After acquiring Poppi last year for nearly $2 billion, PepsiCo structured an additional $300 million earnout that would be paid only if the brand meets unspecified expansion targets by the third quarter of 2027. In a recent filing, PepsiCo marked the current fair value of that contingent payout at about $12 million as of Sept. 5, a steep cut from prior marks. The company measures this liability at fair value using simulations of future results that include Poppi's net revenue and margin forecasts. PepsiCo did not comment on the drop.
Beverages analyst Kenneth Shea of Bloomberg Intelligence said, "At this rate, it seems plausible that they may not pay any of the $300 million unless Poppi's performance rebounds markedly over the next year." If any payment is ultimately made, the recipients would be Poppi's shareholders and its founders, Allison and Stephen Ellsworth.
PepsiCo has acknowledged pressure in its North America soda business. In the third quarter, the beverage division's organic volume slipped slightly and missed Wall Street expectations, while the unit reported $7.7 billion in overall sales. CEO Ramon Laguarta said on last week's earnings call he is "dissatisfied" with soft drink performance and wants stronger execution, adding that PepsiCo plans to put additional investment into Poppi as well as Pepsi and Mountain Dew. In July, he also told analysts that moving Poppi from its prior distributor into PepsiCo's system had "a bit of an impact" on first half performance, saying the issue had been addressed and the brand remained in growth.
On Monday, a PepsiCo spokesperson said Poppi posted double-digit growth in sales volume during the third quarter and picked up share in carbonated soft drinks.
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Poppi leans into splashy, social-first marketing and offers reduced-sugar varieties such as Shirley Temple and Sour Apple. Earlier this year, PepsiCo featured the brand in one of its four Super Bowl ads, and Poppi has teamed up with the Dallas Cowboys and the reality series Love Island USA.
PepsiCo's latest fair value mark for the Poppi earnout has been cut to about $12 million, while the company says Poppi is still growing and gaining share. The gap highlights what to watch next: how the brand performs as PepsiCo steps up investment, and whether new products expand its reach. Those are the signals that will matter more to your wallet than any single accounting line.
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