The Poppi Acquisition: Why the $1.95B Exit Math Doesn't Add Up for Food Founders
(Listen on Apple or Spotify. Full transcript below.)
When PepsiCo announced the Poppi acquisition for $1.95 billion in May 2025, the headlines were immediate and breathless.
One investor called it "a new North Star for any entrepreneur or investor looking for an exit." Food industry publications celebrated another unicorn success story.
But here's what I want to know: North Star for whom?
After diving deep into the financial details behind the Poppi acquisition, I have questions about who actually won in this deal. The math being reported doesn't add up, the transparency is virtually non-existent, and we're celebrating numbers without knowing who benefits.
If this is supposed to be the model for food entrepreneur success, we need to examine what's really happening behind the glossy headlines.
The $39 Million Investment Reality
Let's start with what it actually took to build Poppi into an acquisition target. This wasn't a bootstrap success story – the Poppi acquisition required massive capital investment over seven years.
The journey began in 2018 on Shark Tank, where founders Allison and Steven Ellsworth secured $400,000 from Rohan Oza for 25% of their company. But that was just the beginning.
The real capital requirements escalated rapidly:
2021: $13.5 million Series A for inventory and team scaling
2022: $25 million Series B for direct store distribution expansion
Total investment: $39 million.
The velocity numbers that resulted were genuinely impressive: over 1,000 units per store per week at Whole Foods, selling out Target orders in days - when they were meant to last weeks, and transitioning to direct store distribution across 200+ networks.
The Math That Raises Red Flags
When I started analyzing the reported investor returns from the Poppi acquisition, something didn't add up. Forbes reported that Series A investors saw a 144X return on their $13.5 million investment, while Series B investors earned a 78X return on their $25 million.
Here's the problem: When you actually calculate those returns, each group's payout would equal nearly the entire $1.95 billion acquisition price. Both groups can't simultaneously receive the full purchase amount.
Either major business publications fundamentally misunderstand how investment returns work, or there's something about the Poppi acquisition financial structure that we're not being told.
And that's just the beginning of what we don't know.
The Questions No One's Asking
The Poppi acquisition coverage focuses obsessively on the $1.95 billion headline number, but virtually ignores the most important questions:
How much ownership did the founders retain after multiple funding rounds?
What percentage of that $1.95 billion actually went to the people who built the company?
How much of this "success" story is really about investor returns versus entrepreneurial achievement?
I've known food entrepreneurs who gave away so much equity in funding rounds that they ended up with minimal ownership of companies they founded. Without transparency about equity distribution, we have no idea whether the Poppi acquisition represents founder success or just another case of investors capturing the majority of the payout.
What We're Really Celebrating
The more I dig into the Poppi acquisition, the more I question what exactly we're supposed to be celebrating.
Are we celebrating consolidation? PepsiCo now owns another independent brand, adding to their recent acquisitions of Siete and Sabra. This represents systematic absorption of innovative independent brands rather than competition with them.
Are we celebrating the "exit or die" mentality that pressures food entrepreneurs to view acquisition as the only meaningful success outcome?
Or are we simply celebrating big numbers without understanding who they benefit?
The most troubling aspect is how secretive these deals remain. We get overly excited, and uncritical coverage of purchase prices and investor returns, and virtually no information about founder outcomes or employee compensation.
The Dangerous "North Star" Narrative
For food entrepreneurs facing today's challenging landscape – rising costs, supply chain disruptions, economic uncertainty – the Poppi acquisition narrative becomes particularly dangerous if it's held up as the standard for success.
Building a business worthy of a $1.95 billion acquisition required $39 million in venture capital, impressive velocity numbers across thousands of stores, and infrastructure development that most food entrepreneurs will never have access to.
This path isn't realistic for the vast majority of food businesses, nor should it be the only definition of success.
There are successful food entrepreneurs who have built profitable, sustainable businesses that serve their communities while maintaining meaningful ownership and control. They've created companies that generate consistent returns without requiring massive venture investment or eventual acquisition by large corporations.
But those stories don't generate headlines like billion-dollar exits.
What You Should Ask About Any "Success" Story
The next time you see headlines about a major acquisition like the Poppi acquisition, here are the questions worth asking:
How much capital was required to achieve this outcome?
