PepsiCo's $1.95bn Acquisition of Poppi
- katerinageorgiou5
- Apr 22
- 5 min read
By Aman Prasad, Andrea Defilippi, Jase Lall, Jill Shah, Sharmell Sonia D’Silva (University of Birmingham)
Photo: Richard B. Levine
Overview of the deal
Acquirer: PepsiCo, Inc. (NASDAQ: PEP)
Target: Poppi
Total Transaction Size: $1.95bn
Implied Equity Value: $1.95bn
Closed Date: Undisclosed
Target Advisors: Goldman Sachs & Co. LLC (financial) & Cooley LLP (legal)
Acquirer Advisors: Centerview Partners LLC (lead financial), J.P. Morgan Securities LLC (financial), Cravath, Swaine & Moore LLP (legal) & Davis Polk & Wardwell LLP (tax)
PepsiCo (Ticker: PEP), the food and beverage giant, has announced its acquisition of Poppi, a relatively new better-for-you soda company, for US$1.95bn. After $300mn in tax benefits, this takes the net value to $1.65bn.
Poppi is a rapidly growing company with a strong brand, loyal customer base and celebrity endorsements from the likes of Post Malone and Kylie Jenner. Despite Poppi’s recent legal troubles, PepsiCo is hoping to maintain Poppi’s “coolness” factor while leveraging the economies of scale on offer.
Originally, Pepsi had plans to launch their own wellness soda brand, something which its competitor Coca-Cola has done, but these plans were cancelled as Poppi was the more attractive option.
"As we look to reorient our portfolio offerings to address white space consumer needs, the Poppi brand's unique intersection with wellness and culture is a perfect addition to our portfolio" - Ram Krishnan, CEO of PepsiCo Beverages North America
Company Details (Acquirer -PepsiCo)
PepsiCo, Inc. (NASDAQ: PEP) is a leading global producer of convenient foods and beverages, available in over 200 countries worldwide. Headquartered in Purchase, New York, USA, it has amassed a vast portfolio, comprised of globally recognised brands, including Pepsi-Cola, Lay’s, Doritos and Gatorade.
Founded in 1965, headquartered in Purchase, Harrison, New York, USA
CEO: Ramon Laguarta (2018-)
Number of employees: ~319,000 (as of 31/12/2024)
Market Cap: $200.35bn
Enterprise Value (EV): $239.03bn
LTM Revenue: $91.85bn
LTM EBITDA: $17.34bn
LTM EV/Revenue: 2.60x
LTM EV/EBITDA: 13.78x
Recent Transactions: $1.2bn acquisition of Siete Foods (“Siete”) (Jan 2025), undisclosed acquisition of Sabra and Obela (Nov 2024), $3.85bn acquisition of Rockstar Energy (Mar 2020)
Company Details (Target- Poppi)
Poppi is a beverage company revolutionizing the industry with its prebiotic, apple cider vinegar-infused drinks. First launched as Mother Beverage, Poppi gained national attention on Shark Tank, securing $400,000 from American businessman and shark, Rohan Oza. Poppi specializes in low-sugar and gut-friendly sodas, delivering refreshing flavours while promoting digestive health. With a mission to make wellness accessible, Poppi has rapidly expanded its presence in major retailers like Walmart, Whole Foods and Target. As the market for functional beverages grows, Poppi is positioning itself as the future of soda.
Founded in 2015, headquartered in Austin, Texas, USA.
CEO: Chris Hall (2022-)
Number of employees: 111
Market cap: N/A
LTM Revenue: ~$500mn
LTM EBITDA: N/A
LTM EV/Revenue: N/A
LTM EV/EBITDA: N/A
Recent Transactions: $105,000 investment from The Angel Group (2020), $13.5mn Series A funding from CAVU Consumer Partners (2021), $25mn Series B funding from CAVU Consumer Partners (2022)
Projections and Assumptions
Short-Term Consequences
Under the finalised agreement, PepsiCo acquired Poppi for $1.95B, which included $300mn anticipated cash benefits, resulting in a net purchase of $1.65bn. Following the official announcement, PepsiCo’s share price increased by approximately 1.6% to 2%. Additionally, PepsiCo is planning to incur various integration costs to absorb Poppi into its operations, which might range from $100mn-$500mn.
