Investing.com -- PepsiCo Inc (NASDAQ: PEP) has significantly lowered its valuation of potential bonus payments associated with its acquisition of prebiotic soda brand Poppi, signaling that the unit is missing the growth benchmarks required to trigger the earnout.

According to a recent regulatory filing, PepsiCo estimated the fair value of performance-based contingent consideration for the Poppi deal at $12 million as of Sept. 5. That marks a sharp contraction from the $117 million projected in June and the $278 million recorded in December, reflecting cumulative pre-tax adjustments of $105 million over 12 weeks and $266 million over 36 weeks.

The beverage giant acquired Poppi in May 2025 for $1.9 billion in cash, alongside an agreement to pay an additional $300 million if undisclosed financial targets are met by the third quarter of 2027. The company utilizes Monte Carlo simulations based on discounted future cash flows, specifically revenue and margin forecasts, to estimate the likelihood of achieving those operational milestones.

The downward adjustment underscores broader headwinds facing PepsiCo’s North America Beverage segment, where organic volume declined slightly in the third quarter despite generating $7.7 billion in revenue. Chief Executive Officer Ramon Laguarta noted during a recent earnings call that management remains dissatisfied with soft drink performance, though the company plans to increase investments in Poppi alongside core brands like Pepsi and Mountain Dew.

Despite the valuation cut, PepsiCo has continued to push the brand aggressively into mainstream channels through high-profile marketing initiatives. Following a Super Bowl commercial earlier this year, the low-sugar soda line secured promotional partnerships with the Dallas Cowboys and Love Island USA while recently expanding its lineup into function-driven categories with new caffeine and relaxation beverages.

Original Article