Who actually benefited financially from the exit?
What percentage of the company did founders retain?
Is this moving our food system and industry in the right direction?
Most importantly: Does this align with your own definition of entrepreneurial success?
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Episode Timeline
00:00 Introduction to the Case Study Episode
08:49 Diving into the Acquisition of Poppy
09:36 Understanding the Why Behind the Acquisition
13:47 Poppy's Journey: From Mother Beverage to Acquisition
19:59 Investment Rounds and Growth Trajectory
28:21 Analyzing Financials and Market Position
32:09 The Acquisition Deal and Its Implications
39:14 Questioning the Narrative of Success
Full Episode Transcript
Good Food CFO Podcast Transcript - Poppi Acquisition Episode
You're listening to the Good Food CFO podcast. I'm your host, Sarah Delevan, joined as always by our producer, Chelsea Stier. Chelsea, we've got a case study episode today.
Yeah. And I want to remind the audience what we've talked about before, that you love to come in with a warm take. Right? So the case study, what we're going to be talking about today was in the news a couple months ago. I think the deal was finalized just over a month ago, but we wanted to take our time and really get all the facts that we could and get into it. So we are going to be talking about the acquisition of Poppi today.
I do.
Yeah. And we want to talk about it because I have questions. Obviously, when something like this happens, and the sale was big, Another acquisition by Pepsi, they acquired Siete just a few months prior, and it's all over the news. It's all over the news in terms of that sale number. It's all over the news in terms of how much the investors made. It's all over the news. One investor described it as
Yeah.
quote, a new North Star for any entrepreneur or investor looking for an exit. And it's like, why? I just have this question, why? And what are the real details of this? You know I mean? It's much like how soaring revenue doesn't tell the full story. Obviously, things were going in a good direction for Pepsi to want to purchase this company. But I just wanted to dig deeper and give context, as we like to do, Chelsea.
to something that gets so much media coverage and is being touted as the new North Star.
Yeah. So we're going to dig into a lot of the details in our episode today, and we're going to be quoting quite a few news articles that we found online. So we're not going to actually quote any of them here in the episode, but you will be able to find links to every article that we discuss in the show notes. So make sure to check that out if you want to do some of your own research as well.
You know, we have some other updates to talk about, Sarah, before we jump in. Yeah, so we have brought back our member-only content.
Sounds good.
have. I'm so excited about this.
Yeah, so we are sharing some member only podcasts through our membership where we're sharing like behind the scenes stories of the Good Food CFO, us, and deeper dives into like food business financial case studies with real numbers, real talk, real world examples that I think that our members are going to get really excited about.
Yeah. We have gotten feedback, I mean, forever, for the life of this podcast about how people – No one loves the answer. It depends. Yes. Right? But it is so difficult to run through every possible scenario. We can't pull up a company's financial documents and make an example of them here on this podcast. It's just really hard to
get into specifics here. We want to be general enough to provide insights, information, and helpful guidance to the founders that are listening. And oftentimes, most of the time, it sounds like it depends, right? And then we try to give some context. But what we can do and what we've decided like, hey, you know, wouldn't it be great if we could, you know, take the concepts we're talking about in the podcast and actually look at some financial examples.
and say, in this case, this is what we would do. In this case, you know, here would be my advice. And we're doing that for our members in a members only podcast. So when we air an episode and, know, we'll let you know, we're going to do a deeper dive into this inside the membership. You know, you can go there and hear more and see more. I think we're excited about this too, because members only content has been something we've tried.
to do in the past. the other feedback, and this is the theme, we absolutely listen to your feedback because we are here to serve you. We say that all the time. But another bit of the feedback was it's so hard to find everything that is available to you, right? And so we had our members-only content and podcasts on our website for a while, along with some other members-only stuff there. And you all are so busy.
that it's difficult, like you want information served right up to you and I get it, so do I. I don't want to have to go somewhere to find this information that's supposed to be an additional benefit to me. It's like, it to my doorstep. And so now that's exactly what we're doing.
