PepsiCo Strengthens Wellness Brands Portfolio With Poppi Acquisition

In a bold step to reshape the future of refreshment, PepsiCo, Inc. PEP has officially completed its acquisition of Poppi, the fast-growing prebiotic soda brand, for $1.95 billion. With an estimated $300 million in tax benefits, the net purchase price comes to $1.65 billion. The deal also includes a performance-based earnout, further tying Poppi’s valuation to its future success.

Poppi, known for its vibrant branding and gut-healthy sodas made with prebiotics, fruit juice and apple cider vinegar, has gained popularity among health-conscious Gen Z and millennial consumers. With no more than 5 grams of sugar per serving, Poppi has carved out a leading role in the functional beverage category, a space PepsiCo is eager to dominate as part of its long-term strategic transformation.

Pepsi-Poppi Deal Explained

This acquisition marks a pivotal milestone in PepsiCo’s ongoing portfolio transformation, underscoring the company’s commitment to evolving with consumer demand for great-tasting, functional products that support overall well-being. As part of its broader strategy to build a future-ready beverage and snack portfolio, Poppi joins a growing roster of wellness-oriented brands such as Siete and Sabra.

With health-conscious consumers driving demand for gut-friendly and low-sugar beverage options, Poppi has quickly become a standout name in the industry, known for its vibrant branding, influencer-fueled momentum and functional benefits. By bringing Poppi into its fold, PepsiCo is doubling down on a key growth area, functional wellness, positioning itself ahead of the curve as legacy soda makers adapt to evolving consumer preferences.

As demand grows for beverages that offer health benefits beyond hydration, Poppi provides PepsiCo with a differentiated, science-backed product in a fast-rising segment. Poppi’s meteoric rise has been fueled by a savvy digital strategy and influential partnerships that have made it a staple on platforms like TikTok, an advantage PepsiCo plans to scale globally. The prebiotic soda space is still nascent, giving PepsiCo an edge in shaping consumer behavior and owning a greater share of the emerging health beverage shelf.

With this acquisition, PepsiCo is not just buying a brand, it is buying cultural relevance, health innovation and the future of soft drinks. The integration of Poppi is set to accelerate the company’s transformation into a next-generation food and beverage powerhouse.

Trading PEP Stock in the Face of Headwinds

Despite this strategic win, PepsiCo’s stock has faced persistent pressure over the past year due to ongoing soft top-line trends and operational challenges, particularly in its North America business. Management has pointed to rising global macroeconomic volatility, including trade disruptions, tariffs and sourcing constraints, as key contributors to higher supply-chain costs, threatening margins.

Adding to the uncertainty, consumer demand remains sluggish across many key markets. High inflation continues to constrain household spending, leading to more price-sensitive behavior and reduced discretionary spending, especially in categories like snacks. While PepsiCo has introduced more value-oriented offerings focused on flavor, functionality and portion control, consumer engagement has yet to fully rebound.

In response, PepsiCo is implementing cost containment and productivity strategies, including automation, digital transformation and global supply chain standardization. The company is focusing on international expansion and targeted brand investments to reinvigorate performance in North America.

Nonetheless, the challenging operating environment has prompted PepsiCo to revise its full-year guidance. The company now expects core constant-currency EPS to remain flat year over year, down from its prior outlook for mid-single-digit growth. Organic revenue growth is projected in the low-single-digit range, reflecting constrained consumer spending and ongoing cost pressures.

This Zacks Rank #4 (Sell) company’s shares have declined 27.2% in the past year compared with the industry’s decline of 4%.

Stocks to Consider

Carlsberg CABGY, a brewing company with a beer portfolio of more than 500 brands, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Carlsberg’s current financial-year sales and EPS indicates growth of 31.2% and 9.4%, respectively, from the prior-year reported levels.

The Coca-Cola Company KO is a beverage behemoth with a market share of more than 40% in the non-alcoholic beverage industry. It currently has a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for Coca-Cola’s current financial-year sales and EPS indicates growth of 2.3% and 2.8%, respectively, from the prior-year reported levels. KO has a trailing four-quarter earnings surprise of 4.9%, on average.

Coca-Cola Europacific Partners CCEP produces, distributes and sells a range of non-alcoholic ready-to-drink beverages. CCEP currently carries a Zacks Rank #2.

The consensus estimate for Coca-Cola Europacific Partners' current financial year’s earnings per share indicates growth of 7.5% from the year-ago reported figures. The consensus sales estimate suggests year-over-year growth of 20.5%.

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This article originally published on Zacks Investment Research (zacks.com).

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