ETFs in Focus as PepsiCo Buys Prebiotic Soda Brand Poppi

PepsiCo PEP 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 BeveragesYounger consumers are increasingly turning to prebiotic sodas and energy drinks as part of a healthy lifestyle. Competitors like Coca-Cola KO have responded by launching prebiotic sodas under its Simply brand, while companies such as Celsius Holdings CELH and Keurig Dr Pepper KDP have also expanded their portfolios with wellness-focused drinks.Inside Poppi’s Rapid GrowthAustin-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 SuccessPoppi 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 – PEP weight 8.54%First Trust Nasdaq Food & Beverage ETF FTXG – PEP weight 7.81%Consumer Staples Select Sector SPDR Fund XLP – PEP weight 7.94%Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company (The) (KO): Free Stock Analysis Report PepsiCo, Inc. (PEP): Free Stock Analysis Report Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports iShares U.S. Consumer Staples ETF (IYK): ETF Research Reports First Trust NASDAQ Food & Beverage ETF (FTXG): ETF Research Reports Celsius Holdings Inc. (CELH): Free Stock Analysis Report Keurig Dr Pepper, Inc (KDP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks