• by Danielle Oster , March 17, 2025

Pepsi is spending nearly $2 billion to acquire a leading prebiotic soda brand.

The company announced today that it has entered into a definitive agreement to acquire Poppi for $1.95 billion, subject to customary closing conditions and regulatory approval, while noting that after anticipated tax benefits the net cost of the deal would be around $1.65 billion.

So why was Pepsi interested enough to shell out nearly $2 billion for the prebiotic pop purveyors?

Poppi brought in around $391 million in sales over the past 12 months, according to Market Watch. The brand’s growth over past couple of years has been thanks in no small part to its marketing presence generating widespread ecognition. Poppi has partnered with celebrities including Post Malone, Billie Eilish and Jennifer Lopez. Last year, the brand also introduced a sponsorship of the NBA’s Los Angeles Lakers. It has also made appearances in the last two Super Bowls, including this year’s spot featuring "Call Her Daddy" host Alix Earle.

Olipop, the brand’s primary competition, was recently given a $1.85 billion valuation in an investment round led by JP Morgan.

Married couple Allison and Stephen Ellsworth launched the prebiotic soda brand in their hometown of Austin, Texas, after Allison – whose previous career was in oil and gas research – found success selling an early version of the product at local farmer’s markets, according to a Texas Monthlyprofile. In 2018,  the couple appeared on the reality show "Shark Tank," initially marketing the beverage under the name Mother Beverage, leading to a $400,000 investment by "Shark Tank" investor Rohan Oza. In 2020, the company rebranded as Poppi in an attempt to appeal to millennial and Gen Z audiences, and in 2022 it raised $25 million from Cavu Consumers Partners in a seed investmentround.

The acquisition allows PepsiCo to enter the healthier soda market with a category leader.

In a Q4 earnings call with investors last month, PepsiCo Chairman and CEO Ramon Laguarta said the company was “seeing more conversation in social media about health and wellness,” which he said was “impacting consumption of food and consumption of beverages.

“And this is not new. This is something that we've been working on for many, many years,’ he added.

The probiotic and prebiotic soda market in the U.S. was anticipated to grow at a compounded annual rate of 8.5% from 2024-2030 in a report by Grand View Research. Another report estimated the size of the market in North America at $206.7 million for 2024, anticipating a compounded growth rate of 8.1% annually to reach $329.9 million in 2030. Grand View Research cited contributing factors to the category’s growth such as “a significant shift towards healthier beverage options driven by consumer awareness of gut health benefits.”

“The Poppi brand's unique intersection with wellness and culture is a perfect addition to our portfolio. Allison and the Poppi team have built a magnetic brand that's ahead of the trends, with a loyal consumer base and a demonstrated capacity for growth,” PepsiCo Beverages U.S CEO Ram Krishnan said in a statement.

Poppi’s purported gut heath benefits have already become the subject of legal scrutiny.

Last year, a consumer filed a class-action lawsuit accusing Poppi of misleading advertising over such claims, including its “Be Gut Happy. Be Gut Health.” slogan. According to the lawsuit, the amount of inulin -- a plant fiber approved as a dietary ingredient by the Food and Drug Administration in 2018 – in Poppi was insufficient to have an effect on gut health. CNBC reported that Poppi and the plaintiff agreed to an $8.9 million settlement in the case last Friday, citing court documents.

Pepsi’s primary competition appears to be taking a different approach to entering the healthier soda category. Coca-Cola launched its own prebiotic soda brand last month, Simply Pop, leaning into existing brand equity for its juice-focused Simply Beverages brand.