Yeah. If you are a member, right, you're going to get that member only podcast member only content delivered straight to your inbox. So all you have to do is click a button. Yeah. Yeah. So I'm really excited about that. And Sarah, I'd also love to share, you know, as I mentioned already, we're going to be sharing some stories of how we're building the Good Food CFO. And I want to talk about like why we have decided to do that and kind of
give a little tease of what our members are going to be listening to and hearing over the next few months and get into it.
Okay. So, I mean, I'm a founder, right? I have two businesses, technically. We have Sarah Delevan Consulting, and then we have the Good Food CFO. And they both serve different purposes on the way to the same overall mission, right, of changing our food industry. And as a founder of the Good Food CFO, things have come more
difficultly or been a bit more difficult than they were with SDC, as we call it. SDC, it's like there's no shortage of folks who want to work with us. There's no shortage of, you know, founders that are excited to dig in and get the one-on-one CFO services. And we are able to accommodate and work with, you know, a handful of them because it is one-on-one work. The Good Food CFO is intended to reach a much broader audience. It does things differently. And the truth is it hasn't been
cakewalk trying to build this brand. And it's also been difficult to do it for me while I'm full-time a consulting CFO. And you, Chelsea, and Keisha have been such amazing partners in trying to build the Good Food CFO. But it really felt like if we're going to do this and we're going to devote time to it, we had to go
all in a little bit more. And in this process, and we really go into it in the Members Only podcast, I realized that what I was experiencing, what I was thinking about, what I was going through mirrored what a lot of good food founders I work with and are in community with here are experiencing. On top of that, we're trying to build a community where people are comfortable sharing the highs and the lows, are comfortable talking about their financials.
Right. So that they can get support and advice and, and, and the help that they need. And I think what better way to show that this is absolutely a safe place to do that than to do it myself. You know, and so we, at the air date of this episode, this podcast episode, have two members only podcasts that have been released and this week is the third. And quite frankly, we're talking about the day that I went to the team, you, Chelsea and Keisha.
Yeah.
and talked about how there was a chance we would run out of money. And we're getting your point of view on that, your experience and what that was like for you, what that was like for me, and just sharing. Because I think if I'm not talking about it, if we're not talking about it, how can we expect the founders in our community to feel safe and comfortable talking about it? And also, you all are not alone. This is a founder thing that we go through and we have to take risks and chances and we're diving into that with our members.
Yeah.
Chels, please share with our listeners how they can become a member if they're not already and where they can access that info.
Yeah, so like I said, you can get all this content delivered right to your inbox. If you already are a member of our newsletter, you will see a button right in the newsletter to become a member. You can do that there. And you can also do so by clicking the link in the show notes. Yeah.
I'm really excited about this and the feedback so far has been really great so I'm excited to keep on doing it.
Yeah, same. Well, Sarah, I cannot wait to get into this conversation about Poppi and everything that we learned about A, the investment that it took to build the company, the reported payouts on the investments and the profitability, the velocities that were reported, some more interesting stuff about Poppi's strategy. So what do you say we take a break and get right into it?
Let's do it. Hey there, it's Sarah. If you're enjoying the podcast, I want to invite you to become a BABOYOT member. It stands for building a business on your own terms and your membership directly supports the continued production of this podcast and helps us reach our goal of supporting 1 million food founders. As a member, you'll get access to our live coaching events, have your brand featured right here on the podcast, be the first to test our new tools.
and receive a 10 % discount on all of our tools and services when you choose an annual plan. Join fellow successful founders at thegoodfoodcfo.com slash BABOYOT. That's spelled B-A-B-O-Y-O-T. Together, we're changing the way that food business is done. Now, back to the show.
All right, Sarah, so where do you want to kick this conversation off?
I know we have so much to cover, but I do think it's important to start with the why, right? The why behind Pepsi acquiring Poppi. I think it's important to talk about or to center this conversation on the fact that innovation in food is starting with independent brands, right? And individuals who are creating new things, doing things differently and...
You know, it behooves PepsiCo, for example, to acquire a brand like Poppi because number one, they're losing market share to the brand, right? And they don't want to do that, certainly. And so when they acquire them, obviously there are costs involved, but the long-term goal would be to improve the financial position of PepsiCo itself. I think if you are a regular listener of this podcast or you follow me,
Yeah.
