The Rise of Functional Soda: PepsiCo Wants In—Here’s Why

What if your soda did more than just taste good? PepsiCo thinks the future of soda is all about gut health—and they’re willing to spend over $1.5 billion to prove it. The beverage giant is in advanced talks to acquire Poppi, the viral prebiotic soda brand that’s been shaking up the industry. But why now? And what does this mean for the future of soft drinks?

PepsiCo is reportedly in advanced talks to acquire Poppi, the popular prebiotic soda brand, in a deal worth over $1.5 billion. The acquisition could be announced as soon as next week, marking another major move by PepsiCo to expand its portfolio of health-conscious beverages.

The Rise of Poppi

Austin-based Poppi first gained widespread recognition in 2018 when co-founder Allison Ellsworth secured an investment from Cavu Venture Partners' Rohan Oza on Shark Tank. Since then, the brand has grown rapidly, fueled by consumer demand for functional beverages that offer digestive health benefits with prebiotics, probiotics, and added fiber.

Celebrities such as Nicole Scherzinger and Ellie Goulding have backed Poppi, further boosting its visibility in the competitive beverage market. The brand's success reflects a broader shift toward healthier alternatives to traditional sodas, which have seen slower growth in comparison.

Why PepsiCo Wants Poppi

PepsiCo previously attempted to enter the functional soda space with its own brand, Soulboost, but scrapped the project due to lackluster early performance. Instead, the company has pivoted toward acquisitions to strengthen its presence in the wellness market. This deal follows PepsiCo’s recent purchases of Siete Foods for $1.2 billion and its move to acquire full ownership of Sabra Dipping Co.

Functional Beverages Are Booming

The functional beverage category is experiencing rapid growth. According to FreshDirect’s merchandising director, sales of functional sodas like Poppi and Olipop have surged over 60% in the past year, while traditional sodas have seen only slight increases. Even Coca-Cola has taken notice, recently launching its own prebiotic soda, Simply Pop.

The Bigger Picture

PepsiCo’s continued investment in health-focused brands aligns with changing consumer preferences. As CEO Ramon Laguarta noted in a recent investor call, “There’s a higher level of awareness in general of American consumers towards health and wellness.”

If the Poppi acquisition goes through, it will not only reinforce PepsiCo’s position in the functional beverage market but also signal a broader industry shift where wellness-focused drinks are becoming mainstream.

With the demand for lower-sugar, gut-friendly sodas on the rise, this deal could reshape the future of the soda industry—and Poppi might just become the next big thing in PepsiCo’s lineup.

What Startups & Marketers Can Learn from Poppi’s Success

Poppi’s rise—and its potential billion-dollar acquisition—holds valuable lessons for startups and marketing teams looking to build category-defining brands. First, timing and market demand matter. Poppi capitalized on the growing trend of functional beverages, positioning itself as a healthier alternative to traditional sodas at just the right time. Startups should pay attention to emerging consumer trends and align their product positioning accordingly.

Second, brand storytelling and strategic partnerships fuel growth. Poppi’s founders didn’t just sell a drink—they sold a lifestyle, leveraging platforms like Shark Tank and celebrity endorsements to create buzz. Marketing teams should focus on crafting compelling narratives, leveraging influencer partnerships, and tapping into organic community-driven growth.

Finally, direct-to-consumer (DTC) and retail expansion should go hand in hand. Poppi started with an online presence but scaled into major retailers, proving that an omnichannel approach can drive long-term success. Startups should master digital marketing while keeping retail distribution in mind as a key growth strategy.

PepsiCo’s interest in Poppi is more than just an acquisition—it’s proof that innovative branding, smart marketing, and timing can turn a niche product into a billion-dollar opportunity. The question now is: who’s the next Poppi?