Prebiotic soda is exploding, and large, traditional manufacturers of carbonated soft drinks are now players in the functional soda category.
PepsiCo on Monday announced that it has entered into a definitive agreement to acquire prebiotic soda brand poppi for $1.95 billion, including $300 million of anticipated cash tax benefits for a net purchase price of $1.65 billion.
The transaction also includes an additional potential earnout consideration subject to the achievement of certain performance milestones within a specified period after closing of the transaction, the Purchase, New York-based company said.
“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,” said Ramon Laguarta, PepsiCo chairman and CEO. “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.”
Laguarta said poppi is a great complement to the company’s portfolio transformation efforts to meet these needs.
Poppi, founded by husband-and-wife duo Stephen and Allison Ellsworth, is based in Austin, Texas, that was “discovered on Shark Tank by Rohan Oza and funded by CAVU Consumer Partners from their initial seed round to today,” PepsiCo said in statement on Monday.
PepsiCo said the transaction is subject to customary closing conditions, including regulatory approval. Additional terms of the acquisition were not disclosed.
Functional beverages aimed at health-conscious consumers has seen a rapid increase, according to data from Brightfield Group, a research firm based in Chicago.
“The prebiotic/probiotic soda category is experiencing remarkable growth, with purchase incidence rising by 37.3% year over year,” Brightfield Group said.
Photograph courtesy of Coca-Cola
In February, Coca-Cola, Atlanta, joined the soda trend with the launch of its prebiotic drink Simply Pop.
“We found that consumers, especially wellness-focused Gen Z-ers and Millennials, were really interested in juice and prebiotic sodas,” said Becca Kerr, CEO of nutrition for Coca-Cola. “And since many brands in this category are new, they were looking to align with names they know and trust for both quality and taste.”
With more than two decades of expertise and equity in juice, Simply’s credentials made it the ideal choice to lead the company’s entry into prebiotic sodas, Coca-Cola said in a statement.
“We knew that in order to bring new drinkers into the category, we had to strike that perfect balance of innovation and trust,” Kerr said.
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