Prebiotic soda maker Poppi announced today that it has raised $13.5 million in a funding round led by existing investor CAVU Ventures and also backed by a roster of celebrities from across the music, film and professional sports industries.
Among the new investors are NBA stars Russell Westbrook and Kevin Love, musicians the Chainsmokers, 24kGoldn, Kygo, Halsey, Ellie Goulding and Nicole Scherzinger, and actress Olivia Munn. The round also brought in social media personalities including Chantel Jeffries, Bryce Hall, Noah Beck, Josh Richards, Griffin Johnson and Blake Gray.
Founded in 2015 as “Mother Beverage” by husband and wife team Stephen and Allison Ellsworth, the company rebranded as Poppi last year after CAVU managing partner Rohan Oza invested, reformulating and repositioning its line of apple cider vinegar drinks as a prebiotic soda. Following its relaunch in March of 2020, the company has emerged as the leading brand in the emerging functional pop space, growing 7,509% in the 52-week period ending June 13, according to SPINS.
The functional pop subcategory — which also includes other gut health-friendly soda brands like Olipop, Health-Ade Pop, Culture Pop and, most recently, REBBL Pop — grew 465% year-over-year for the 52-weeks ending March 21, per SPINS. Poppi is also not the only brand to receive investor attention; Olipop raised $10 million in a Series A round last year while Culture Pop is backed by TF Ventures. CAVU is also an existing investor in REBBL, giving it multiple plays in the space. Meanwhile, Health-Ade (which CAVU exited this month, selling its shares to Fist Bev) has embraced its Pop line as a key strategy for reaching new consumers.
Molson Coors Beverage Company also entered the fizzy gut health beverage category last year with Huzzah, a probiotic seltzer developed by L.A. Libations. However, LIVE Soda, an originator of the category, is now focusing on its kombucha and juice shots lines, noting on social media last month that it has had difficulty producing its flagship probiotic soda line due to the ongoing aluminum can shortage but hopes to bring the products back in the future.
Poppi currently produces nine flavors: Watermelon, Strawberry Lemon, Raspberry Rose, Orange, Ginger Lime, Grapefruit, Cola, Root Beer, and DocPop (the latter three being recent additions that launched this spring). Each 12 oz. can retails for $2.49 and contains about a tablespoon of apple cider vinegar, sparkling water, real fruit and natural sweeteners.
According to Stephen Ellsworth, the new financing will largely go towards the fundamentals of brand building and expansion, including marketing, innovation, team expansion and operating capital. The company currently has over 50 employees — all added over the last 18 months — and plans to continue building out its sales and creative teams (all creative and marketing is done in-house).
The company is currently in the process of relocating its headquarters from Dallas, Texas to Austin, which Allison said is expected to open up the talent pool as Poppi builds the team. New innovations are expected to debut next year.
The brand is now available in over 7,500 stores nationwide, including retailers such as Target, Erewhon, Sprouts, Wegmans and Publix. According to Stephen Ellsworth, the brand is gaining strong traction across the country, with some of its strongest sales coming from markets like North Dakota, Minnesota and Indiana.
“It is really exciting, because I think a lot of people look at better-for-you products and they think ‘We know you’ll do really well in L.A., we know you’ll do really well in New York,’” said Allison Ellsworth. “But we find that we are hitting that middle American, everyday consumer, which sheds light onto the fact that we can go beyond and really be a global brand.”
According to Allison, velocities in retail have increased rapidly. Some individual Whole Foods stores sell over 1,000 units per week and after rolling out into 1,300 Target stores earlier this year, she said three months worth of inventory sold out within three days, prompting the retailer to help cover shipping costs in order to fast track a restock. Target is now planning to take Poppi nationwide in September and other major retailers are set to come on board in the coming weeks, including Kroger, Safeway and Walmart.
Having debuted Poppi at the onset of the pandemic, the brand’s early sales strategy was centered around ecommerce, including Amazon, but online sales represent only around 30% of the total business, Stephen said. The company currently operates a hybrid distribution model, including independent DSD distributors along the Coasts, UNFI and KeHE, while other retailers have opted for direct distribution.
Much of the company’s marketing has been digital first, with an emphasis on social media channels like TikTok and Instagram. In particular, Poppi found viral success on TikTok when a video Allison posted in January discussing the brand’s founding, as well as its appearance on Shark Tank that resulted in Oza’s investment, gathered over 13 million views and 400,000 comments from consumers.
According to Allison, the video’s success was wholly unexpected; she impromptu recorded it herself and posted it around 10 p.m. on a Friday night and woke up the next day to find it had taken off, she said. By Sunday, Poppi had sold $75,000 worth of product on Amazon. The viral success also allowed the company to fill out its email contact list, going from almost no subscribers in December 2020 to over 200,000 in a matter of months. Allison believes it was the authenticity of the video that resonated with consumers and the company has since sought to foster a sense of community around the brand through social media, with Allison and Stephen serving as the faces.
“Nowadays, that’s what the consumer wants, right? They want to connect with a real human, they don’t want the high gloss, they don’t want the ad in your face,” she said. “I always tell other brands to just find what works and be real to yourself, because if you’re trying to do something fake and you’re not real, then it’s so transparent and people feel it and they know it.”
But with a new roster of celebrity investors, Poppi will also be looking to tap A-list talent going forward. Allison said the company wanted to bring in individuals who wanted to “ingrain Poppi into their lives,” noting that the brand has in the past advertised via its newsletter around people like Halsey being photographed drinking Poppi at public events. Earlier this year, the brand also partnered with Jennifer Lopez (who is not an investor) producing videos for TikTok that similarly achieved viral status.
“It’s not always about the social post or the face with the can next to it,” Allison said. “It’s just being at the right places with the right people, to be seen in a different light talking about it the right way.”