Olipop nears $200 million in annual sales; Coke, Pepsi come knocking,

Prebiotic soda maker Olipop is set to cross $200 million in annual sales this year, just five years after it arrived on grocery store shelves.

Founder and CEO Ben Goodwin said beverage giants PepsiCo and Coca-Cola have already come knocking. But he’s not interested in cashing out just yet.

“Right now, my focus is on blowing business through the roof,” Goodwin told CNBC.

Coke and Pepsi didn’t respond to requests for comment from CNBC.

Olipop is on target to more than double its sales this year. The startup presents itself as a healthier alternative to traditional soda but with the same familiar taste.

Olipop had raised $55.4 million as of Jan. 2, at a reported valuation of $199.8 million, according to Pitchbook data. Investors include Gwyneth Paltrow, former PepsiCo CEO Indra Nooyi and RXBAR founder Peter Rahal.

Goodwin estimates that roughly 10% of Olipop drinkers have replaced traditional soda entirely, but the rest swap it into their routines occasionally.

“We really are replacing that soda experience and soda occasion,” Goodwin said.

For roughly two decades, U.S. soda consumption has been falling. Americans have ditched the drinks for bottled water, flavored seltzer and other options that they view as healthier due to concerns about soda’s sugar — or sugar replacements, such as aspartame. Still, Coke and Pepsi aren’t in danger of discontinuing their namesake sodas.

“Consumers are drinking less soft drinks, but they’re still drinking a lot of soft drinks,” said Michele Scott, associate director of food and drink for Mintel’s U.S. research.

Consumers are also increasingly interested in “gut health,” one of the latest wellness trends. Matthew Barry, Euromonitor International’s insights manager for food and beverages, said the two trends — soda’s decline and gut health’s rise — have helped benefit Olipop and other similar brands, such as Poppi.

Functional soda accounts for 14% of the digestive health category, according to SPINS data.

Olipop’s formula includes nine grams of fiber and prebiotics, which are substances that help beneficial bacteria grow in the gut. Their health benefits haven’t been conclusively proven.

Rival Poppi, which was founded in 2015 and has also seen its sales accelerate over the last year, infuses its soda with apple cider vinegar, which contains prebiotics. Both Olipop and Poppi have leaned into influencer marketing on TikTok, where gut health became a trending topic last year.

In February, Olipop’s root beer overtook Keurig Dr Pepper’s A&W as the best-selling root beer at an unspecified top U.S. retailer, according to Goodwin. He takes it as another sign of Olipop’s potential, since root beer was one of the first flavors it started selling.

“My hope is that as other [flavors] in the system mature as well and get higher distribution and customer familiarity, we may be able to repeat this type of story with a range of different flavors,” he said.

Goodwin said he formulated the root beer himself and remains the company’s top…