PepsiCo is making a significant move to capture a larger share of the burgeoning functional beverage market, announcing on Monday that it is acquiring the prebiotic soda brand Poppi for a staggering $1.95 billion.
This acquisition gives PepsiCo access to a rapidly expanding brand that has resonated with health-conscious consumers seeking better-for-you alternatives to traditional sugary sodas.
“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,” said PepsiCo Chairman and CEO Ramon Laguarta, underscoring the strategic rationale behind the acquisition.
PepsiCo noted that the transaction includes $300 million of anticipated cash benefits, reducing the net purchase price to a still-substantial $1.65 billion.
From kitchen to conglomerate: the Poppi story
Allison Ellsworth, the co-founder of the Austin, Texas-based Poppi, sees the combination with PepsiCo as a transformative opportunity to expand the brand’s reach.
“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 remarked, expressing confidence in PepsiCo’s ability to steward the brand’s future.
Ellsworth initially developed Poppi, then known as Mother Beverage, in her kitchen in 2015.
Driven by a love for soda but frustrated with the unhealthy side effects, she experimented with combining fruit juices, apple cider vinegar, sparkling water, and prebiotics, eventually selling the resulting concoction at local farmer’s markets.
The brand’s trajectory took a dramatic turn in 2018 when Ellsworth and her husband successfully pitched Mother Beverage on the popular television show “Shark Tank.”
An investor on the show, Rohan Oza, recognized the brand’s potential and took a stake in the company, spearheading a major rebranding effort.
Thus, Poppi, with its brightly-colored, fruit-forward cans and health-conscious positioning, was born.
“We’re beyond thrilled to be partnering with PepsiCo so that even more consumers across America, and the world, can enjoy Poppi,” Oza, who is also the co-founder CAVU Consumer Partners, which has invested in other popular beverage brands like Oatly and Bai, told Associated Press.
Navigating challenges: a lawsuit over gut health claims
While Poppi has experienced remarkable success, its journey has not been without its challenges.
Last summer, a class-action lawsuit was filed against the brand by a consumer who alleged that its products do not deliver the same level of gut health benefits as suggested by the company’s marketing materials.
This legal challenge highlights the growing scrutiny surrounding functional beverage claims and underscores the importance of transparency and accurate marketing practices within the industry.
Despite this past litigation, PepsiCo’s acquisition of Poppi signals a strong belief in the brand’s long-term potential and its ability to capture a significant share of the rapidly expanding functional beverage market.
As consumer demand for healthier alternatives continues to grow, PepsiCo is betting that Poppi will play a key role in shaping the future of the beverage industry.
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