PepsiCo Inc., the multinational food and beverage giant, is reportedly in advanced discussions to acquire Poppi, a growing healthier soda brand, for more than $1.5 billion. According to sources familiar with the matter, the PepsiCo Poppi deal could be finalized as early as next week, although delays remain a possibility. This move marks a significant step in PepsiCo’s ongoing strategy to enhance its portfolio with healthier beverage options and respond to growing consumer demand for functional drinks.
Poppi, a Texas-based company, has gained significant popularity with its line of “functional sodas”—beverages designed not only to quench thirst but also to provide health benefits. The brand is known for its use of apple cider vinegar, prebiotics, and other ingredients aimed at promoting digestive health. These functional sodas offer a lower-sugar alternative to traditional sodas, which are increasingly falling out of favor as consumers become more health-conscious. In recent years, Poppi has seen remarkable growth and caught the attention of major investors and celebrities alike, including Nicole Scherzinger and Ellie Goulding.
The deal with PepsiCo would continue the company’s shift toward more health-focused acquisitions. Earlier this year, PepsiCo announced plans to acquire Siete Foods, a popular brand of better-for-you snacks, for $1.2 billion. Furthermore, in November 2024, PepsiCo revealed its intention to buy the remaining 50% of Sabra Dipping Co. to have full ownership of the hummus and dips company. These strategic purchases align with PepsiCo’s broader initiative to diversify its portfolio and meet the increasing demand for healthier, functional food and beverage products.
The Rising Popularity of Functional Beverages
The functional beverage market, which includes prebiotic sodas like Poppi, is rapidly expanding. Functional drinks contain added nutrients or ingredients designed to offer health benefits, such as promoting gut health, boosting immunity, or providing hydration. Unlike traditional sodas that are typically high in sugar and artificial ingredients, functional sodas are positioned as a healthier option. Brands like Olipop and Poppi have capitalized on this trend, offering products with added fiber, probiotics, and prebiotics that support digestive health.
Retailers have also noticed the growing interest in these beverages. According to Loan Heilner, the merchandising director for FreshDirect, functional beverages have seen an impressive 60% growth over the past year. In comparison, sales of traditional big-brand sodas have remained relatively flat. This shift in consumer preference is driving more companies to innovate and introduce beverages that cater to health-conscious buyers. For example, Coca-Cola Co. recently launched Simply Pop, a prebiotic soda that competes directly with Poppi and other functional beverage brands.
The success of Poppi is a testament to the rising consumer demand for healthier options. Founded in Austin, Texas by husband-and-wife duo Allison and Stephen Ellsworth, Poppi originally gained attention when it appeared on the popular television show Shark Tank in 2018. At the time, the company was known as “Mother,” and it received an investment from Rohan Oza of Cavu Venture Partners. Since then, Poppi has grown rapidly, securing distribution in major retailers like Target, Whole Foods, Costco, and Kroger.
Poppi’s products have become a favorite among consumers seeking healthier soda alternatives. The company’s sodas are infused with apple cider vinegar, which has long been known for its purported health benefits, including improved digestion and blood sugar regulation. Additionally, Poppi offers a variety of flavors, including ginger-lemon, raspberry-lemon, and strawberry-rose, making it an appealing choice for a wide range of consumers. With its clean ingredients and focus on health, Poppi has positioned itself as a leader in the functional soda category.
PepsiCo’s Strategy to Tap into the Health and Wellness Market
PepsiCo’s interest in acquiring Poppi fits into its broader strategy to capitalize on the health and wellness trend. Chief Executive Officer Ramon Laguarta has stated that there is an increasing level of awareness among American consumers regarding health and wellness. In a recent conference call with investors, Laguarta emphasized that this shift in consumer behavior is driving PepsiCo’s investments in healthier food and beverage options.
PepsiCo has recognized the importance of aligning its product offerings with evolving consumer preferences. In addition to acquiring brands like Siete Foods and Sabra Dipping Co., PepsiCo has also launched its own functional beverage line, Soulboost. Soulboost was designed to compete with brands like Poppi and Olipop, offering consumers an alternative to sugary sodas with the added benefit of functional ingredients. However, PepsiCo eventually decided to discontinue Soulboost after early market tests indicated that the brand might not achieve the desired success.
With Poppi, PepsiCo would gain a well-established player in the functional beverage space, along with a loyal customer base and a growing presence in major retail outlets. The acquisition would also allow PepsiCo to expand its product offerings in a market that is increasingly shifting toward health-conscious choices. As consumers continue to demand healthier options, companies like PepsiCo are looking for ways to diversify their portfolios and tap into this lucrative market.
PepsiCo Poppi deal: A Transforming Beverage Industry
The beverage industry is undergoing a significant transformation as consumers are becoming more mindful of their health and wellness. This shift is evident not only in the success of functional beverages like Poppi but also in the challenges faced by traditional soda companies. In recent years, major soda brands have struggled to maintain growth, as younger consumers, in particular, are moving away from sugary, high-calorie drinks in favor of healthier alternatives.
In response to these changing trends, many beverage companies, including PepsiCo, are increasingly focused on acquiring or developing products that cater to health-conscious consumers. With the Poppi acquisition, PepsiCo would be positioning itself as a leader in the functional beverage market, tapping into the growing demand for products that offer more than just taste but also health benefits.
Although the deal has not been officially confirmed, the potential acquisition of Poppi highlights the increasing importance of health and wellness in the food and beverage industry. As more companies pivot to meet consumer demands for healthier products, it is clear that the future of the beverage industry will be shaped by functional drinks that offer both taste and health benefits.
In conclusion, PepsiCo’s potential $1.5 billion acquisition of Poppi would not only strengthen its position in the functional beverage category but also reflect the company’s ongoing commitment to responding to the growing consumer demand for healthier options. With the rising popularity of functional sodas, Poppi is poised to continue its upward trajectory, and PepsiCo’s involvement could accelerate its growth in the years to come.
