The creator breaks down the news of PepsiCo slashing the earn-out for its $2 billion acquisition of Poppi. He explains the financial details of the deal, analyzes potential reasons for the brand's underperformance by examining the roles of both Pepsi and Poppi, and discusses the broader challenges large CPG companies face with managing trendy lifestyle brands. He also considers the possibility that the entire prebiotic soda category has peaked, citing market saturation and slowing growth for competitors, before concluding with the status of Poppi, Pepsi, and the brand's founders.
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Is Poppi doing okay????
Pepsi paid $2 billion for Poppi. Now they’ve slashed the additional earn-out from $300M to $12M. So what’s happening?
Quick context: Part of the Poppi deal was a $300M bonus for the founders if the brand hit growth targets by Q3 2027. Pepsi has to update what they think they’ll actually pay every quarter. December it was $278M. June $117M. Now it’s $12M... 😱
We don’t think this is fully on Poppi or on Pepsi either. Pepsi has wanted a real functional beverage brand forever and couldn’t build one themselves. So they bought one. Poppi was hot, had cultural relevance around it, and Pepsi’s soda business needed that badly.
The bigger factor might be the category itself, the category is very crowded with countless upstarts and even Coke coming into the rat race.
Whose fault is it, Poppi, Pepsi, or neither? Full breakdown in the video.
Transcript
Pepsi paid almost $2,000,000,000 for Poppy, and this week, they admitted it's basically not working. This week, Pepsi dropped the earn out of their Poppy acquisition from 300,000,000 to $12,000,000 When Pepsi acquired Poppy last year, there was a part of the deal that the founders could get a bonus earn out if certain sales requirements were met by the end of twenty twenty seven. Month over month since that deal went live, it kept going down. So whose fault is this? Is it Pepsi's? Is it Poppy's? Is it a little of both? A lot of people assume Pepsi bought Poppy to take out their competition. But I don't really think that's what's happening here, at least not fully. Poppy was never a real threat to Pepsi's core business. Poppy was this hot lifestyle brand with a lot of cultural momentum, and Pepsi saw it as a way to make their portfolio relevant again. And these big strategic food and beverage brands are great at scale, but horrible at maintaining and managing these fuzzy cultural lifestyle brands. Back in 2020, Pepsi tried to make their own lifestyle functional beverage brands. They made Best and DriftWell. Both shut down before they even hit shelves. They just couldn't figure out a way to make it resonate with their audiences. So they have to go to a brand like Poppy who can build something that resonates with an audience, then try to incorporate it into the behemoth of Pepsi. To be fair, Pepsi did say that Poppy grew last quarter and gained more market share in the soda category. So the brand's not dying, but it's not growing at a rate that a $2,000,000,000 acquisition needs to grow at. The other side of this is that the category might have just peaked. The shelf is wildly crowded with both better for you sodas and even bunch of prebiotic sodas. Most people just want a regular soda. And even Lollipop is slowing down, so it might not just be a poppy thing. Pepsi's answer to this is apparently more poppy. They're launching Poppy Lift with caffeine and Poppy Chill with magnesium and L theanine. So is Poppy done? No. Is Pepsi alright? Probably not. But are the Poppy founders good? Yeah. They're fine. They didn't get the big earn out that they were hoping for, but they got plenty of money and they're off launching a new beverage brand called Jetty next month. So they'll be fine. And if you wanna hear all of our thoughts on what's happening with Pepsi and Poppy, subscribe to our newsletter express checkout at the link in our bio. Pepsi bought Poppy because they've been trying to get into the functional beverage space for years now. They tried with Best and DriftWell in 2020, and both of those quickly shut down. And Pepsi really needed this.
