By Abhay Ray 
Introduction
PepsiCo has recently announced the acquisition of Poppi, a prebiotic soda brand, for $1.95 billion, signaling a significant transformation in the soda industry. Poppi’s rapid rise from a small, home-brewed beverage to a health-conscious soda brand reflects a broader shift toward healthier, functional drink options. This deal underscores the changing landscape of the soft drink market as consumers increasingly demand better-for-you alternatives.
The Story Behind Poppi’s Success
Founded in 2018 by Stephen and Allison Ellsworth, Poppi began as a small home-brewed drink sold at farmers’ markets. The brand gained national attention after appearing on the TV show Shark Tank, where it secured funding and rebranded from Mother Beverage to Poppi. Poppi’s unique formula combines fruit juices, apple cider vinegar, prebiotics, and sparkling water, creating a soda alternative that contains only five grams of sugar per serving. Poppi quickly gained traction due to the rising consumer interest in health and wellness, particularly among younger generations. The brand’s offerings, including flavors like cherry soda, cream cola, and root beer, helped it become one of the fastest-growing beverage brands in the U.S., surpassing $100 million in revenue by 2023. Retail partnerships with major stores like Whole Foods, Target, Costco, and Amazon further boosted its growth.
Rising Demand for Functional Beverages
The functional beverages market, which includes brands like Poppi, was valued at $134 billion in 2024 and is expected to grow to $231 billion by 2033. This rapid expansion reflects a growing consumer preference for healthier, gut-friendly, and low-sugar drinks. Poppi has been able to carve a niche in this category, partly due to its successful use of influencer marketing, brand collaborations, and experiential events. Poppi’s vibrant, nostalgic packaging and engaging social media presence have made it a cultural phenomenon, particularly among Gen Z and millennials. Its marketing strategies have further fueled the brand’s rapid rise and solidified its place in the functional beverage space.
PepsiCo’s Strategic Acquisition
PepsiCo’s acquisition of Poppi comes as a direct response to the growing demand for functional, healthier beverages. Ramon Laguarta, PepsiCo’s Chairman and CEO, explained that the deal aligns with the company’s strategy to evolve its food and beverage portfolio. As consumer preferences shift toward health-conscious options, PepsiCo sees this acquisition as an opportunity to expand its reach in the rapidly growing better-for-you beverage category. The deal allows PepsiCo to diversify its portfolio and meet the rising demand for convenient and great-tasting health-focused beverages. This acquisition strengthens PepsiCo’s position in the market and enables the company to compete with emerging brands like Poppi, which are attracting increasing attention.
A Competitive Landscape
Poppi is not the only brand benefiting from this growing trend. Its main competitor, Olipop, has also experienced rapid growth. In 2024, Olipop raised $50 million in Series C funding and achieved a valuation close to $2 billion. Like Poppi, Olipop focuses on offering prebiotic sodas that promote gut health through functional ingredients.In addition to Olipop, Coca-Cola has entered the prebiotic soda space with its Simply Pop brand. The entrance of Coca-Cola and PepsiCo’s acquisition of Poppi highlights a broader shift in the soda industry. Traditional soda giants, once heavily reliant on sugary sodas, are now focusing on healthier, functional drinks in response to declining soda consumption in the U.S.
Health-Conscious Sodas – A New Industry Trend
The soda industry has been under pressure for years, as consumption of sugary sodas has steadily declined. In response, functional sodas like Poppi and Olipop are proving that there is demand for healthier alternatives within the category. These new drinks, blending familiar soda flavors with functional ingredients, provide a much-needed alternative to traditional sugary sodas. Poppi’s success illustrates the shift in consumer preferences, as people are increasingly seeking beverages that not only taste good but also offer functional benefits. By providing lower sugar options and ingredients that promote gut health, Poppi and other brands in the functional beverage space are proving that the demand for health-focused sodas is far from a passing trend.
Poppi’s success is also attributed to its innovative marketing strategies. The brand expertly combined traditional retail distribution with influencer-driven promotions and experiential marketing events. By partnering with celebrities and influencers, Poppi expanded its presence on social media and gained a loyal following. One notable achievement was Poppi’s Super Bowl commercial in 2024, titled “The Future of Soda.” This commercial became the most-watched ad of the game, reaching 29.1 million households. Such high-profile marketing moments have helped solidify Poppi’s position as a cultural icon and demonstrate the power of blending effective marketing with a health-conscious product.
Challenges Along the Way
Despite its impressive growth, Poppi has faced challenges. The company recently settled a class action lawsuit for $8.9 million in March 2025, after allegations that its health claims were misleading. While the lawsuit posed a setback, it does not diminish the brand’s overall success. Poppi continues to resonate with consumers who prioritize healthier lifestyles and seek brands that align with their values.
The Future of Soda – Health and Lifestyle Integration
PepsiCo’s acquisition of Poppi signals a broader shift in the beverage industry. As consumer interest in health and wellness continues to rise, traditional soda companies are adjusting their focus to align with these evolving preferences. The success of Poppi and its competitors illustrates that functional sodas are not just a passing trend they are here to stay.
In the future, the soda industry will likely continue to be shaped by the growing demand for healthier beverages. The legacy soda brands, such as PepsiCo and Coca-Cola, are investing in functional drinks to stay relevant in an increasingly health-conscious market. Poppi’s unique marketing approach and commitment to healthier living show that small, authentic brands can achieve extraordinary success in today’s rapidly changing market.
Conclusion
PepsiCo’s acquisition of Poppi marks a defining shift in the soda industry toward health-conscious and functional beverages. As traditional sugary sodas decline in popularity, brands like Poppi are setting new standards by blending wellness with taste and cultural relevance. With its bold marketing, clean ingredients, and focus on gut health, Poppi has not only disrupted the market but reshaped consumer expectations. PepsiCo’s move reflects the industry’s future where innovation, health benefits, and lifestyle alignment take center stage. This acquisition signals that better-for-you sodas are not a fad, but the new norm.
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