- North American coffee giant Keurig Dr Pepper is acquiring Amsterdam-headquartered JDE Peet’s in an $18 billion deal
- The combined coffee company will be the world’s largest pure-play coffee company: with around $16 billion in annual sales
- The merger allows Keurig Dr Pepper to expand its North American coffee expertise globally, leveraging JDE Peet’s international reach.
- The new coffee entity will feature leading billion dollar brands such as Keurig, Jacobs, L’OR, and Peet’s
- Meanwhile, Dr Pepper, Canada Dry and 7UP will be split into an independent ‘Beverage Co’
Tim Cofer, CEO, KDP, calls the deal - announced this morning - a ‘transformational moment in the beverage industry’.
The tie-up between Keurig Dr Pepper (led by Keurig and Green Mountain) and JDE Peet’s (led by L’OR, Peet’s, Jacob’s, Senseo and Douwe Egberts) is set to transform the global coffee industry: as well as shake up the North American refreshment beverage market.
Global coffee leadership to boost innovation opportunities
Coffee is one of the most consumed beverages globally, representing a $400bn category.
It’s a staple for billions of people in developed markets: but also a promising growth opportunity in developing markets.
The deal takes Keurig Dr Pepper’s coffee expertise (to date centered in the North American market) global: thanks to Amsterdam-headquartered JDE Peet’s worldwide scope.
Provisionally named ‘Global Coffee Co.’, the new coffee company will enjoy ‘an unparalleled portfolio across all coffee segments, channels and price points’.
At the heart of the business will be $1bn-plus revenue brands Keurig, Jacobs, L’OR and Peet’s.
And it’s not just about geographical expansion: the new combined entity pledges to lead the next generation of coffee innovation worldwide: with its ability to rapidly scale new ideas.
Global Coffee Co.: The rational for the combination of KDP’s coffee division and JDE
- Complementary geographic footprint: KDP boasts single-serve coffee leadership in North America, the world's largest coffee market. Combining with Amsterdam headquartered JDE Peet's will transform access opportunities across both developed and emerging markets.
- Unparallelled portfolio: The portfolio, which spans all coffee segments, channels and price points, positions the company for growth and resilience in the coffee category
- Global manufacturing footprint of 40+ facilities and local route-to-market expertise: The aility to rapidly scale next-generation coffee innovation will help the company grow
- Attractive, reliable growth model: The combination starts with around $400m in expected cost synergies. Strong margins create an attractive playground for steady and resilient revenue growth on the back of focused execution and innovation.
The acquisition sees the landscape of North American coffee pioneers shifted once again. Green Mountain Coffee Roasters and single-serve brewing machine pioneer Keurig combined in 2006 to create coffee giant Keurig Green Mountain.
Keurig Green Mountain was bought by Dr Pepper Snapple in 2018: in a deal estimated at around $21bn to create a new North American beverage challenger as Keurig Dr Pepper.
This North American giant - #3 behind The Coca-Cola Company and PepsiCo - will now split its coffee and refreshment beverage interests apart.
The new coffee business will become the world’s largest pure-play coffee business (other companies such as Nestle have large coffee businesses but also have interests in other categories).
Sizing up: The big guns in the coffee industry
Nestle
Headquarters: Vevey, Switzerland
Annual sales: $29.5bn in coffee
Focus: Heavyweights Nespresso, Nescafe and Starbucks retail in global markets
JDE Peet's
Headquarters: Amsterdam
Annual sales: $10.3bn
Focus: L'OR, Peet's, Jacobs, Senseo, Tassimo, Douwe Egberts
Keurig Dr Pepper
Headquarters: Texas, US
Annual sales: $4bn in coffee
Focus: Keurig coffee systems and coffee pods and Green Mountain
Lavazza
Headquarters: Turin, Italy
Annual sales: $3.8bn
Focus: European style coffee products
J.M. Smucker
Headquarters: Ohio, US
Annual sales: Total sales across food, snacks, pets and coffee $8.7bn
Focus: At-home retail coffee, including Folgers and Cafe Bustelo
Starbucks
Headquarters: Seattle
Annual sales: $36bn
Focus: The world's largest coffee shop chain
Costa Coffee (Coca-Cola)
Annual sales: $1.2bn
Focus: The world's second largest coffee chain
“Strategically, the deal makes sense: it creates a focused coffee champion, unlocks around $400m synergies, and positions KDP as a stronger global player,” said Gerd Müller-Pfeiffer, coffee expert and founder of International Coffee Consulting. “But execution is everything.”
Under the terms of the transaction, KDP will pay JDE Peet’s shareholders €31.85 ($37.24) per share in cash, a 33% premium to JDE Peet’s 90-day volume-weighted average stock price, representing a total equity consideration of €15.7bn ($18.35bn). JDE Peet’s will also pay a previously declared dividend of €0.36 per share prior to closing, with no reduction to the offer price.
Once the acquisition is complete, the combined company will be led by KDP’s management team, including CEO Tim Cofer and CFO Sudhanshu Priyadarshi.
Once the refreshment business is spun off, Priyadarshi will become CEO of Global Coffee Co. Additional members of leadership and Boards of Directors will be announced at a later date.
The global headquarters for Global Coffee Co. will be in Burlington, Massachusetts; and its international headquarters will be in Amsterdam.
Refreshments beverage business spin-off
Meanwhile, the new ‘Beverage Co’ in the refreshment beverages division (led by brands such as Dr Pepper, 7UP and Canada Dry) will have more than $11bn in annual net sales.
Described as a ‘scaled challenger’, the company will use its portfolio and differentiated Direct-Store-Delivery (DSD) system to grow in the $300bn North American refreshment beverages market.
Beverage Co. will be headquartered in Frisco, Texas. Tim Cofer, current CEO of KDP, will become CEO of this refreshment beverage company.