You know, on social media, you probably understand that I am not a fan of big food acquisitions of independent brands. The reason is because I believe that it's dangerous long-term for our food supply, our food chains, right? Our food industry to be owned by a few large corporations. And that is, think, a conversation for another day, like how we don't, how we don't
end up there in what I would consider my worst nightmare for the food industry. But where we are today, and as I pointed out in the intro, is that we're in a situation, an environment where acquisitions like this have become the North Star. And I think it's important that we talk about why these acquisitions are happening, right, from as many angles as we can and what goes into a business.
and what it has to be doing to be acquired. And then I want to take it to, you know, what do we know about this acquisition and sort of, we're going to read between some lines, today and call out some things that maybe aren't as accurate as they were portrayed in the media. Definitely. So like lots of stuff to cover. But what I think is really interesting and one of the many things you brought to the table for this episode,
Yeah.
is the press release from Pepsi around the acquisition of Poppi. So can you read a little bit of that for
I'm going to read just a short excerpt from the very long press release that PepsiCo released. It starts, this acquisition marks a significant step in PepsiCo's ongoing transformation of its portfolio, reinforcing its commitment to meeting evolving customer preferences for great tasting functional products. Poppi, a fast growing prebiotic soda brand, is among PepsiCo's recent acquisitions
including Ciete and Sabra, aimed at aligning with consumers' modern wellness priorities. And then Ram Krishnan, the CEO of PepsiCo Beverages US, is quoted as saying, Poppi represents a compelling strategic fit with our short and long-term vision for the future of beverages. Its rapid growth, strong consumer engagement, and differentiated functional positioning
make it a dynamic addition to our portfolio. We're excited to scale Poppi's momentum and unlock new growth through our capabilities. We're just getting started. So I think that speaks exactly to what you were just saying, right? Not wanting to lose the market share, wanting a piece of this kind of modern wellness priorities as they labeled it, right? Pie. And they even say right there, like it wasn't just Poppi that they
also acquired Siete, that they also acquired Sabra. So you can see that change in their portfolio in real time.
Yeah. And as I sort of hinted at, right, there are certain things like rapid growth. They call it out. These things that interested Pepsi in Poppi. And I want to dive into all of them. And I also want to put it in as much context as humanly possible. So let's start at the beginning.
Yeah.
Absolutely. So for anyone who maybe doesn't know, Poppi was initially founded as Mother Beverage by couple Allison and Steven Ellsworth, I believe in Austin, Texas. And the pair actually appeared on Shark Tank back in 2018. This was kind of their like first big break, right? And on Shark Tank,
They received a couple of nos, but they got one big yes. And that was from Rohan Oza, who committed $400,000, a $400,000 investment for 25 % of the company.
Which can we just pause there for a second? I want to share this opinion publicly. I don't like Shark Tank. It just feels so, I'm going to say it, predatory to me. I mean, 25 % of the business for $400,000.
Yeah, and those sharks as they call them, right, like they push for that investment amount, right, for that ownership amount.
I have to trust that the founders know what they're doing and that they go in with a predetermined, yeah, and like what they will say yes to, but I think investment is so celebrated and ownership, but people give away a lot of ownership a lot more than sometimes I think that they should, but that's just sort of a side note to this. But so they get this $400,000 investment.
limit.
for 25 % ownership in the business from Rohan. And this money is used for a rebrand.
Yeah, which took months apparently.
Yeah, which makes sense because it was a pretty big change. From what we've read, they also noted that they, dialed down the vinegar. I feel like this is me putting myself in the shark's shoes and thinking, okay, I can see what can be done with this brand. I can see that this is a direction that beverage might move in.
When I taste it, it's a little too vinegary for me, right? So if we can tone down the vinegar, but maintain that prebiotic benefit and we can rebrand this to be a little less, these are my words, obviously not, there's granola and a little bit more like mainstream. think Chelsea is, when we were discussing it, they made it a bit younger, more youthful, right? More colorful, more mainstream. You know, they're like, okay, I...
we can make this work, this could be a success, right? So I get how it could take a long time to do that rebrand. And I think that this is something that's really important to talk about because if you look at Mother Beverage and then you look at Poppi, I think it's fair to say that Mother Beverage probably would not have had the success Poppi has had.
