(Reuters) -PepsiCo said on Monday it would buy prebiotic soda brand Poppi for $1.95 billion, expanding in the "healthier soda" category at a time when the company is battling falling demand for its traditional beverages and snacks.

Young Americans are increasingly turning to healthier sodas and energy drinks as part of a broader shift to fitness and lifestyle products, with rival Coca-Cola expanding its Simply brand to launch a prebiotic soda called "Simply Pop".

Peers such as Celsius Holdings and Keurig Dr Pepper have also snapped up smaller energy and wellness drink makers to build out and expand in the fast-expanding market.

PepsiCo has been struggling to boost demand for its sodas and snacks as customers moved to cheaper private labels after several price hikes.

Meanwhile, prebiotic sodas have become a top-growing category in the U.S. within the carbonated drinks segment, powered by a shift in preference to more health and wellness drinks focused on gut health.

Poppi combines prebiotics, fruit juice, and apple cider vinegar to create a low-calorie soda with no more than five grams of sugar per serving, PepsiCo said.

The Austin, Texas-based company's retail sales jumped 122%, year-over-year, in the 12-weeks through February 22 and now holds about a 1% share of the total carbonated soft drinks category, according to BNP Paribas.

Poppi was founded by Stephen and Allison Ellsworth.

The deal includes $300 million of anticipated cash tax benefits for a net purchase price of $1.65 billion, the company said, without disclosing additional terms of the deal.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)