PepsiCo acquires prebiotic soda brand Poppi for A$2.6b

PepsiCo has announced its acquisition of Poppi, a prebiotic soda brand, for US$1.95 billion (A$3.10 billion), including anticipated cash tax benefits of US$300 million (A$477.4 million). The net purchase price, after tax adjustments, stands at US$1.65 billion (A$2.63 billion). The acquisition aligns with PepsiCo's strategy to diversify its beverage portfolio, meeting the growing consumer demand for healthier beverages.

Transaction snapshot

• Net deal value: US$1.65 billion (A$2.63 billion)

• Deal multiples: N/A

• Deal type: Acquisition

• Investors: PepsiCo

Poppi was founded in 2015 by Allison and Stephen Ellsworth. Initially, the brand was a homemade alternative to traditional soft drinks, created by blending fruit juices, apple cider vinegar, and prebiotics. This resulted in a low-calorie drink marketed for its digestive health benefits. Poppi gained broader visibility and credibility after appearing on the American TV program "Shark Tank" in 2018. The appearance secured investment from Rohan Oza, a noted consumer-brand investor. This investment helped Poppi rebrand, scale rapidly, and expand its market presence significantly.

Today, Poppi sells a range of 14 flavours and has established itself in the fast-growing prebiotic and functional beverages segment. The brand reached annual sales exceeding US$100 million (A$159.1 million) by 2023, demonstrating robust consumer demand and market potential.

PepsiCo Chairman and CEO, Ramon Laguarta, highlighted the increasing consumer shift toward healthier beverages. He noted that consumers are actively seeking convenient, flavourful products that fit their wellness-focused lifestyles. According to Laguarta, Poppi is an ideal complement to PepsiCo’s ongoing efforts to transform its product offerings in response to these consumer preferences.

Poppi co-founder Allison Ellsworth expressed optimism regarding the acquisition. She stated that the partnership with PepsiCo provides resources and distribution strength necessary to introduce Poppi to a larger market, without compromising the unique attributes that helped build its initial success.

The deal, however, is not without its controversies. Poppi recently faced legal challenges, including class-action lawsuits questioning the accuracy of the health claims related to its products. These legal disputes culminated in an US$8.9 million (A$14.17 million) settlement agreement. Despite these challenges, Poppi's rapid growth and strong consumer support remained consistent, as reflected by the continuing upward trajectory of its sales figures.

PepsiCo's strategic acquisition of Poppi comes as part of the company's broader initiative to diversify into more health-conscious beverage options. This strategic shift is expected to better position PepsiCo within the increasingly competitive functional beverage market and adapt proactively to evolving consumer preferences.

Following news of the acquisition, PepsiCo's share price rose approximately 2% in morning trading, indicating positive investor reaction to this latest strategic expansion.