Yeah. And in one of the articles that we were reading, know, Alison Ellsworth, one of the founders, actually was talking about how that kind of incubation period, right, with the rebrand allowed them to come out of the gate swinging. Right. Like she talks about how like a lot of brands kind of address their branding as they go, whereas they were able to kind of go into a dark cave.
get it all together and then come out like loud and proud and ready to go.
Yeah. And I think something to key in there is that they weren't that big. Right? They had proven the concept. had, right? They had done enough and had a good enough product to get an investor, at least one, to say, I believe in this. And we can go into a cave because now we've got some money and we can take the time to do this and figure this out. It's not just what does the can.
yet. Yeah.
look like. It is who is our customer? How are we talking to them? Where are we meeting them? How are we interacting with them? It's the entire brand identity, the brand strategy, really knowing your customer. And we say this a lot on the podcast, Chelsea, no matter what financial advice we give, no matter what we say your margin should be or what have you, if you are not speaking directly to your customer, if you don't know where to find them, if you don't know what they…
want to pay and will pay for your product, all of these things that are related to brand, you're making it harder for yourself to be successful. Now, do I think that everybody has to have it figured out from day one or from year two? You know I mean, even? No. As we talked about in the intro to this episode, we're diving into our own journey at The Good Food CFO on that. But it's such an important
moment to pause on in that brand's history and really pivotal.
Yeah, exactly. And so as I said, they took about eight months on this rebrand and in 2020 they came back as Poppi, no longer mother beverage, but now Poppi with this, as we talked about, right? Youthful, colorful, really bright identity. Yeah. Right. And, and then in 2020 they got additional investment and this was from the Angel Group.
that invested $105,000. At the time, they were given evaluation of $22 million.
Now, here's the thing, that valuation, I question because who valued it? The angel group may have valued it. I don't know if in the information that we've read where that value comes from, but someone valued it there.
Yeah. Yes. And so that ended up actually giving this angel group a half a percent ownership in the company. And so that takes us to 2021. And in 2021, they had their series A round of investment.
And that was actually led by CAVU Consumer Partners, which is a company that's co-founded by Rohan Oza, the original investor from Shark Tank that they had been working very closely with to this point. And in that round, they were able to raise $13.5 million. Should we talk Sarah about what they plan to do with that money at the time?
Yeah. So at this point, they are primed for growth, right? We could say. So they're preparing, according to the information that we read, to purchase a lot of inventory with this money. There are also some very clear markers of like, we want to grow our team by, you
X number of people by the end of this year and then even more people and it's multiplying. You know what mean? It's not like we're adding five. It's adding 20, adding 30 at a time. You know what I mean? And this is very common, I will say, when you are asking for money. You're asking for funding. Yeah. Funders want to know what are you going to do with this? How is my money going to be used and then how are those uses going to create a return on investment?
How are they going to make me money? exactly.
So $13.5 million going into purchasing inventory and starting to grow out the team fairly exponentially. Now we also know from some of our readings that at this point in time,
Velocity in the stores that Poppi is in is really high. So according to Allison, they delivered a three month order to Target and sold out in a matter of days, which again, according to her, Target had never seen before. Some other velocity information that we gathered from the same article was that in Whole Foods, they were doing over a thousand units per store per week.
On average, so across conventional grocery stores, mean, were, think, potentially in Walmart at this point, they were in lots of different stores. they were doing over 200 units per store per week. So I don't have data on like what a Pepsi is doing, right? But 1,000 units per store per week in Whole Foods and selling out at Target in a couple of days. like a lot.
They were.
And we also know from the press release that rapid growth and high velocities is something that Pepsi had recognized in this brand.
Yeah. And so with that rapid growth, with that, you know, initial investment or investment they've had so far, they entered 2022 with some big plans. And that led to their series B round of funding, which again was led by CAVU, right? That they've been working so closely with this whole time. And that was $25 million that they raised in 2022.
That was their final round of funding according to the research that we've done. And so just to give everybody listening a total, we are at $39 million of investment at the end of this Series B round of funding. So go ahead, Chelsea, pick up from there.
