PepsiCo has made a strategic move by acquiring Poppi, the renowned functional beverage brand, for $1.65 billion. This acquisition underscores PepsiCo’s commitment to expanding its “better-for-you” product line as consumers increasingly opt for healthier alternatives over sugary drinks and snacks.
In January, PepsiCo took a similar step by acquiring Siete Foods, a gluten-free chip manufacturer, for $1.2 billion. Additionally, PepsiCo secured full ownership of the Sabra hummus brand late last year. According to Ramon Laguarta, CEO of PepsiCo, “We’ve been evolving our food and beverage portfolio over many years, including by innovating with our brands in new spaces and through disciplined, strategic acquisitions that enable us to offer more positive choices to our consumers.”
Laguarta further emphasized that functional beverages like Poppi align perfectly with the growing demand for health-conscious options. “More than ever, consumers are looking for convenient and great-tasting options that fit their lifestyles and respond to their growing interest in health and wellness. Poppi is a great complement to our portfolio transformation efforts to meet these needs,” he added.
Poppi’s Rise to Fame
Poppi gained recognition after appearing on “Shark Tank” in 2018 under the name Mother Beverage. Known for its prebiotic sodas infused with apple cider vinegar, Poppi claims to promote gut health. However, the scientific backing for these health claims remains debatable.
With PepsiCo’s vast distribution network and robust marketing budget, Poppi could gain an edge over competitors like Olipop. Despite the growing interest in functional beverages, only around 5% of consumers regularly consume prebiotic sodas, according to research firm Zappi. Nataly Kelly, Chief Marketing Officer of Zappi, noted, “The challenge for these brands lies in the disconnect between brand awareness and functional understanding. While most consumers have heard of functional beverages, only about a third truly understand what they are and how they work.”
The Competitive Landscape
Coca-Cola has also ventured into the functional beverage market with the recent launch of Simply Pop, a line of prebiotic sodas. Other brands, such as Spindrift Soda and Bloom Nutrition, have also entered the scene.
PepsiCo initially planned to develop its own prebiotic soda brand, Soulboost, but abandoned the idea in favor of acquiring Poppi. This strategic move allows PepsiCo to leverage Poppi’s established brand presence and loyal customer base.
The Future of Functional Beverages
The functional beverage industry is expanding rapidly and is projected to reach $2 billion in sales by 2029. Olipop, Poppi’s primary competitor, recently achieved a $1.85 billion valuation after securing $50 million in funding and turning a profit for the first time since its 2018 launch.
Despite some backlash over Poppi’s marketing tactics, such as gifting vending machines to influencers during the Super Bowl, the brand’s popularity continues to grow. Industry expert Duane Stanford commented, “We’ll see whose strategy plays out best – buy like PepsiCo or build with an existing brand, like Coke. Much of that depends on whether this functional beverage segment has long-term potential or is a fleeting trend.”
With PepsiCo’s backing, Poppi is poised to become a dominant force in the functional beverage market, paving the way for innovation and healthier consumer choices.
