How the Healthy Soda Category Is Evolving After Poppi’s Acquisition

For years Andrea Baule, a home and design publicist in New York City, would drink a can of Sprite daily. With added sugar and fillers, she knew the habit wasn’t healthy, and hunted for alternatives. For a while, it was diet Sprite. Then she switched to mini diet Sprite cans rather than full-sized. All along, Baule knew these swaps weren’t necessarily better for her, but she couldn’t kick the habit until she discovered Olipop, a prebiotic soda, on social media.

Now?

“I haven’t had soda in a year and a half,” said Baule, adding that she opts for an Olipop three-to-four times a week. 

Baule is among a growing cohort of consumers who are swapping out sugary sodas for newer health-minded versions. “We generally understand as a society that soda’s not good for us,” said Olipop cofounder and chief executive officer Ben Goodwin. “The ability to be like, ‘Oh, it looks like a soda. It’s accessible. It’s flavors I understand. That real aha moment happens for a lot of people, when they’re like, ‘OK, cool. I’ll try one.’”

As consumers are constantly seeking better-for-you alternatives — cleaner skin care, non-toxic cleaning products, sugar-free alternatives — soda is the latest category to get a major refresh, and thanks to disruptor brands and social media, it’s become a sexy market.

“This momentum is driven by two key forces: an increasing interest in gut health as part of overall health and wellness, and a broader search for healthier beverage alternatives,” said Becca Kerr, chief executive officer of nutrition at The Coca‑Cola Company via email. 

According to data from retail analytics firm Spins, the digestive health soda market reached $933 million in a year, having grown 121.5 percent from the previous period. Additionally, data from Nielsen IQ shows that functional beverages only make up 1.7 percent of total soft drink sales, denoting significant opportunity in the space. 

While it may seem like an impossible feat to compete with traditional soda, experts have likened it to another alternative category. “If you told someone the milk alternative market would be just as big as regular milk, people would say you’re crazy,” said Mark Lacy, an investment banking director at Raymond James specializing in healthy living. “I don’t think it’s a crazy claim that better-for-you soda alternatives could be just as big as general soda.” 

Prebiotic soda brand Poppi’s acquisition by Pepsi for $1.95 billion, Olipop’s $1.85 billion valuation and Coca Cola’s entry into the market with Simply Pop are proof points.

In the early days of better-for-you sodas, the focus was primarily on gut health, which is why most brands, like Poppi, Olipop and CulturePop, have an apple cider vinegar base, prebiotic blends and added fiber combined with fruit juice for taste. However, sources say it’s not the main reason customers enter the category. At the end of the day, they’re just looking for a slightly healthier version of regular soda. Data from Euromonitor shows that no sugar is the leading claim in the category. 

“If you want to maximize a brand’s potential, you want to go after the soda replacement [aspect],” said Lacy.

Additionally, focusing on health claims has proven complicated. Poppi, for example, settled a class action lawsuit for false claims in regard to its gut health benefits. To achieve the benefits the brand had touted, a user would have to drink several cans a day which would ultimately increase their sugar intake. Experts say brands shouldn’t forgo added health benefits altogether, but they should be buttoned up when it comes to claims.

As brands double down on the soda alternative story more, the consumer landscape becomes quite broad. According to a Target spokesperson, there is an upswing in consumer interest across the board, though females tend to be the most eager. While Walmart said that many customers are often buying other better-for-you swaps across food and beverage, experts say for most people it’s a balancing act. 

“It’s not that people are walking away from carbonated soda drinks or staying away from soda forever,” said Health-Ade chief marketing officer Charlotte Mostaed. “They’re looking for those healthier choices to sprinkle in through their lives, and then some people at the extreme will be choosing them for good… It’s completely mainstream.”

Although these growing health trends boosted this market, social media has also played a crucial role, particularly TikTok. Poppi can specifically attribute a bulk of its success to the platform, according to analysts from influencer marketing platform CreatorIQ. The brand’s EMV (earned media value) has reached around $125 million, up 270 percent over the last 12 months, according to the firm, thanks to viral moments like its Super Bowl ad, seeding branded vending machines to influencers and cementing itself in the Sleepy Girl Mocktail trend.

Poppi founder Allison Ellsworth previously told WWD her social strategy was 80 percent planned and 20 percent left to viral moments that the team could quickly jump on.

“A lot of brands are like, ‘Well, I don’t know if that one’s gonna take off’ and they overthink it. Then a week’s gone by and you’ve missed the trend,” she said. “We’ll get something up within an hour.”

Poppi’s growing presence on social has allowed the brand to work with mega influencers like Alix Earle, who is now an investor, as well as more niche but impactful food and beverage influencers. It’s this combination that experts say is driving the entire better-for-you soda category. 

“In terms of the actual content, it isn’t just those big viral moments,” said Alex Rawitz, director of research and insights at CreatorIQ. “There’s a lot of everyday content, primarily from food and beverage or lifestyle creators, people who are testing out recipes or sharing what they eat in a day.” 

With these trends, CreatorIQ’s data shows strong growth for brands like Olipop, Zevia and Culture Pop, though not quite as quickly as Poppi did. 

Thanks to the growing popularity, the category is also welcoming new entrants. Health-Ade, known for its kombucha, recently launched SunSip, a prebiotic soda, which is carried at Whole Foods, Sprouts and select Targets. Influencer Mari Llewyn’s Bloom Nutrition is launching her version at Walmart this summer. Meanwhile, the traditional players, like Coca Cola and Pepsi also want in and will broaden reach with mass distribution at Walmart, Target, Costco, Kroger and more.

With the proliferation of brands comes the challenge of standing out, particularly when it comes to flavor. If it doesn’t taste good, consumers won’t drink it. Therefore, brands are creating alternatives of fan favorite sodas, such as Olipop’s Vintage Cola or Bloom Nutrition’s Shirley Temple, while also innovating with offerings like SunSip’s Peach soda or Culture Pop’s Wild Berries and Lime. Although function isn’t the main reason customers are grabbing for these brands anymore, experts say it could be another means of standing out going forward.

“You could do cobranding with other brands for cool flavors… Dive into caffeine,”  said Lacy. “Then continue to go after the legacy stock keeping units like Sun Kiss, Dr. Pepper and Coke.” 

SunSip is one such example as it has added B vitamins for energy and vitamin C and zinc for immunity benefits. While data from Nielsen IQ shows that digestive health and microbiome health are the top health claims, new need states are gaining traction in soda including immune support, beauty benefits, stress relief and bone health.

With successful exits, new entrants and ways to continue innovating, the category isn’t expected to slow down any time soon.

“These disruptor brands that are built around creators are going to continue to accelerate and scale at a rapid rate,” said CreatorIQ chief marketing officer Britt Starr. “The disruption cycle is going to get faster and faster.”