How much is PepsiCo buying Poppi for?
A: PepsiCo is buying Poppi for $1.95 billion, which includes $300 million of anticipated cash tax benefits.
Q: What is the net purchase price of the deal?
A: The net purchase price of the deal is $1.65 billion.
Q: When was Poppi founded?
A: Poppi was founded in 2018 by Allison and Stephen Ellsworth.
Q: What is the formula of Poppi’s soda?
A: Poppi’s formula includes apple cider vinegar, prebiotics and just five grams of sugar.
Q: How much were Poppi’s annual sales in 2023?
A: Poppi’s annual sales reportedly crossed $100 million in 2023.
Q: What is the valuation of Olipop?
A: Olipop was valued at $1.85 billion during its latest funding round.