So this round of funding from what we were able to read was really about them being able to expand nationwide. had, know, Allison again has had some quotes that we read about wanting to really drive down completely into DSD distribution, which I actually, Sarah, would love to talk to a little bit more.
with you about because DSD this was a new term for me.
Yeah. It is direct store distribution, right? So it's very interesting because let's put a little bit of more information in context here. They were in roughly 20,000 stores in 2022, either at the time or shortly after the $25 million Series B funding was completed, right? They have aspirations of getting into 30,000 stores.
So they're in 20,000 stores. They're selling between 100 units per store per week and a thousand units per store per week. Traditionally, and what we talk about here often is that when you're in Whole Foods, for example, you're distributing through UNFI. There is an agreement that Whole Foods has that UNFI is their primary distributor. And if you want to get on the shelves of Whole Foods,
You're going to either go through UNFI and in some states and cities, you're going to go through like KE or another distributor. What DSD is saying is that we're not going to go through a distributor. We are going to distribute directly to the stores. You picture Pepsi or Frito-Lay, right? Think about if you've ever seen someone in a store stocking the shelves. If you've ever seen the Pepsi truck outside.
Mmm.
Yeah
of a retail store, they are doing direct store distribution. They are not going through a distributor. And part of the reason is the volume that they are selling of their products, like chips and sodas, right? Things like that. why can Poppi move to or desire to move to realistically this type of distribution? Because of the amount of product that they are selling.
because of most likely the amount of revenue and gross profit margin that Poppi is generating for the retailers that they are selling in. This goes back to the conversation we have a lot here, Chelsea, about who has the power in the relationship. If you go into Whole Foods and you're selling 10 units per store per week, you don't have a lot of bargaining power to say, you know what, I'm going to self-distribute to you. But if you're selling a thousand units per store per week,
Thank
or more, you've got some power. They're not, they're going to want to work with you in the way that you want to work with them. So that's what DSD is. Now it requires a very large network of distribution partners. Now we don't have specific details on what that looks like, but I could imagine that it's, you know, regional distribution companies that could get in and networks that they're developing. They're signing contracts with people.
Yeah.
They were signing multiple contracts a day.
Yeah, they talked about overall wanting to work with 200 different tier one DSD networks and that their team was furiously working to piece together those contracts, as you said, and that they were closing, yeah, six to seven contracts a week, sometimes three contracts a day up to this point.
I mean, you have to, when you make that decision, right, at least regionally, that change sort of happens pretty quickly. have to have all your ducks in a row and all your trucks in a row, perhaps, to get your product distributed. So I think what we're seeing here is, a $25 million investment. This is going to help sign those contracts. This is going to help us roll that out. This is going to help us to get more inventory.
for the additional 10,000 stores that the brand wants to onboard in 2023. when we're looking at the data, and again, there's lots of different reports depending on where you look, but there's 500 % growth year over year in some of the early years. just the growth is really astronomical, but it comes...
with a $39 million investment to get there. And I just think it's so important to have that context. Rapid growth is exciting. It's great. You know what I mean? But it costs a lot of money to help make that happen. I think some other things we should talk about, Chelsea, and these things were hard to pin down and get concrete numbers on because Poppi is a privately owned company.
Yeah.
obviously until Pepsi's ownership and Pepsi hasn't reported to the SEC or done any kind of filings where we can look at any financials related to Poppi. But we got varying numbers in terms of like annual revenue and sort of overall revenue. Do you have some of the numbers that we were seeing?
Yeah, so one that we saw was in 2023, their revenue being 153.2 million. That was the best reporting that we could find there. We didn't find too much information about whether or not they ever were profitable before the acquisition. There were some reports that they did achieve profitability in 2024, although we were not able to verify those claims. And I think another thing that's interesting
is some of the information we found about their alleged gross profit margin.
Yeah. I was astonished to see one of the few numbers that I saw around gross profit margin was 65%. But it was being reported for 2023. if the transition to DSD had taken place, they could have, I'll say, like regained or gained some gross profit margin after making that move. you know, it's possible.
You know what mean? I have no idea. I have no idea, you know, what, again, what their actual financials look like. But if you are at a 65 % gross profit margin, you're self-distributing, which is what Pepsi is going to do. I mean, obviously that's a good looking business from a financial perspective. And then if you think about purchasing power of Pepsi and what might come along with that, I mean, you could drive COGS down potentially even further and boost gross profit margin.
