Pepsico (PEP.US) is investing $1.95 billion to acquire the probiotic soda brand Poppi, a move that signals the company's commitment to innovation and health-consciousness in the beverage industry.

Pepsico, Inc. (PEP.US) announced on Monday that it has agreed to acquire Poppi, a maker of carbonated beverage, for $1.95 billion, including $300 million in expected tax-free cash, for a net purchase price of $1.65 billion. The transaction also includes additional potential earn-out payments, subject to the achievement of certain performance milestones within a specified period following the closing of the transaction. The transaction is subject to customary closing conditions, including regulatory approvals.

"Over the years, we have been developing our food and beverage portfolio, including innovation on our brands in new categories, as well as disciplined strategic acquisitions, that have enabled us to offer consumers more positive choices," PepsiCo CEO Ramon Laguarta emphasized. "Consumers are more than ever looking for convenient, delicious options that fit their lifestyles and meet their growing interest in health and wellness. Poppi is a great addition to our portfolio transformation efforts to meet these needs."

Poppi was founded in 2015 by Stephen and Allison Ellsworth, a couple who played a significant role in the television show Shark Tank. The most recent funding round was a B-round in 2022, raising $25 million. Poppi's carbonated beverage products are a blend of juice, apple cider vinegar, and prebiotic fiber, which is said to be a delicious, refreshing, and flavorful carbonated beverage. The carbonated beverage line emphasizes all the taste benefits of soda, but with only 5 grams of sugar and 25 calories, and features prebiotics to support gut health.

The prebiotic soda category remains relatively small, and its health benefits are still controversial. Last year, reports showed that both Coca-Cola (KO.US) and PepsiCo were interested in Olipop, a prebiotic soda brand with 25,000 stores in the US, which generated over $100 million in revenue in the first half of 2023.