In a statement accompanying the deal, PepsiCo highlighted the strategic benefits, emphasising that Poppi’s presence in the healthier markets would elevate Pepsi’s presence in the better-for-you soda segment, which would give Pepsi a strong foothold against its competitor Olipop (Coca-Cola distribution) among others. Poppi will be accretive to revenue but dilutive to margins for the initial 12-18 months post-acquisition due to its cost structure and narrow gross margin (40-50%) against Pepsi’s (55-60%).
Despite the strategic fit and promising growth, concerns over the extremely high price tag still remain in the market, in addition to a recently settled lawsuit. Overall, if Pepsi successfully integrates Poppi, improves its cost structure, and capitalizes on the health-conscious trend, the long and short-term outlook remains promising despite near-term financial strain.
Long-Term Upsides
Globally, consumers have been increasingly health-conscious and mindful of the ingredients list. Thus, the better-for-you soda market is expected to grow significantly in the coming years, with some sources forecasting an 8.5% CAGR until 2034, ending in a market size of US$ 484 million. In fact, major US retailers have already been expanding shelf space dedicated to functional beverages due to a rise in demand. Moreover, this rise in demand has been driven by both young and old as consumers of all ages are becoming more health aware. The acquisition of Poppi marks a strategic move by PepsiCo to diversify its offerings and benefit from this new market’s growth potential.
By buying an already-established company, Pepsi guarantees itself a proven, loyal customer base. Coca-Cola, however, will likely struggle more to capture a significant market share as it is attempting to launch its own brand, and large corporations are seen as “uncool”, giving Pepsi a head-start in this space.
Furthermore, Poppi has a clear brand identity of bright colours and retro-inspired style, which resonates strongly with its audience. This has sometimes come with the label of a “TikTok company”. However, Poppi is yet another case of a brand with a strong character being rewarded with loyal customers.
Pepsi will look to maintain the appeal of Poppi but integrate it into its already established supply chain and retail partnerships. PepsiCo’s global trade reach and extensive R&D facilities will enable Poppi to grow more easily and cheaply, relative to what Poppi could have achieved alone. This way, they can benefit from economies of scale, enhancing efficiency and driving returns.
In conclusion, in the long-term, PepsiCo’s acquisition of Poppi is aligned with synergy, increased efficiency, growth potential, and competitive advantage. This deal is a step towards “future-proofing” PepsiCo’s business.
Risks and Uncertainties
A major uncertainty and concern is Poppi’s ongoing legal troubles, particularly class-action lawsuits related to misleading health claims in their advertisement campaigns. The drinks previously contained only two grams of prebiotic fibre, an amount too small to actually realise any gut health benefits. The suit is looking to be settled soon for around $8.9 million and a change in marketing, potentially affecting consumer perception of the brand and products.
Poppi could also face brand authenticity risks from the new PepsiCo ownership. Many of Poppi’s loyal consumers would choose its products due to being a health-focused and independent alternative to mainstream beverages. However, now being acquired by a global corporation founded on sugary and unhealthy drinks, it potentially could lead to backlash and customer attrition as other companies have faced once purchased by PepsiCo.
Another factor is the volatility in the health trend market. Prebiotic sodas are currently popular; however, in this market, due to the influence of social media and other outlets, consumer preferences change rapidly. Other past health trends like hard Kombucha experienced significant growth in its early stages, but around 5 years later to present day, the product has experienced a decline of 7.8% in sales in retail stores. If the gut-health movement slows, demand for Poppi could stagnate.
The market is also becoming increasingly saturated, with competitors like Olipop and Simply Pop expanding their market share of the healthy beverage industry. If too many brands enter the market, especially those backed by major players like Coca-Cola, Poppi’s consumer base could become fragmented, particularly if competitors offer cheaper or better-tasting alternatives, ultimately limiting the company’s growth.
High production costs could impede the company’s profitability. The costs of premium ingredients like apple cider vinegar and agave inulin are expensive compared to artificial sweeteners. These costs, alongside extensive marketing and retail expenses, mean the brand is risky to invest in based on profitability concerns.
"We can't wait to begin this next chapter with PepsiCo to bring our soda to more people — and I know they will honor what makes Poppi so special while supporting our next phase of growth and innovation."- Allison Ellsworth, Co-Founder of Poppi