PepsiCo Inc. is in advanced talks to buy healthier soda brand Poppi, according to people with knowledge of the matter.
The Purchase, New York-based beverage giant could announce the transaction as soon as next week, said one of the people, who asked not to be identified discussing confidential information. The purchase price under discussion is more than $1.5 billion, the person said.
PepsiCo had planned to launch its own so-called functional soda under the brand Soulboost, but decided to scrap that effort because of early indicators it wouldn’t succeed.
While deliberations are at a late stage, they could still be delayed, the people said. A representative for PepsiCo declined to comment. A spokesperson for Poppi didn’t respond to a request for comment.
The “functional soda” category has been growing, especially compared to standard sodas. The lower-sugar beverages can include ingredients not found in standard soda, such as prebiotics, probiotics and added fiber and say they are aimed at improving digestive health.
Functional beverages are “on fire” with New York-based FreshDirect, said Loan Heilner, the grocer’s merchandising director. She said sales are up more than 60% over last year, driven by brands like Olipop and Poppi. Big-brand sodas, meanwhile, are up only slightly compared with last year, she said. Coca-Cola Co. recently launched its own prebiotic soda, Simply Pop.
Austin-based Poppi was founded by Allison Ellsworth and Stephen Ellsworth. It gained notoriety in 2018 when the company — then known as Mother — received an investment from Cavu Venture Partners’ Rohan Oza on the television show Shark Tank. A slew of celebrities including Nicole Scherzinger and Ellie Goulding have also backed the company.
PepsiCo has been turning to acquisitions of healthier brands recently. In October, it announced plans to acquire Siete Foods for $1.2 billion. The following month, it said it would buy the remaining 50% of Sabra Dipping Co. and PepsiCo-Strauss Fresh Dips & Spreads International GmbH.
“There’s a higher level of awareness in general of American consumers towards health and wellness,” Chief Executive Officer Ramon Laguarta said in PepsiCo’s February conference call with investors.