PepsiCo is planning to acquire prebiotic soda brand Poppi for $1.95 billion, marking a major shift toward health-conscious beverages. With traditional soda sales declining, functional sodas—which include prebiotics and lower sugar content—have emerged as a booming category, led by Poppi and Olipop.
Rather than developing its own functional soda under its Soulboost brand, PepsiCo has opted to buy into the trend. The deal includes $300 million in anticipated tax benefits, bringing the net purchase price to $1.65 billion. Additional payments will be made if Poppi reaches specific performance milestones. The deal is still subject to regulatory approval.
Poppi, founded in 2018, has grown rapidly, crossing $100 million in annual sales by 2023. Its success has drawn comparisons to Olipop, which was recently valued at $1.85 billion. Both brands have capitalized on growing consumer demand for healthier soda alternatives.
However, Poppi hasn’t been without controversy. The company recently settled an $8.9 million class action lawsuit over health claims made on its packaging. Despite this, its Super Bowl ads and aggressive marketing signal a push for further market dominance.
For Economics students, this case highlights mergers and acquisitions, market competition, and shifting consumer preferences. Will PepsiCo’s move into functional sodas disrupt the industry—or is this just another trend?
THINK LIKE AN ECONOMIST!
Q1. Define the term oligopoly.
Q2. Explain using a market structure diagram how PepsiCo’s potential acquisition of Poppi could impact competition in the soft drink industry.
Q3. Evaluate whether PepsiCo’s acquisition of Poppi is likely to be a successful long-term strategy for adapting to changing consumer preferences.
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