Functional soda Poppi raises $25M

Dive Brief:

• Prebiotic soda brand Poppi raised $25 million in new financing led by Cavu Consumer Partners, the beverage brand said in a statement.
• The company also bulked up its C-suite by appointing former Anheuser-Busch vice president Lana Buchanan as its chief marketing officer. She joins CEO Chris Hall who was hired in May from Talking Rain; and Chuck Czerkawski, the former CFO at Essentia, who took on the same position at Poppi. 
• The fast-growing, better-for-you soda brand is part of a broader trend sweeping the food and beverage space in which shoppers are looking for functional attributes in what they consume. 

Dive Insight:

While soda is traditionally associated with being loaded with sugar and other out-of-favor ingredients, a few upstart beverage markers are finding success by thinking healthy.

Poppi combines fruit, apple cider vinegar, less than 5 grams of sugar and 20 calories to create a prebiotic soda that improves gut health. It is now one of the fastest-growing non-alcoholic beverages in the U.S., according to the company. During the past year, the brand experienced a 148% increase in overall revenue and a 250% increase in online sales.

“The growth we’ve experienced these past two years is a testament to the demand for functional products that taste good and do our bodies good,” Allison Ellsworth, Poppi’s co-founder who created the drink for chronic health conditions, said in a statement.

The brand’s growth has proven valuable in attracting seasoned food and beverage executives such as Buchanan who bring industry experience to the upstart. As Poppi navigates the ultra-competitive beverage space and changing consumer trends, having a deep executive bench will help it with everything from innovation and cultivating relationships with retailers to procuring ingredients and marketing.

The functional soda brand plans to use the cash to expand its retail presence, both in stores and online; focus on breaking new ground in social media platforms such as TikTok and accelerate its product development.

Studies routinely have shown sweetened beverages can have a detrimental impact on consumer health. The American Heart Association released a study in 2019 showing women older than 50 who drink two or more artificially sweetened beverages daily have an increased risk of heart attacks and strokes. That same year, a study published in JAMA found drinking at least two 8-ounce glasses of soda a day is linked to an increased risk of death. 

At the same time, Poppi and other functional soda brands have thrived by touting ingredients such as prebiotics, real fruit juice and plant-based fibers that a few years ago would have been unheard of in the soft drink category.

The growth being exhibited by Poppi, Olipop and Wave Soda, among others in the category, has attracted the interest of outside investors eager to put their money to work. Poppi’s latest haul comes just over a year after it raised $13.5 million, with celebrity investors a major part of the fundraising round. Functional soda brand Olipop closed a $30 million Series B funding round earlier this year.