PepsiCo is buying Dallas-founded prebiotic soda brand Poppi for $1.95 billion, a homegrown beverage that has caught the attention of health-conscious drinkers as “the future of soda.”
Poppi was started by couple Allison and Stephen Ellsworth in the kitchen of their Dallas home in 2016. They made the concoction out of fruit juices, apple cider vinegar, probiotics and artificial sweetener stevia.
The Ellsworths launched the sodas at Dallas-area farmers markets under the name Mother Beverage. It was soon picked up by Whole Foods and then the owners got a break with the CNBC business pitch show Shark Tank in 2018. “Shark” Rohan Oza of Bai and Vita Coco invested $400,000 in the company in exchange for a 25% share.
They later moved the company to Austin and rebranded it as Poppi.
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The acquisition is the latest sign of interest in the “healthier soda” category at a time when Pepsi is battling falling demand for its traditional beverages and snacks.
Young Americans are increasingly turning to healthier sodas and energy drinks as part of a broader shift to fitness and lifestyle products, with rival Coca-Cola expanding its Simply brand to launch a prebiotic soda called “Simply Pop”.
Related:How Dallas-based Poppi is shaking up the soda market
Peers such as Celsius Holdings and Plano-based Keurig Dr Pepper have also targeted the market by snapping up smaller energy and wellness drink makers.
The Poppi deal boosts PepsiCo’s presence in the healthy drinks category at a time when multiple price hikes weigh on demand for its sodas and Lay’s snacks, pushing the company to forecast weak annual profit.
Prebiotic sodas have become a top-growing category in the U.S. within the carbonated drinks segment, powered by a shift in preference to more gut health-focused drinks.
Poppi combines prebiotics, fruit juice, and apple cider vinegar to create a low-calorie soda with no more than five grams of sugar per serving, PepsiCo said.
The Austin, Texas-based company’s retail sales jumped 122%, year-over-year, in the 12 weeks through February 22 and now holds about a 1% share of the total carbonated soft drinks category, according to BNP Paribas.
The deal with Poppi includes $300 million of anticipated cash tax benefits for a net purchase price of $1.65 billion, PepsiCo said, without disclosing additional terms of the deal.
– Ananya Mariam Rajesh for Reuters. Dallas Morning News assistant business editor Kyle Arnold contributed to this report.
