PepsiCo Inc ( PEP )  is discussing a deal to acquire the healthier soda brand Poppi for over $1.5 billion, Bloomberg reported on Friday, citing unnamed sources familiar with the matter.

The “functional soda” includes prebiotics, probiotics, and added fiber, which companies market as digestive health boosters.

PepsiCo ( PEP ) had previously abandoned its plans to launch its functional soda under the Soulboost brand.

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Allison Ellsworth and Stephen Ellsworth co-founded Poppi.

The global probiotic soda market reached $242.1 million in 2023 and is projected to reach $422.4 million by 2031, at a CAGR of 7.1% from 2024 to 2031, driven by rising health consciousness and the increasing popularity of gut-friendly products. 

PepsiCo ( PEP ) held $8.5 billion in cash and equivalents as of Dec. 28.

It reported a fourth-quarter sales decline of 0.2% to $27.78 billion, missing the analyst consensus estimate of $27.89 billion. Adjusted EPS of $1.96 beat the consensus estimate of $1.94.

PepsiCo ( PEP ) expects a low-single-digit increase in organic revenue for fiscal 2025 and a mid-single-digit increase in core constant currency EPS.

Piper Sandler’s Michael Lavery noted how PepsiCo’s aggressive promotional strategy failed to bear fruit due to weak U.S. consumer spending. However, the analyst highlighted it as a buying opportunity for investors with a long-term time horizon despite the business challenges and negative investor sentiment.

Coca-Cola Co ( KO ) Chair and CEO James Quincey highlighted in the fourth-quarter report how the company acquired a significant market share from PepsiCo ( PEP ).

Last November, then President-elect Donald Trump announced Robert F. Kennedy Jr. as his nominee to lead the Department of Health and Human Services (HHS). PepsiCo’s shift toward health-conscious products coincided with Kennedy’s stricter health and nutrition regulations.

PepsiCo ( PEP ) stock lost close to 10% in the last 12 months.

Kennedy met PepsiCo ( PEP ) and other company executives this week to address health concerns linked to processed foods and additives.

Price Action: PEP stock is down 0.03% at $148.29 at last check Friday.

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