From what I read, the term originally comes from a UFO ramen commercial from the 1980s, in which an axolotl character is referred to as ウーパールーパー。 But based on what I could find, the company claimed they did not come up with the term themselves.
I could only find one article that gave more details on the etymology, saying the term originated from one CEO's trip to Mexico. I wasn't sure how credible it was, though. I appreciate any information!
On a side-note, I was surprised that in Korea they've begun to use the same term for axolotl, although people have taken to pronouncing it as oompa loompa instead. No one could explain why they use the word, which is why I started digging.
by Zarekotoda