I was incredulous when I first read the news. But once explained, the idea of all the billions of dollars involved stopped popping in my poor little brain like out-of-control fireworks. And I could just about envision it…
‘Revolutionary’ K-Rounds bio-degradable coffee pods and customized brewer…
Everybody on this side of the Atlantic knows that Keurig is a leading coffee purveyor. And a luxury one, at that. Who knew, when they fist appeared, that their big little idea – disposable pods – would make it as big as it has?
Well, there’s another coffee giant – a parallel entity to Keurig’s – on the other side of the pond. And the two are joining forces to create an unassailable global Coffee Monster.
JDE Peet’s is by no means a household name in North America. Nor are its principle brands: L’OR, Jacob’s, Senseo, or Douwe Egberts.
But that may be about to change, as the dust settles from around the just-announced mega-merger.
The overall merger process will constitute a bit of a modern dance routine, so try to stay with me while I run it down…
The mega-brand shuffle…
Before Keurig merges with Peet’s, it will calve-off Dr. Pepper, with which it merged just a decade ago. The idea is to separate Keurig’s Coffee business from Pepper’s recreational beverage business allowing each to grow off in its own direction without carrying the other’s baggage.
While recent market reports have indicated that coffee is ‘growing’ again, in spite of inflation, sustainability issues and crop failures assignable to global warming, most recent financial results for full year 2024 showed the recreational beverage (fizzy and sugary) were running out of steam. Meanwhile ‘functional’ drinks – such as ‘energy’, protein and probiotc-enhanced brands – were on the ascendant, and throwing the purely-‘recreational’ market space for a loop.
This way, Keurig can go about it’s Coffee business with a maximum of freedom from the recreational sector’s entanglements under the overarching brand ‘Global Coffee Co.’. At the same time, Dr Pepper will spearhead ‘Beverage Co.’ in North America shepherding brands we all know including 7UP, Snapple, Dr Pepper and others.
What they’re juggling…
There’s really no other adequate descriptor for the deal than ‘mega’. According to a recent news release, Keurig will pay Peet’s (US)$18 billion – all cash – to take over. But Keurig’s is pushing the bounds of financial sector jargon calling the coffee portion of the deal ‘transformatonal’.
“Global Coffee Co., with approximately $16 billion in combined annual net sales, will be the world’s largest pure-play coffee company,” The release explains. With reach across more than 100 countries, including 40 in which the company [already] holds the #1 or #2 market position by sales, Global Coffee Co. will enjoy an unparalleled portfolio across all coffee segments, channels and price points.”
“Beverage Co., with more than $11 billion in annual net sales, will be a scaled challenger in the $300 billion North American refreshment beverage market, with a portfolio of iconic and emerging brands.”
My take
The deal is certainly a market shaper. And it seems like it’s built on sound business principles. But it’ll take me a while to get used to the idea that, wherever I go, whatever retail or foodservice brand I’m drinking, I’ll probably be drinking ONE company’s coffee. The world never ceases to amaze…
~ Maggie J.