PepsiCo continues its acquisition spree, snapping up gut health soda brand Poppi for $1.95 billion – the CPG leaders' third major acquisition in less than six months.
Following media speculation of the deal, PepsiCo agreed to acquire the US beverage brand due to its “cultural cache and nutritional profile” that “have nurtured a loyal fan base and driven rapid growth,” PepsiCo shared in a statement.
Husband and wife team Allison and Stephen Ellsworth started the brand in 2016 initially under the name Mother, before rebranding to Poppi in 2020. Shortly after the rebrand, Poppi gained retail notoriety in the US, boosted by funding rounds led by venture capital firms like CAVU Ventures and celebrity investors.
Poppi also was the subject of several controversies that boosted its notoriety, including a lawsuit around its gut health claims and a Super Bowl marketing campaign that sent vending machines to influencers.
Poppi’s price tag is slightly higher than the valuation given to its rival Olipop – $1.85 billion – during its Series C funding round, according to Bloomberg.
PepsiCo’s acquisition of Poppi - which is subject to customary closing conditions - will allow the CPG leader to expand beyond its current functional categories, the company added. Currently, PepsiCo’s primary functional focus is on sports nutrition and recovery and energy drink spaces with Gatorade and Propel and Amp and its partnership with Celsius, respectively.
“We have 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,” Ramon Laguarta, PepsiCo chairman and CEO, said in a statement.
Poppi will leverage PepsiCo’s manufacturing and market expertise to grow the brand further, Chris Hall, CEO of Poppi, explained in a statement to the press.
“It has been an honor to work alongside the Ellsworth’s, the Poppi team, and our partners as we created a leading brand, a movement and a community like no other. I am thrilled to enter this next chapter with PepsiCo as they support our continued growth, innovation and broaden our availability,” Hall elaborated.
Can functional innovation address PepsiCo’s doldrums?
PepsiCo's better-for-you acquisition spree
PepsiCo's acquisition of Poppi is the latest deal to reshape its snack and beverage portfolio with an eye to natural and better-for-you options. First, PepsiCo acquired Texas-based snack brand Siete Foods for $1.2 billion in October 2024. Shortly after, the food maker followed that deal with the purchase of the remaining stake in hummus brands Sabra and Obela from its business partner Strauss Group.
PepsiCo’s acquisition of Poppi comes after the CPG giant’s volumes declined across its North American snack and beverage businesses in 2024. PepsiCo Beverages North America volumes dropped 3%, and Frito-Lay North America dipped 2.5% year-over-year in 2024.
However, functional hydration products, like Propel and water enhancers and tablets, and Pepsi Zero Sugar drove double-digit net revenue growth in beverages, according to the full-year financial results.
Laguarta teed up further functional innovation across its Gatorade and Propel brands at the 2025 Consumer Analyst Group of New York investor conference.
PepsiCo’s stock increased 1.85% on March 17 on news of the acquisition. However, PepsiCo’s stock is down roughly 11.50% for the year.
Is gut health sodas' growth trajectory assured?
Functional innovations, including gut-health sodas, are driving beverage growth and currently represent only about 15% of total retail sales volume for the category, according to Euromonitor data.
However, the gut-health carbonated soda drink (CSD) category might be “past a saturation point,” and broader economic concerns might cut into growth moving forward, explained Nikolas Allen, senior research analyst at data analytics company Euromonitor International.
“Many of these products sit in the premium segment of CSDs and face considerable economic headwinds. Unstable input costs and increasing food expenditure will test how consumers appraise wellness in their soft drink choices. Without expanding what signifies the ‘modern soda’ category outside of gut health and sugar reduction, the future success stories likely remain in acquisitions or private label,” he elaborated.
The gut-health soda wars heat up
Poppi and Olipop were responsible for the lion’s share of gut health soda’s growth, inspiring small and large beverage brands alike to throw their hat into the gut health soda ring, or what Walmart is calling the “modern soda” set.
PepsiCo’s rival Coca-Cola released its own gut health soda, Simply Pop, on Feb. 18, joining the line of Simply juices and smoothies. Weeks prior, Suja Life relaunched the iconic ’80s citrus soda brand Slice with a gutsy modern twist, following the soda brand’s acquisition in March 2024.
Additionally, kombucha brands Brew Dr and Health-Ade entered the gut health sodas with Sipjoy and SunSip early in 2024.
