Now that bright future might be fizzling out.

Pepsi filed its latest earnings release last week, for the quarter ending Sept. 5. Buried in the Financial Instruments footnote disclosure was this:

In connection with our acquisition of VNGR Beverage LLC (Poppi), we recorded a contingent consideration liability measured at fair value. Under the terms of the arrangement, we will be required to make a payment of $300 million if certain performance milestones are achieved by the third quarter of 2027; otherwise, no payment will be made … An increase in the net revenue and margin forecasts would result in a higher fair value measurement, while a decrease in the net revenue and margin forecasts would result in a lower fair value measurement. As of September 5, 2026, the fair value of the contingent consideration was $12 million, reflecting a fair value decrease of $105 million and $266 million in the 12 and 36 weeks ended September 5, 2026, respectively.

Translation: Pepsico had promised the owners of Poppi a $300 million earn-out payment if the unit hit certain performance milestones. Over the summer, however, Pepsi reassessed the likelihood of needing to make that payout and marked the fair value of that bet down to a measly $12 million. 

OK, but notice: the earn-out payment had already been marked down quite a bit before the latest mark-down in this most recent quarter. That is, the mark-down in this quarter was $105 million; but it was also $266 million for the first three quarters of the year. 

So what was going on with this earn-out item in those prior quarters? When could analysts have first noticed that things were going in the wrong direction? 

Turns out that a few keystrokes from Calcbench is all the sleuthing you need. 

We began on our Disclosures & Footnotes Query page, opened to Pepsi’s Financial Instruments footnote for Q3. That’s where we found the above footnote and noticed the Poppi mark-down. Then we just clicked on the “Previous Period” tab directly above the disclosure, to get a side-by-side comparison of that exact same footnote in Q2. See Figure 1, below.

We realize you can’t easily see the text from that image, but on a subscriber’s computer screen you would immediately be able to see that in Q2, the fair value of the earn-out instrument was $117 million, and it had been marked down by a total of $161 million in the first half the year. So expectations for Poppi had already been marked lower by the start of summer. 

After that, we just kept looking up previous Financial Instrument footnote disclosures to see when this all started. For example, Pepsi’s Q1 footnote listed the fair value at $162 million, a mark down of $116 million from the prior quarter. 

We jumped back another quarter, to Pepsi’s Financial Instruments footnote included in the 2025 Form 10-K. That’s when we noticed a different disclosure:

As of December 27, 2025, the fair value of the contingent consideration was $278 million, comprised of the acquisition-date fair value of $180 million and a fair value increase of $98 million recorded in selling, general and administrative expenses. 

That’s our answer; that’s when this all started. At the end of Pepsi’s fiscal 2025, expectations for Poppi’s performance were still high and the value of that earn-out instrument was still going up. Starting earlier this year, however, Poppi’s fortunes apparently took a turn and Pepsico has been marking the value of the instrument down ever since. 

Coincidentally, Pepsi only disclosed the final purchase price allocation for Poppi in Q2 of this year. By then the value of the deal had increased to $2.12 billion, up from the $1.95 billion originally announced last year. Most of the purchase price ($1.7 billion) was allocated to the value of the Poppi brand, labeled as “Other indefinite-lived intangible asset (brand).” See Figure 2, below. (And ignore that other acquisition, Siete, also included in the footnote.)

What all this means for the future of Poppi, we don’t know. But for analysts who know the early-warning signs and where to look for them, you could have spotted these problems with Poppi two quarters ago, rather than be surprised by them now.

Nor is this our only example of early-warning signs that clever analysts could use to ferret out financial issues sooner rather than later. Last fall we had a fascinating example from Netflix ($NFLX) when investors were caught unawares by a “surprise” $619 million charge thanks to a tax dispute that went against Netflix in Brazil. In reality — and in the footnotes — that tax liability had been disclosed for nearly two years.

This mark-down with Poppi is another example of the same phenomenon. No, this quarter’s mark-down is not a surprise like a can of soda exploding in your face. The mark-downs have been draining away Poppi’s expectations all year, like a soda going flat.