Prebiotic soda producer Poppi has closed a $25 million Series B funding round backed by existing investor CAVU Venture Partners, the company announced today.
The new financing arrives as Poppi reports 148% year-over-year growth amid a significant retail expansion. Over the last year, CEO Chris Hall said the Texas-based company had been focused on hiring in order to prepare for strategic execution and scaling in 2023, which the new funding will support.
“I would say the timing of this funding round couldn’t be more perfectly timed,” Hall said. “It’s really the fuel we needed to keep the business moving in the right direction.”
While ecommerce remains strong and the brand has a large presence in the natural channel, Hall said Poppi still has under 50% ACV in most traditional retail outlets with about 18,000 doors and about 75% of its brick-and-mortar distribution is through DSD. Now, the company is working with “all hands on deck” to transition its remaining distribution to DSD houses by the end of Q1 2023 with a goal of surpassing 30,000 doors.
In markets like New York, where it is serviced by Big Geyser, Poppi has been fully DSD since the beginning, Hall said. However, many other regions have been “half-in” with a mix of DSD, direct and broadline.
While the brand is strongest in its backyard of Texas and coastal markets like New York and California, Hall said the brand has proven it has the ability to “sell anywhere,” noting that regions such as the Dakotas and the broader Midwest are currently “on fire” as brand awareness rises. Much of 2023’s distribution growth will be about going deeper and “filling out the holes” throughout its existing markets with new chain partners and rural areas in need of support.
Hall acknowledged that the company “still has learning to do” when it comes to breaking into the convenience channel, but the immediate focus will be on covering grocery and MULO nationwide. And breaking into those accounts, he said, has gotten easier with time as the prebiotic soda category grows and retailers are devoting more in-store space to the products.
Hall joined Poppi this spring after spending nearly 15 years at sparkling water maker Talking Rain, including the past four years as CEO. At the time, co-founders Allison Ellsworth and Stephen Ellsworth moved into new roles, serving as Chief Brand Officer and Chief of Product respectively.
Since then, Poppi has continued to flesh out its leadership team, most recently bringing on CFO Chuck Czerkawski – who held the same title at Essentia leading up to the brand’s exit to Nestle – and former Anheuser-Busch InBev Beyond Beer VP Lana Buchanan as CMO. The new financing will also allow Poppi to grow its sales, supply chain and finance teams, Hall said.
Allison Ellsworth said she no longer sees Poppi as a “startup,” and that the recent growth now signals to the market “that we’re here and ready to go.” Ellsworth, who previously led Poppi’s marketing, said Buchanan’s hiring now allows her to focus on larger initiatives.
According to Ellsworth, Poppi will continue to “double down” on marketing campaigns and brand awareness initiatives in the new year, beginning with a previously announced “New Year, New You” campaign aimed at educating consumers around gut health.
Poppi has frequently found success through social media marketing, particularly through TikTok, which Ellsworth said has been a key driver behind the brand’s success in the Midwest. Going forward, she said that continuing to “develop and invest in community” will be a focus as the company taps into its email list of more than 500,000 subscribers.
“We’re a really well oiled machine right now, so we’re excited that these funds are really going to go into that brand equity and building out community, brand awareness, household penetration, and just getting more cans in hands,” Ellsworth said.
The funding also reflects deeper interest in the company from investor CAVU Venture Partners, which initially came into the brand in 2019 after an appearance on Shark Tank. CAVU is the sole investor in the Series B and according to Stevie Clements, chief brand architect at CAVU, the firm will continue to play a hands-on role in working with the leadership team and guiding Poppi’s growth.
“We always talk about the modern soda for the next generation, and what does that look like? It’s about being digital first, brand first, truly omnichannel and there just aren’t that many brands in the CPG space, the beverage space, etc. that have such a large omnichannel presence. And I think that’s something that’s really special about Poppi and that we will absolutely continue to build and nurture into the future.”