Just a few years ago, drinking full-sugar soda was a daily habit for consumers. Traditional soft drinks dominated grocery store shelves and comprised a significant portion of most people's daily intake.
But with the growing awareness around health and wellness and a bit of social media brainwashing, consumer preferences have shifted dramatically. This has increased demand for healthier alternatives and nonalcoholic beverages, especially those offering health benefits.
💵💰 Don't miss the move: Subscribe to TheStreet's free daily newsletter 💵💰
Prebiotic soda has become one of the fastest-growing segments in the beverage industry, so much so that even giants like PepsiCo have reported revenue declines in the U.S. market, once its most profitable client.
Related: Coca-Cola brings back controversial Coke flavor
As traditional soda brands struggle, startups like Olipop, Poppi, and Culture Pop thrive. These brands have experienced astronomical growth in just a few years, outdoing what even the most veteran companies achieved in decades by listening to consumers' demands.
PepsiCo acquires Poppi as the prebiotic soda market booms
Driven by skyrocketing demand for healthier soda alternatives and gut-friendly drinks, PepsiCo (PEP) acquired Poppi for $1.95 billion in May.
Despite being officially founded four years ago, Poppi achieved over $100 million in revenue in 2024, with a gross margin of 65%. This market a significant leap from its initial $30 million in sales back in 2020, placing it among the fastest-growing soda brands in the U.S.
PepsiCo stated that this acquisition aligns with the company's short- and long-term strategy to meet changing consumer preferences and capture market share in the beverage space.
Related: Pepsi to buy popular alternative brand to destroy rival
This move comes at a critical time for PepsiCo, which has faced troublesome declines over the past few months. The company reported a 2% drop in its North American beverages division during the second quarter of 2025, highlighting a shift in consumer behavior.
PepsiCo didn't take long to enter the soda market with its own innovation.
On July 21, the company announced the launch of its first-ever prebiotic cola, available in Original and Cherry Vanilla flavors. This marks PepsiCo's first major innovation in the category in 20 years.
Olipop launches a SpongeBob collaboration following PepsiCo's innovation
Since its launch in 2018 with an initial investment of $100K, Olipop has become a force to be reckoned with.
In only seven years, the prebiotic soda brand has reached a $1.85 billion valuation with profits of approximately $50 million, another testament to the growing consumer demand for functional health beverages.
However, the competition is getting more challenging, which prompted Olipop to reveal a new partnership only a day after PepsiCo's prebiotic soda was launched.
More Retail News:
- Taco Bell reveals new menu item with dream partner
- Papa Johns announces wild new menu deal to win back customers
- Target is ending price matching — Here’s where you can still save
Olipop has partnered with the Nickelodeon character SpongeBob SquarePants to release the new “Olipop X The SpongeBob Movie Pineapple Paradise” flavor for the upcoming “The SpongeBob Movie: Search for SquarePants.”
The collaboration features five different SpongeBob can designs, each containing prebiotics, plant fiber, botanicals, pineapple, and a splash of mandarin.
Paramount Global is the parent company to Nickelodeon, where the “SpongeBob SquarePants” show airs.
The limited-time flavor has been listed at Walmart and HEB. Although no specific stores have been announced, Olipop is sold at nearly all major retailers, including Target, Whole Foods, and Kroger.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
