Pepsi’s latest acquisition of Poppi for $1.7 billion is a strategic move to solidify its foothold in the functional soda market. Poppi, known for its prebiotic drinks, has grown exponentially, achieving $391 million in sales over the past year. Pepsi is paying a valuation of approximately 4.2 times Poppi’s sales, demonstrating confidence in the brand’s long-term potential.
According to TD Cowen analyst Robert Moskow, this deal is logical given Pepsi’s capability to further scale Poppi’s distribution. He emphasized the increasing consumer preference for functional beverages, making Poppi a valuable addition to Pepsi’s portfolio.
From Shark Tank to Super Bowl Stardom
Poppi’s journey began in 2018 when founders Stephen and Allison Ellsworth pitched their product, then called Mother Beverage, on ABC’s Shark Tank. They secured a $400,000 investment for a 25% stake from investor Rohan Oza. His involvement helped rebrand the product as Poppi, positioning it as a leading functional soda. By 2022, Poppi had raised $25 million in additional funding.
Poppi’s impressive growth was highlighted during its Super Bowl advertisement appearances, solidifying its status as a mainstream beverage. The brand has also gained support from celebrities like Jennifer Lopez, Billie Eilish, and Mila Kunis, further boosting its popularity.
Pepsi’s Strategic Investments
Pepsi has been actively expanding its “better-for-you” product line. The acquisition of Poppi follows its $1.2 billion purchase of the snack brand Siete in January. This move aligns with Pepsi’s broader strategy of catering to evolving consumer preferences for healthier, functional products.
Despite the acquisition, Pepsi’s stock saw a modest 1.9% increase on Monday, while the S&P 500 remains down by approximately 3.5% this year. Analysts remain optimistic about Pepsi’s growth potential in the functional beverage market.
Conclusion
Pepsi’s acquisition of Poppi is a testament to the growing demand for functional beverages. From a humble farmers’ market favorite to a billion-dollar brand, Poppi’s success story highlights the power of innovation and strategic partnerships. As Pepsi continues to expand its healthier product portfolio, consumers can expect more functional and flavorful options on store shelves.
