Soda titan PepsiCo enters the arena of health-focused sodas by acquiring Poppi for a staggering $1.6 billion.
PepsiCo's latest acquisition of Poppi, the prebiotic soda brand, for a whopping $1.65 billion markedly highlights the colossal beverage giant's shift towards the "better for you" category. With consumers increasingly skeptical of sugar-laden drinks and unhealthy snacks, PepsiCo has been steadily evolving its food and beverage portfolio.
In January, the company already dropped a cool $1.2 billion on Siete Foods, a maker of gluten-free chips, and acquired the remaining half of the Sabra hummus brand it didn't own late last year.
Ramon Laguarta, PepsiCo's CEO, expressed his thoughts on the acquisition in a statement, stating, "We've been evolving our food and beverage portfolio over many years, including by innovating with our brands in new spaces and through disciplined, strategic acquisitions that enable us to offer more positive choices to our consumers."
Laguarta believes Poppi complements PepsiCo's efforts towards meeting consumers' growing interest in health and wellness. "More than ever, consumers are looking for convenient and great-tasting options that fit their lifestyles," he added.
While Poppi and rival Olipop are still relatively new players in the market, harnessing PepsiCo's major distribution agreements and marketing budget could give Poppi an edge over Olipop. However, only about 5% of consumers drink prebiotic sodas regularly, according to Zappi, a consumer research firm.
"The challenge for these brands lies in the disconnect between brand awareness and functional understanding," said Nataly Kelly, Zappi's chief marketing officer, in an interview with CNN. "While most consumers have heard of prebiotic sodas, only about a third truly understand what they are and how they work."
Poppi first gained a loyal following after appearing on "Shark Tank" in 2018, promising prebiotics and apple cider vinegar benefits for gut health. Though some research questions the effectiveness of these claims, the market for healthy sodas continues to grow.
Coca-Cola, PepsiCo's chief rival, launched its own line of prebiotic sodas, Simply Pop, last month, signaling a growing demand for health-oriented beverages. Other brands like Spindrift Soda and Bloom Nutrition have also entered the market recently.
Despite facing some controversy over controversial Super Bowl weekend full-sized Poppi vending machines gifted to influencers, the market for healthy sodas doesn't seem to be slowing down.
The functional beverage sector, which is the industry phrase for non-alcoholic drinks that advertise additional health benefits, is projected to generate $2 billion in sales by 2029 according to Coca-Cola's research.
Last month, rival Olipop received a $1.85 billion valuation after a $50 million funding round and turned a profit for the first time since its launch in 2018, doubling the previous year's sales at $400 million. Poppi has not publicly disclosed its valuation.
The prebiotic soda industry has been experiencing significant growth, with a CAGR of about 7.9% from 2024 to 2032, reaching approximately $484.48 million by 2032. The market is expected to reach $545.5 million by 2034[1]. Coca-Cola's entry into the prebiotic soda market with Simply Pop underscores the industry's growth potential[3][5].
It remains to be seen whose strategy will play out best – buy like PepsiCo, or build with an existing brand like Coca-Cola. Much depends on whether this gut soda segment has long-term legs or is a fad of our times.
- PepsiCo received a billon dollars for its acquisition of Poppi, a prebiotic soda brand, signaling the company's increasing focus on the "better for you" category and consumer interest in health and wellness.
- The functional beverage sector, which includes brands like Poppi and Olipop that offer additional health benefits, is projected to generate $2 billion in sales by 2029, indicating significant growth in the industry.
- With Coca-Cola, PepsiCo's main competitor, entering the prebiotic soda market with Simply Pop, it seems that the market for healthy sodas will continue to expand, potentially creating a competitive landscape for brands like Poppi and Olipop.