I think the other thing that was really interesting is the reported market share.
Yeah, that's where I was going to go next too.
Because I think this is probably different. I hadn't looked at this data prior to creating this podcast episode. The numbers varied, again, for how much of the market share Poppi had, depending on where you looked. But one thing that was always consistent across all the reporting that we saw was that Alipop had a greater market share than Poppi.
Yep. Yeah. So it's very interesting. What was it that made Poppi so attractive to Pepsi?
Right. And I would love to know, you know, I have to assume that Pepsi did some digging on both. Yeah. Right. You don't just like, what is that saying? Like latch your horse to whatever it is. You don't want to just go, yep, we're going with Poppi and kind of not do.
yet.
don't know that thing.
yeah, you're due diligence. Yeah, absolutely.
Yeah, so it's really interesting and to think, you know, it's not all about market share. It's about sort of what's happening under the hood, right? What does the growth look like? What is the company that has been established here? What are the velocities in store?
But just hearing you explain it, like maybe that self-distribution model was more attractive. I mean, who knows, right? Could have been. Or aligned more with PepsiCo. There's a lot of reasons.
Transition could have been a bit smoother or just not a lot of transition from a physical distribution standpoint potentially. Well, so again, there's a lot that we, some things we know and some things we don't, right? Because of the lack of concrete financial data that we have. But that's another reason that we want to be talking about this. And this leads me perfectly, I think, to the acquisition.
Yeah.
On May 19th, 2025, PepsiCo acquired Poppi for $1.95 billion.
Yeah, and Sarah, that deal included what they say is $300 million of anticipated cash tax benefits, which makes the net purchase price $1.65 billion. What do they mean exactly, cash tax benefits?
So there's something, and it could be a number of things, going on in this acquisition that would create a tax benefit for Pepsi. I'm not saying that this is it, but let's just say that Pepsi had acquired a company that was not profitable or that was experiencing losses or this acquisition maybe created losses on their P &L for the year. There could be tax benefits for that.
know the details as to why, but because there is a cash tax benefit of 300 million, essentially what Pepsi is actually paying out is that $1.65 billion. So I did a lot of digging, couldn't find any specifics. Something else we know, Chelsea, and we kind of hinted at earlier, is that they haven't done any SEC filings. The why behind this might become clear if and when the filings are.
complete.
Yeah, I cannot wait to get my hands on those file links.
Yeah. So a big part of why we wanted to do this episode is this truly a North Star, right? And who is it a North Star exit for? Is it the investors? Is it the founder? Is it everybody? Right? And what really, really sparked my interest was the articles around the payouts that the investors rep...
I'm just going to go ahead and say it that the math doesn't make sense.
Yeah.
Nope. Nope. Especially in those last two rounds, right? Yeah. It doesn't make sense at all.
Yeah. So let's talk through for our listeners, like what is it that doesn't make sense and why I think and you think, you agree, that it's important to talk about this, right? Because when we're painting a picture in the media about the amazing returns on investment that people are getting, can we really trust the information that we are receiving? And in this case, it feels the answer is certainly no. So let's detail it.
Yeah, so when we looked into the returns on these investments, what we were able to find, again, as you kind of hinted at Sarah, right, we don't know that all of this is accurate, but we were able to find that that angel group that invested the 105,000 in 2020 was able or supposedly got an 88 times, like 88X return on that investment.
to the tune of $9.5 million. And then here's where things get a little funky. The report that we saw in Forbes around the series A and the series B funding rounds quoted that the $13.5 million that was raised in the series A round reportedly saw 144X return and that the 25...
million dollar series B saw a 78X return.
Let's break this down for folks. When we say 144X return, essentially the math there is 144 times the investment amount. If you take $13.5 million and you multiply it by 144, you get $1.94 billion, just about the entire acquisition price, purchase price from Pepsi.
If you take the $25 million investment and you multiply that by 78, you get $1.95 billion. So what we're finding here is bad math in Forbes, which is unfortunate because it's essentially saying that that 144X is based on the entire payout. It's not specifically what those investors would have received for their share of ownership in the company. Exactly.
Exactly.
