Pepsi acquires Poppi prebiotic soda for $1.65 billion in a play to attract Gen Z

PepsiCo is sick of being left out of the prebiotic soda craze—and to catch up with competitors, the multinational food and beverage corporation just dropped $1.65 billion to acquire the functional soda startup Poppi.

The deal, announced this morning, will bring Poppi’s range of 14 colorful, low-sugar, prebiotic-packed sodas into Pepsi’s expansive existing beverage portfolio. The move comes as young consumers are increasingly turning away from traditional soda in favor of more health-conscious, “functional” beverages, which typically come with a mood or health benefit derived from a specific set of ingredients. Popular prebiotic brands like Poppi and Olipop fit in this category, as do hydration-based drinks like Mio and Magna. 

While Pepsi already owns Gatorade—which continues to dominate the hydration market, despite an influx of new entrants—the corporation has yet to make a move in the prebiotic space. Meanwhile, its main competitor, the Coca-Cola Company, just announced its own prebiotic soda brand called Simply Pop early last month. Now, Pepsi is ensuring that it leaves no functional beverage category unchecked.

“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 U.S, said in a press release on the acquisition.

What’s your function?

According to data from NielsenIQ, U.S. sales of functional beverages grew 54% to $9.2 billion between March 2020 and March 2024. As of last March, functional beverages accounted for an impressive 10% of the nonalcoholic beverage market. Poppi has been well-positioned to capitalize on this growing interest: In 2024, the brand made more than $500 million in sales.

Poppi’s “healthy soda” premise attracts young consumers, but where the brand really hooks potential drinkers is through its influencer marketing tactics (like its controversial decision to send entire vending machines to TikTokers for the Super Bowl) and an ultra-vibrant, colorful branding approach designed to court Gen Z. Founder Allison Ellsworth says that these efforts have helped to distinguish prebiotic sodas as a new “modern soda” section on grocery store shelves.

“Over the last five years, we’ve worked with our buyers and retailers to define this whole new category. It’s what we call the modern soda set,” Ellsworth told Forbes in an interview this month. “It’s a dash destination within the store for this whole new category.”

America’s soda-drinking habits are changing, with young consumers leading the way—and Pepsi’s latest acquisition demonstrates that prebiotic soda might just be the next sparkling water.

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