PepsiCo Cuts Estimated Value of Poppi Earnout to About $12 Million
PepsiCo's latest fair value for the up to $300 million performance payment tied to its Poppi deal fell from $117 million in June and $278 million in December, Briefs Finance reported.
- Earnout ceiling
- Up to $300 million, tied to undisclosed goals by 3Q 2027
- Latest fair value
- About $12 million as of Sept. 5
- Earlier marks
- $117 million in June; $278 million in December
- Acquisition price
- Nearly $2 billion, per Briefs Finance
- Third-quarter volume
- Double-digit growth, per a PepsiCo spokesperson
Originally reported by Briefs Finance.
PepsiCo has cut the estimated value of the performance-based earnout tied to its acquisition of Poppi, Briefs Finance reported on October 12. In a filing, PepsiCo marked the fair value of the contingent payment at about $12 million as of Sept. 5, down from $117 million in June and $278 million in December, according to the report.
PepsiCo acquired Poppi last year for nearly $2 billion and agreed to pay up to $300 million more if the brand meets undisclosed targets by the third quarter of 2027, Briefs Finance reported. The company measures the liability at fair value using simulations of future results that include Poppi's net revenue and margin forecasts, and any payment would go to Poppi's shareholders and its founders, Allison and Stephen Ellsworth, according to the report.
A PepsiCo spokesperson said Poppi posted double-digit growth in sales volume in the third quarter and picked up share in carbonated soft drinks, Briefs Finance reported. Kenneth Shea, a beverages analyst at Bloomberg Intelligence, was more cautious: "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," he said, according to Briefs Finance.
Why it matters
The earnout turns part of the Poppi price into a forecast, and PepsiCo's own forecast has moved sharply away from a full payment within a year. The mark comes as PepsiCo acknowledges pressure in its North America soda business: in the third quarter the beverage division's organic volume slipped slightly and missed Wall Street expectations, and CEO Ramon Laguarta said on an earnings call the week before the October 12 report that he is "dissatisfied" with soft drink performance, according to Briefs Finance. Laguarta said PepsiCo plans to put additional investment into Poppi as well as Pepsi and Mountain Dew. In July he told analysts that moving Poppi from its prior distributor into PepsiCo's system had "a bit of an impact" on first-half performance, adding that the issue had been addressed and the brand remained in growth, the report said.
What to watch
Whether the added investment lifts Poppi's net revenue and margin forecasts enough to raise the earnout's fair value before the third-quarter 2027 deadline, or whether the next marks keep falling from the September figure.
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