Functional soda brand Olipop closed a $30 million Series B funding round led by Monogram Capital Partners, which also led the company’s 2020 Series A round. This latest round features several celebrity investors, including the Jonas brothers, Mindy Kaling and Gwyneth Paltrow, and well-known business execs including former PepsiCo CEO Indra Nooyi, ClassPass founder Payal Kadakia and Beautycon co-founder Moj Mahdara. The current round values the three-year-old startup at $200 million, the company said.
Olipop plans to use the funding to develop new products, hire employees, tap into new marketing channels and expand its e-commerce and wholesale business.
- The better-for-you soda brand is part of a broader trend sweeping the food and beverage space in which shoppers are looking for functional attributes in what they consume.
Few categories in food and beverage have been vilified as much as soda.
In 2019, the American Heart Association released a study showing women older than 50 who drink two or more artificially sweetened beverages daily have an increased risk of heart attacks, strokes and death. That same year, a study published in JAMA found drinking at least two 8-ounce glasses of soda a day is linked to an increased risk of death. Other studies have linked soft drink consumption to stroke, dementia, Type 2 diabetes, obesity and metabolic syndrome.
As consumers keep a closer watch on what they drink and increasingly expect these products to do more than provide sustenance or hydration, upstarts like Olipop are taking advantage. Several brands have drawn the eye of investors. Prebiotic soda brand Poppi raised $13.5 million last year from a number of celebrity investors. Wave Soda, with sparkling water, fruit juice and natural caffeine derived from green coffee beans, caught the attention of AB InBev, prompting its venture capital arm to invest in the company three years ago.
Two years ago, Olipop, which says it incorporates plant-based fiber, prebiotics and other botanical ingredients to help the body’s microbiome and promote well-being, raised $10 million. Today, it is tripling that total. Sales appear to be growing quickly, with the California company predicting a run rate of $100 million by the end of this year, based on current financial data.
“Olipop is transforming how consumers experience soda,” Jared Stein, a partner at Monogram Capital who is joining Olipop’s board, said in a statement. “Today’s consumers are increasingly focused on lower-sugar alternatives that don’t sacrifice taste and include functional benefits such as enhanced gut and immune health.”
The better-for-you beverage category has attracted PepsiCo and other large manufacturers that are increasingly competing with brands including Olipop. PepsiCo launched a functional beverage called Driftwell aimed at relaxation and decreasing stress, and Frutly, a beverage targeted at teens made with fruit juice, water and electrolytes. Even beer giant Molson Coors has jumped in with Huzzah, a full-flavored seltzer with added probiotics; and MadVine, a plant-based diet soda without calories, sugar and artificial ingredients.
While Olipop and others may not have the deep pockets of their larger competitors, their presence and focus on one beverage category could increase their credibility and popularity among consumers. The ongoing pandemic has likely served to further fuel growth in areas like healthier sodas as people keep a close watch on what goes into their bodies.
Similar to other upstarts, Olipop plans to use its money to create new products, hire employees and increase how it reaches shoppers — uses that will be key toward building recognition and growing sales. The lengthy roster of celebrities, along with Nooyi, the former PepsiCo chief, also will no doubt help in promoting the brand and providing valuable insight on how to navigate the competitive beverage space.