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ETFs in Focus as PepsiCo Buys Prebiotic Soda Brand Poppi

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PepsiCo (PEP - Free Report) announced on Monday its acquisition of the prebiotic soda brand Poppi for $1.95 billion, strengthening its presence in the growing functional beverage category. The move comes as the company faces declining demand for its traditional sodas and snacks amid consumers’ preference for health-conscious options. Shares of PEP gained about 1.9% on March 17, 2025.

PepsiCo stated that the transaction includes $300 million in anticipated cash tax benefits, bringing the net purchase price to $1.65 billion. However, additional terms of the deal were not disclosed.

Rising Popularity of Healthier Beverages

Younger consumers are increasingly turning to prebiotic sodas and energy drinks as part of a healthy lifestyle. Competitors like Coca-Cola (KO - Free Report) have responded by launching prebiotic sodas under its Simply brand, while companies such as Celsius Holdings (CELH - Free Report) and Keurig Dr Pepper (KDP - Free Report) have also expanded their portfolios with wellness-focused drinks.

Inside Poppi’s Rapid Growth

Austin-based Poppi has emerged as a leading brand in the prebiotic soda market. Combining prebiotics, fruit juice, and apple cider vinegar, Poppi offers a low-calorie beverage with no more than five grams of sugar per serving. According to BNP Paribas, the brand's retail sales surged 122% year-over-year in the 12 weeks leading up to February 22, capturing around 1% of the total carbonated soft drink market, as quoted on Reuters.

Founders’ Journey and Shark Tank Success

Poppi was founded in 2015 by Stephen and Allison Ellsworth, who initially developed the drink—then called Mother Beverage—in their home kitchen. Allison, seeking a healthier soda alternative, experimented with fruit juices, apple cider vinegar, and sparkling water.

The brand gained traction in 2018 when the couple pitched it on “Shark Tank,” as mentioned on AP News. Investor Rohan Oza took a stake in the company and spearheaded a major rebrand, giving Poppi’s brand superb packaging.

Any Challenges?

Despite its success, Poppi has faced challenges. In the summer of 2024, a class-action lawsuit was filed against the brand, alleging that its marketing overstated the gut health benefits of its products. However, despite legal hurdles, Poppi’s partnership with PepsiCo is set to boost its expansion across the United States and beyond.

ETFs in Focus

Against this backdrop, below we highlight a few PEP-heavy exchange-traded funds (ETFs). These ETFs may register gains in the medium term.

iShares U.S. Consumer Staples ETF (IYK - Free Report) – PEP weight 8.54%

First Trust Nasdaq Food & Beverage ETF (FTXG - Free Report) – PEP weight 7.81%

Consumer Staples Select Sector SPDR Fund (XLP - Free Report) – PEP weight 7.94%

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