Pepsi (PEP) buys probiotic soda Poppi for $1.95 billion to expand their presence in the functional soda market, paying 13x+ topline revenue
**Shares of Pepsi closed 1.85% up today. Some information about Poppi, the acquisition target.**
\- Founded in 2018 by a couple, they reported upwards of $100 million in sales in 2024. Even if we round up to $150 million in sales, Pepsi would be paying a 13x multiple on top line revenue not net profit.
\- The company previously appeared on Shark Tank and sold 25% of the business to Rohan Oza for a $400,000 investment. Rohan Oza is a businessman known for his success in bringing drink brands such as Vita Coco and Vitaminwater to market
\- The company has a wide range of marketing partnerships with celebrities including Post Malone, Hailey Bieber, Kylie Jenner, Billie Eilish, Russell Westbrook, Jennifer Lopez and Olivia Munn
\- Poppi was previously sued in California class action lawsuit for misleading consumers about the health benefits of their drinks. With only 2g of fiber, a consumer would have to drink 4+ cans to "realize any potential health benefits"
**Interested to hear what people think about this acquisition.**
\- Is Poppi overvalued and did Pepsi overpay?
\- Should Pepsi have built the internal capabilities to build a brand like this rather than acquiring? Does acquiring show a lack of direction and vision by management? It's hard to imagine that with Pepsi's scale in manufacturing, marketing, retail partnerships, etc. it have cost more than $1.95 billion to make a competing offering that could reach $100 million in sales within 6 years.
\- Naturally my next thought was, given the above on valuation, is the Poppi brand worth almost $2 billion? Maybe it's not the sales they are after, but the formulation, the brand, or the marketing partnerships.
\- Will Pepsi change the formula, leading to turning off long time customers?
**Sources**
[https://www.usatoday.com/story/money/2025/03/17/pepsi-prebiotic-soda-poppi-acquisition/82495383007/](https://www.usatoday.com/story/money/2025/03/17/pepsi-prebiotic-soda-poppi-acquisition/82495383007/)
[https://www.reuters.com/business/retail-consumer/pepsico-buy-healthier-soda-brand-poppi-nearly-2-bln-deal-2025-03-17/](https://www.reuters.com/business/retail-consumer/pepsico-buy-healthier-soda-brand-poppi-nearly-2-bln-deal-2025-03-17/)
[https://apnews.com/article/pepsico-poppi-prebiotic-soda-f1fdb1103b5d8ad6a9e6d8c37e5ab713](https://apnews.com/article/pepsico-poppi-prebiotic-soda-f1fdb1103b5d8ad6a9e6d8c37e5ab713)
