Few beverage categories are as hot as prebiotic sodas at the moment. Last month, PepsiCo announced it had agreed a deal to acquire US prebiotic soda brand Poppi for $1.95bn. The brand reportedly racked up sales of more than $500m in 2024 in the US and even booked an illustrious Super Bowl advertising spot.
Poppi’s success isn’t an isolated example. Other prebiotic soda brands have enjoyed growing popularity as consumer interest in their health of their guts has increased.
Drinks industry experts believe the category is set to enjoy sustained growth as health-conscious consumers turn away from traditional soft drinks.
Prebiotic soda brands first started to hit the shelves around seven years ago in the US, which is the largest market globally. Poppi and rival brand Olipop both hit the shelves in 2018 and soon found a loyal following of consumers looking for healthier alternatives to soft drinks. Their sales pitch was simple: they were offering sodas lower in sugar, that featured powerful flavour profiles and promoted good gut health.
“The benefits of prebiotic sodas come from the prebiotic fibres they contain, which can help promote a healthy microbiome,” explains gastroenterologist Samantha Nazareth MD. However, some experts believe the health claims made by some prebiotic brands have been overstated. Nazareth says determining how healthy a prebiotic soda is depends on what you are comparing them to.
“If you are comparing it to soda, prebiotic sodas do have less sugar and have more fibre, so, yes, most prebiotic sodas are healthier than your typical soda,” she adds.
As to whether they can boost your health, it depends on if the prebiotic fibres found in sodas arrive in the large intestine, which is where bacteria can make beneficial short-chain fatty acids.
“The added fibre found in these sodas may help move things along in the digestive tract but I would caution those with diagnosed gastro diseases that drinking these sodas may cause gas, bloating, and diarrhoea,” Nazareth explains. “Overall, it doesn’t replace the benefits of eating a plant-forward diet or eating the actual, unprocessed source of these prebiotics found in foods like apples, artichokes, garlic, asparagus, oats, etc.”
In March, Poppi settled a lawsuit in the US filed by consumers who claimed they were misled by the company over gut-health claims the brand had made in relation to its drinks. It’s a controversial issue and one brands are acutely aware of.
UK carbonated soft drink brands Hip Pop, which was launched in 2019, doesn’t use the words ‘prebiotic’ or ‘probiotic’ as a descriptor on its sodas like some rival brands do.
“We don’t over claim,” says Emma Thackray, co-founder of Hip Pop. “Our drinks are crafted with live cultures (and prebiotics) that support gut health but we communicate that simply and transparently – no fads, no jargon.”
It’s a similar story for Ben Vear, co-founder of another UK business, Living Things Soda. “We're trying to sell the benefits really and not the function, so, this is a really tasty, refreshing drink but it happens to be good for your gut, so we lead with the taste and the refreshment first.”
Living Things Prebiotic Soda. Credit: Living Things Soda
Vear says his brand’s range of prebiotic sodas typically over-index with women aged from 18 to 30 who are bored of drinking diet sodas.
“That younger age group is really hard to navigate at the moment because they’re turning to sobriety, they're turning away from alcohol and towards premium treats, natural foods and healthier options,” he says.
Ben Goodwin, co-founder and CEO of US-based Olipop, says functional sodas appear to have found favour with younger shoppers but the typical consumer spans multiple demographics who tend to be somewhat health conscious.
“They're looking for better alternatives rather than complete sacrifices,” he says. “Olipop now reaches one in five households and has achieved 25% adoption amongst Gen Z consumers. These consumers are often former traditional soda drinkers seeking to reduce sugar intake while addressing gut health, which has become increasingly mainstream in recent years.”
These consumers are also seeking tasty and new flavour profiles, which is where the category has delivered. Although you can get prebiotic colas, root beers and lemonades, brand owners have also delivered innovative flavours like banana cream and watermelon lime.
“The range of familiar to new and exciting flavours have really resonated with consumers and it’s clear from the recent growth and attention on the category that consumer preferences are shifting towards healthier options that also deliver on taste,” says Goodwin, whose company has launched around 20 different flavours.
As product ranges have developed, retailer approaches to merchandising prebiotic sodas has changed and these drinks are no longer just assigned to the wellness aisle.
Credit: Anatoliy Tesouro / Shutterstock
“They’re moving into the heart of the soft drinks fixture, helping shoppers make better everyday choices without compromising on taste,” Hip Pop’s Thackray says.
Given the rapid growth of some of these brands, it’s not surprising the category has caught the attention of the global beverage behemoths.
In addition to PepsiCo’s acquisition of Poppi, earlier this year Coca-Cola launched a prebiotic soda brand called Simply Pop. It had been rumoured Coca-Cola had explored an acquisition of Poppi last year but a deal never materialised.
The reason the category has found itself caught in the crosshairs of the large drinks groups is potentially because the companies don’t want to repeat the mistakes they have made in the past, according to Francois Sonneville, director for beverages at Dutch financial-services group Rabobank.
Credit: Xoxo
“Missing a trend can be costly,” says Sonneville. “When Red Bull entered the non-alcoholic space, there will have been many people who did not see the potential. Coca-Cola had to buy [a stake in] Monster much later to get into the energy drinks category and PepsiCo had a bad experience with Bang. Energy drinks have become a success and are still growing, despite negative publicity about sugar, caffeine etc.”
He continues: “There probably is a little bit of an insurance policy aspect to the [Poppi] acquisition too, with hope that it becomes the next Red Bull – both in the US but ideally also across the globe – but also an assurance you did not miss the trend.”
Sonneville points out prebiotic drinks remain a very small percentage of the carbonated drinks market, particularly in the US. The risk associated with making any acquisition, he says, is “always that the sales force loses interest in the category, for example because it doesn’t become relevant quickly enough – they sell a lot of cola still – or because another hot trend emerges. It is a little bit like throwing items at the wall and see what sticks”.
One person convinced of the stickiness of healthy soda is Nick Cooney, managing partner at investment fund Lever VC, which recently made an investment in European prebiotic soda brand Xoxo. Cooney says the fast growth of the category in the US makes it very compelling and he doesn’t see it as a passing fad.
“I’m sure the novelty period will pass and that will lead to some drop-off, from fewer retailer promotions and similar, but on the other hand there’s still only a modest portion of the public that has tried these drinks and there are so many markets that they still have open to them to start to penetrate,” Cooney says. “I think momentum in those areas will more than offset any drop in momentum when the novel aspect is gone.”
He adds he’s not entirely convinced the “prebiotic claim angle” will be around for a long time and that it might prove to be faddish but feels that isn’t the reason most people are buying these drinks.
Cooney contends their main motivation is they want a healthier soda that tastes as good as a traditional soda and that has enduring value. That’s why he predicts big things for the category.
“The healthy/prebiotic soda space basically didn't exist in the US five years ago and is now doing $1.5bn in annual sales, with close to $1bn of that coming from the two leaders Olipop and Poppi,” says Cooney. “I’m not sure the rate of growth will be as steep in Europe as it has been in the US, for a few reasons, but I think it could certainly reach the same size as the US market. And I wouldn't be surprised if this category gets to $3bn in the US in the next several years, as there is a lot of room for growth in convenience, restaurants, foodservice and retail as well.”
"Gut feeling: prebiotic soda’s healthy prospects" was originally created and published by Just Drinks, a GlobalData owned brand.
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