By Ananya Mariam Rajesh
(Reuters) – Pepsico said Monday it would buy prebiotic soda brand POPPI for $1.95 billion and expand into the “healthier soda” category as it fights lower demand for traditional drinks and snacks.
PepsiCo shares rose 1.6% in early trading.
Young Americans are increasingly turning to healthier sodas and energy drinks as part of a broader shift towards fitness and lifestyle products, with rival Coca-Cola expanding their Simply brand to launch a prebiotic soda called “Simply Pop.”
Fellows like Celsius Holdings and Keurig Dr Pepper are also targeting the market by snapping smaller energy and wellness drink makers.
Poppi trading boosts the presence of PepsiCo in the healthy drink category when multiple price hikes use soda and ray snacks, predicting that the company will have weak annual profits.
Prebiotic sodas are the top category in the US within the Soda Beverage Segment (CSD) and are driven by a shift that prioritizes more gut health-centric drinks.
The deal “will help to establish a foothold in the rapidly growing ‘modern’ soda segment and reinforce the CSD portfolio that has been sharing for years with Coca-Cola and Dr. Kelig Pepper,” said Andrea Exeira, analyst at JP Morgan.
Poppi combines prebiotics, fruit juice and apple cider vinegar to create a low-calorie soda with less than 5 grams of sugar per serving, PepsiCo said.
According to BNP Paribas, the Austin, Texas-based company’s retail sales jumped 122% year-on-year from 12 weeks ago, and now holds around 1% of its total carbonated soft drink category.
Founded by Stephen and Alison Ellsworth, Poppi was originally known as Mother and was rebranded in 2020. The founder appeared on Shark Tank in 2018, with the support of investors and co-founders of Kabu consumer partner Rohan Oza.
The agreement with POPPI includes an expected cash tax benefit of $300 million on a net purchase price of $1.65 billion without disclosing additional terms of the transaction.
(Reporting by Ananya Mariam Rajesh of Bengaluru, Editing by Sriraj Kalluvila)