This further makes us question, I mean, a lot of the sort of financial information around the payouts and around the ROI. We don't know how much the co-founders maintained in terms of ownership of Poppi. We know that Rohan
Oza had initially a 25 % ownership based on his first investment during 2018. But as the leader, you know, and part of, you know, the other investment rounds, we don't know if A, that ownership could have been diluted a little bit by further funding rounds, which some articles had hinted at maybe happened, but he also could have generated more ownership in the business. Again, we don't know. And that type of information may never become public.
But what we also cannot definitively say is if the founders received much money or any money and how much of their initial contributions and financial investments they were able to recoup. Now I can hear people in my head saying, Sarah, there is no way that the co-founders didn't have any ownership of their own brand. And I'm going to tell you that that is not impossible.
Yeah.
And we were hoping to have someone on the show to share their story and how they ended up with no ownership of a brand that they founded. Unfortunately, the schedules and timing, just because it's summer, it didn't work out. But I hope to share that story at some point in the future. And I don't mean to be negative. I am not trying to convince anyone that they didn't make any money. But what I am saying is that we have no...
information on who is getting what, how much ownership they still have. There's so much money invested in this company. So much growth, right? So we think maybe they were profitable in 2024. That I want to know if we're celebrating these things, these acquisitions, what are we celebrating? Are we celebrating that investors made money?
Are we celebrating that the owners, the co-founders of this company, I should say, made money? Are we celebrating the further consolidation of the beverage industry? Like, what are we celebrating? Because to me, we're celebrating a number and no one is saying anything other than the investors made a lot of money.
Mm-hmm.
And I think the other side of the story that I hear a lot of too is like
Because the only way to make money in CPG is to sell. Because you're not going to make money as the co-founders, you're not going to make any money in between. I, this podcast exists to start to change that narrative, right? But in order to change that narrative, we need some real information. And I think the hardest thing for me, the hardest pill to swallow around these sales is how secretive.
Yeah.
they are.
And I think we need to talk about who's really winning here.
We have profitable regional businesses that could really do a lot of good in our world if folks decided to invest in them. You know, and I think the outcomes for our food industry as a whole would be better. And I'm going to keep on pushing for that and try to keep proving through all of our work here, through what we do at the Good Food CFO in general.
Yeah.
through what we do at SDC to show people that regional and local businesses can be profitable because maybe they'll get some more attention and maybe they'll get some investment that is a positive outcome and positive benefit for everybody involved. Until I get some more information on who exactly is benefiting and how Pepsi owning another company is beneficial.
to the greater good, I'm gonna keep on questioning these big acquisitions. So that's where I'm at, Chels. I think it's really interesting to do these deep dives and to put things in context. And I would love to be convinced of something other than how I feel at the end of this episode.
I was going to say and I'll be right there with you to do the research. I'll be on the SEC website. Just lillily.
And here's the other thing we want to say is if the, you know, we were able to find the very brief SEC filing for Sieté foods acquisition, we won't go into the details, you know, too much here, but there are, for very specific reasons, PepsiCo didn't have to do a super formal SEC filing for that Sieté acquisition. Things that look to be a bit different for Poppi.
And it does appear that they do need to file something formal with the SEC, but that hasn't been done yet as of the date of this recording. And we're just about at the end of June. So if and when we see the filing and if we are able to see any financials associated with it, we will take that to the Members Only podcast and we'll do a download on that for sure. So we'll let you guys know if that comes up. But we know you guys generally like these case study episodes.
Tell us your thoughts. Tell us what you think about the acquisition, what you think about the numbers. If you've read or uncovered something that Chelsea and I somehow missed in our deep research. know. Yeah. Yeah. And once again, you can find all of the articles and all of the websites and all of the links to the information that we sourced and read through in the show notes if you're interested in checking those out.
Yes, absolutely. And I would even go a step further, Sarah, and say if you're listening and there is a story about a brand that you've been following that you would love for us to do a deep dive on, let us know. We always are open to hearing what you guys want us to talk about. Reach out to us at hello at thegoodfoodcfo.com.
Well thank you Chelsea for all of your hard work on this episode and for spending a good amount of time with me today to record it. We will see all of you with a brand new episode in two weeks.
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