Keurig Dr Pepper announced today that it has reached an agreement to acquire JDE Peet’s, the Dutch parent company of Peet’s Coffee. This deal is a huge $18 billion investment! This strategic move aims to reshape the beverage landscape as Keurig Dr Pepper plans to split into two distinct entities: one focused on coffee and the other on cold beverages.
To further fortify its coffee cannon, Keurig Dr Pepper will acquire JDE Peet’s, headquartered in Amsterdam. This acquisition brings well-known marquee brands such as L’OR, Jacobs, Douwe Egberts, Kenco, Pilao, OldTown, Super and Moccona into its fold. With the merger, Keurig Dr Pepper will build a green coffee business that is expected to bring in about $16 billion in sales. The cold drink segment, a key driver to Coca-Cola’s recent success, includes big sellers like Snapple, Dr Pepper, 7UP and energy drinks. It’s on track to bring in about $11 billion in sales.
Keurig Dr Pepper CEO Tim Cofer underscored how transformative this agreement is. He stated, “By creating two sharply focused beverage companies with attractive and tailored growth propositions and capital allocation strategies, we are poised to generate significant shareholder value in both the near and long term.”
Keurig Dr Pepper recently announced an overall drop in coffee sales during its most recent quarter. The media seized on their announcement of a 0.2% decrease. To put it lightly, Peet’s Coffee has a big uphill battle on their hands. The company has recently experienced its same-store sales drop for six straight quarters. The iconic Saturn brand’s own shares have plummeted, down 23% since early March.
Sudhanshu Priyadarshi, senior vice president and current CFO of Keurig Dr Pepper, will lead the new coffee company headquartered in Burlington, Massachusetts. In Amsterdam, the international headquarters for this corporate venture will be established. Tim Cofer will lead the new cold beverage business, which will be based in Frisco, Texas.
Keurig Dr Pepper anticipates the merger will result in about $400 million in cost savings over the coming three years. This acquisition almost completely rolls back the disastrous 2018 merger between Keurig and Dr Pepper. In reality, it definitely aligns both companies’ fortunes going forward as the market continues to change.
