PepsiCo to buy prebiotic soda brand Poppi for nearly $2 billion

PepsiCo said on Monday it would acquire prebiotic soda brand Poppi for $1.95 billion, as part of its push into the healthier soda category amid falling demand for its traditional beverages and snacks.

The deal, which comes with $300 million in anticipated cash tax benefits, effectively values the acquisition at a net purchase price of $1.65 billion.

Poppi, founded by Stephen and Allison Ellsworth and originally known as Mother before its 2020 rebranding, has experienced rapid growth. The Austin-based company reported a 122% jump in retail sales over the 12 weeks through February 22 and now holds about a 1% share of the overall carbonated soft drinks market, according to BNP Paribas.

This strategic move by PepsiCo comes as young Americans increasingly turn to healthier sodas and energy drinks, driving shifts in consumer preferences. Rival Coca-Cola has similarly expanded its Simply brand with the launch of a prebiotic soda called "Simply Pop," while competitors like Celsius Holdings and Keurig Dr Pepper have also targeted the wellness and energy drink segments by acquiring smaller players.

"By acquiring Poppi, we are establishing a foothold in the fast-growing 'modern' soda segment and shoring up a carbonated soft drinks portfolio that has been losing share to competitors like Coca-Cola and Keurig Dr Pepper," said Andrea Teixeira, an analyst at J.P. Morgan.

The deal is seen as a critical component of PepsiCo’s strategy to diversify its product offerings and mitigate the impact of recent price hikes that have weighed on demand for its sodas and Lay's snacks. In early trading, shares of PepsiCo were up 1.6%.

As consumer trends continue to evolve towards health-conscious choices, PepsiCo’s acquisition of Poppi underscores the company’s commitment to innovation in its beverage portfolio and its efforts to capture a larger share of the emerging market for healthier, prebiotic drinks.

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