Back to top

Image: Bigstock

PepsiCo to Buy poppi Soda Brand to Strengthen Better-For-You Offerings

Read MoreHide Full Article

PepsiCo, Inc. (PEP - Free Report) looks well-poised for growth on strength in its core categories, diversified portfolio, improved digital capabilities and flexible go-to-market distribution systems. PEP’s solid innovations are on track.

In the latest revelation, PepsiCo has inked an agreement to acquire poppi, which is a fast-growing prebiotic soda brand, worth $1.95 billion. This amount comprises $300 million of estimated cash tax gains for a net purchase price of $1.65 billion.

Details on PEP’s Latest News

poppi combines prebiotics, fruit juice and apple cider vinegar to offer a refreshing low-calorie soda with about five grams of sugar per serving. poppi's consumer-first style, cultural cache and nutritional content have driven a robust fan base and overall growth. 

The aforesaid transaction includes an additional potential earnout consideration, which is subject to the achievement of some performance milestones within a particular period after the closing of the deal. This soda brand was created by Allison and Stephen Ellsworth and discovered on Shark Tank by Rohan Oza while funded by CAVU Consumer Partners.

This deal looks to strengthen the company's portfolio, with better-for-you offerings to resonate well with consumer tastes. As the prebiotic soft-drink market is evolving fast, PEP’s new launch is likely to compete against leading brands, which have majorly grabbed consumer interest in gut-health beverages.

The poppi deal is subject to customary closing conditions, with regulatory approvals. However, the additional terms of the transaction remain under wraps. poppi, a growing functional soda brand, is focused on health-conscious consumers and captures extra sales and profits for the company.

More on PepsiCo

PEP has been evolving its brand portfolio via meaningful innovations and prudent buyouts. In addition, the company anticipates elevating its focus on holistic cost-management initiatives to boost productivity and use these savings to mitigate cost inflation and prioritize investments in its brands, innovation and channel expansion.

PEP expects to achieve the productivity goal through savings generated from restructuring actions. Such actions aim at further simplifying, synchronizing and automating processes. In addition, it has been reinforcing its international footprint. PepsiCo has been benefiting from strength and resilience in its categories, diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to-market distribution systems and robust consumer demand trends. 

Zacks Investment Research
Image Source: Zacks Investment Research

This current Zacks Rank #4 (Sell) company’s shares have dipped 0.1% in the past three months against the industry’s 7.9% growth. This underperformance is owing to weaker consumer demand in North America, product recalls in the Quaker Foods North America segment and geopolitical tensions. Adverse currency rates continue to pose challenges.

Stocks to Consider in Consumer Staples Space

The Chef's Warehouse (CHEF - Free Report) , which is a distributor of specialty food products in the United States, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CHEF has a trailing four-quarter earnings surprise of 34%, on average. 

The Zacks Consensus Estimate for CHEF’s current financial-year sales and earnings per share (EPS) indicates growth of 5.7% and 17.7%, respectively, from the year-ago numbers.

Post Holdings (POST - Free Report) , which is a consumer-packaged goods holding company, has a Zacks Rank of 2 at present. POST has a trailing four-quarter average earnings surprise of 22.3%.

The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and EPS implies growth of 0.3% and 2.2%, respectively, from the year-ago numbers.

Utz Brands (UTZ - Free Report) , which has a diverse portfolio of salty snacks, currently carries a Zacks Rank of 2. UTZ has a trailing four-quarter earnings surprise of 8.8%, on average.

The Zacks Consensus Estimate for Utz Brands’ current financial-year sales and EPS indicates growth of 1.2% and 10.4%, respectively, from the year-ago numbers.

Published in