On Monday, PepsiCo Inc. announced plans to acquire a soft-drink firm known for gaining significant social media traction after appearing on "Shark Tank," for approximately $1.7 billion. This move aims to help the drinks conglomerate attract younger consumers such as millennials and Generation Z by offering more health-conscious products.
PepsiCo intends to leverage Poppi's appeal as a "healthier alternative" soda brand, providing prebiotic beverages that contain fewer than 5 grams of sugar per serving.
At a selling price of $1.7 billion to Pepsi, they are essentially paying around 4.2 times Poppi’s revenue of $391 million from the last twelve months.
"The agreement seems logical to us as we think PepsiCo’s North American beverage operations could further enhance Poppi’s reach in the market," stated TD Cowen analyst Robert Moskow, maintaining his "hold" recommendation for Pepsi. He also noted that 'functional soda' appears to be developing into a significant and enduring sector within the industry.
One of the more successful enterprises highlighted on ABC’s "Shark Tank," which has recently concluded its 16th season featuring presentations from business owners before a stringent group of investors like Mark Cuban and Barbara Corcoran, is Poppi.
Another notable success from "Shark Tank" is Bombas, a sock company that secured $1 million in funding during their appearance on the show in 2014. Since then, they have reportedly achieved over $1.3 billion in total sales.
Another company was Ring, a manufacturer of doorbells that made an appearance on the show in 2013 and subsequently secured support from basketball legend Shaquille O'Neal prior to being acquired by Amazon.com for approximately $1 billion in 2018.
Scrub Daddy, a company specializing in sponges showcased on the program back in 2012, has reportedly accumulated total sales amounting to $925 million.
Regarding Poppi, the item first appeared on the show in 2018 with the band name Mother Beverage. It received backing from "shark" Rohan Oza, which led to the company being relabeled as Poppi.
In 2024, the brand had grown sufficiently to air advertisements during the Super Bowl, and it repeated this feat this year.
"What began as a homemade creation rapidly gained popularity at local farmer’s markets, then caught the attention of 'Shark Tank' investors, and is now widely available across major retail stores nationwide," stated Pepsi and Poppi.
The business was started by the married couple Stephen and Allison Ellsworth in Austin, Texas. Their beverage includes components like apple-cider vinegar that are intended to enhance digestive well-being.
Following its appearance on "Shark Tank," Poppi attracted millions of dollars in investments from famous personalities, including endorsements from Jennifer Lopez, singer Billie Eilish, and actress Mila Kunis, along with feature segments on the "Drew Barrymore Show."
Prebiotics are substances designed to feed the "beneficial" microbes in your digestive system that aid in breaking down food and maintaining general well-being.
The TD Cowen analyst Moskow mentioned that Pepsi has invested approximately $3 billion in "healthier" product lines recently, which includes their purchase of the snack company Siete for around $1.2 billion back in January.
On Monday, Pepsi's stock price increased by 1.9%. Year-to-date, the stock has dropped by 0.6%, whereas the S&P 500 index has declined approximately 3.9%.
