News Summary
PepsiCo has completed the acquisition of Poppi, a prebiotic soda brand, for approximately $1.95 billion. The deal includes significant tax benefits and reflects the rising demand for healthier beverage options. Poppi, known for its low-calorie soda alternatives, has seen remarkable sales growth and gained popularity through effective social media marketing. Despite facing legal challenges, Poppi’s founders remain committed to their mission of providing health-conscious consumers with innovative soda options. This acquisition aligns with PepsiCo’s strategy to enhance its product portfolio in response to shifting consumer preferences.
Texas
PepsiCo Inc. has finalized its $1.95 billion acquisition of the prebiotic soda brand Poppi, marking a significant move in the beverage industry to enhance its portfolio in healthier products. The net purchase price after accounting for expected cash tax benefits stands at $1.65 billion. The acquisition deal was announced on May 19, following its initial reveal in March.
PepsiCo, headquartered in New York, has a considerable corporate presence in Texas with its Frito-Lay subsidiary based in Plano. Despite the acquisition, Poppi will continue to operate from its headquarters in Austin, Texas.
Founded in Dallas in 2016 by Allison and Stephen Ellsworth, Poppi began as a kitchen experiment producing a healthier soda alternative. The original name was “Mother Beverage” and was made from fruit juices, apple cider vinegar, prebiotics, and stevia. Initial sales efforts saw the product being sold at local farmers markets, and it soon gained traction at Whole Foods.
Poppi’s rise to fame significantly accelerated following its appearance on the television show “Shark Tank” in 2018, where it attracted a $400,000 investment from guest investor Rohan Oza for a 25% stake. Since then, Poppi has positioned itself as a healthier alternative to traditional sodas, boasting low calorie counts (35 or fewer) and no more than 5 grams of sugar per serving. As of February 2023, the company recorded a remarkable 122% year-over-year increase in annual retail sales, while capturing approximately 1% market share in the total carbonated soft drink category.
This acquisition is a strategic move by PepsiCo in response to declining consumption of traditional sugary beverages, coupled with increased competitive pressures from rivals like Coca-Cola and Keurig Dr Pepper. PepsiCo aims to strengthen its position in the burgeoning “healthier soda” market, which aligns with shifting consumer preferences towards healthier options.
However, Poppi has recently faced challenges. The brand confronted class-action lawsuits regarding the gut health benefits claimed by its products, culminating in an $8.9 million settlement pending court approval.
Poppi’s growth can also be attributed to its effective social media marketing strategies, including a viral video that reportedly generated over $100,000 in sales on Amazon within a single day. The company’s innovation in flavors and vibrant packaging, both conceived by the Ellsworths, have proven appealing to health-conscious consumers.
As the beverage industry evolves, both PepsiCo and Poppi exemplify the trend of incorporating healthier alternatives into mainstream markets. This acquisition not only signifies PepsiCo’s commitment to meet the demands of modern consumers but also establishes Poppi as a notable player in the healthier beverage landscape.
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