PepsiCo is making a major move in the growing health-conscious beverage market with the acquisition of Poppi, a popular prebiotic soda brand, for $1.65 billion. This strategic purchase aligns with the company’s broader efforts to expand its portfolio with better-for-you products as consumers shift away from traditional sugary sodas.
The acquisition follows a series of similar investments by PepsiCo, including its $1.2 billion purchase of Siete Foods, a gluten-free snack brand, and its full ownership acquisition of Sabra hummus in late 2023. These moves highlight the company’s increasing focus on health-oriented food and beverage options to meet changing consumer preferences.
PepsiCo sees the prebiotic soda market as a key growth area, as more consumers seek products that support health and wellness. With Poppi positioned as a gut-friendly soda made with apple cider vinegar and prebiotics, the brand is expected to complement PepsiCo’s ongoing transformation into a more health-conscious company.
Market Competition and Growth Potential
The prebiotic soda market is still in its early stages, with only 5% of consumers drinking these beverages regularly. However, the broader functional beverage sector, which includes non-alcoholic drinks promoted for their health benefits, is growing quickly. By 2029, sales in this category are expected to climb to $2 billion, creating a major opportunity for PepsiCo.
By leveraging its extensive distribution network and marketing power, PepsiCo is expected to give Poppi a competitive advantage over its biggest rival, Olipop. Despite both brands gaining traction in recent years, consumer awareness remains a challenge. While many people recognize prebiotic sodas, a large portion does not fully understand their benefits or how they work.
PepsiCo’s main competitor, Coca-Cola, is also investing in the prebiotic soda trend. Last month, the company introduced Simply Pop, its own line of gut-friendly sodas, while other brands like Spindrift Soda and Bloom Nutrition have also entered the space. Initially, PepsiCo had planned to develop its own prebiotic soda under the Soulboost brand but has now opted to acquire Poppi instead.
Challenges and Brand Controversies
Poppi, which originally gained popularity after appearing on Shark Tank in 2018 under the name Mother Beverage, has built a loyal following. However, the brand has also faced some setbacks. Last month, during Super Bowl weekend, Poppi sparked backlash after gifting full-sized vending machines to influencers, with critics calling the move out of touch with consumers. Despite the controversy, the brand remains a key player in the growing health soda segment.
Meanwhile, rival Olipop has experienced significant growth, recently securing a $1.85 billion valuation after a $50 million funding round. The company also turned a profit for the first time since its launch in 2018, doubling its annual sales to $400 million.
The Future of Prebiotic Sodas
With both PepsiCo and Coca-Cola now fully invested in the prebiotic soda category, the industry is entering a pivotal phase. The debate over whether PepsiCo’s buy-and-scale strategy or Coca-Cola’s organic brand-building approach will prove more effective remains open. The long-term success of gut-friendly sodas will depend on consumer adoption and whether they can sustain their rapid growth or fade as a passing trend.
For now, PepsiCo’s latest billion-dollar acquisition underscores its commitment to expanding beyond traditional sodas and securing a foothold in the fast-growing functional beverage industry.