Multi-national food and beverage company PepsiCo is following its arch rival The Coca-Cola Company into the fast-growing prebiotic soda market by purchasing the poppi brand for US$1.95 billion (A$3.1 billion).
The acquisition follows Coca-Cola’s recent launch of the Simply Pop prebiotic soda brand and Pepsico’s reported cancellation of the Soulboost functional soda brand, and can be seen against the backdrop of declining sales of traditional soda (soft) drinks over the last two decades.
Chairman and CEO said Ramon Laguarta said PepsiCo had been evolving its food and beverage portfolio for many years, innovating in new spaces and making disciplined, strategic acquisitions that offered more positive choices to consumers.
He said consumers were looking for convenient and great-tasting options that fitted their lifestyles and which responded to their growing interest in health and wellness.
“poppi is a great complement to our portfolio transformation efforts to meet these needs," Laguarta said in a statement.
Created by Allison and Stephen Ellsworth in their Texas kitchen in 2015, poppi combines fruit juice and apple cider vinegar with prebiotics, which are natural non-digestible fibres that promote gut health, to produce a low calorie soda.
It was discovered on the Shark Tank television program and funded by CAVU Consumer Partners from their initial seed round.
PepsiCo Beverages U.S. CEO Ram Krishnan said the poppi brand's intersection with wellness and culture was a perfect addition to the company’s portfolio as it looked to reorient offerings to address consumer needs.
“We are big fans of the poppi brand movement and believe this incredible brand paired with our commercial capabilities will drive continued growth and innovation for years to come," Krishnan said in a statement.
Pepsico is best known for its rivalry with Coca-Cola in the soda market through its Pepsi brand but sells other products such as Lay's potato chips and snacks, Gatorade sports drinks, Tropicana fruit juices, Quaker oats, cereals, and snacks and Aquafina bottled water in more than 200 countries and territories.
The acquisition will cost $1.65 billion net of $300 million of expected cash tax benefits.
PepsiCo (NASDAQ: PEP) shares closed on Monday at $151.34, up $2.75 (1.85%) on the day, capitalising the New York-based company at $207.64 billion.