Dive Brief:
- Keurig Dr Pepper is buying JDE Peet’s for $18 billion in cash as the beverage maker aims to grow its struggling coffee operations.
- Once the merger is completed, Keurig Dr Pepper plans to separate its coffee and beverage units into two independent, publicly listed companies.
- The intended split would unwind the 2018 transaction that combined Dr Pepper with Keurig Green Mountain, creating a sprawling beverage giant with a portfolio spanning coffee, Bai, 7UP, Sunkist and A&W under one roof.
Dive Insight:
Seven years after coming together, Keurig Dr Pepper is splitting up.
When the combined company was first formed, the rationale behind the deal was to create a beverage giant offering both traditional sodas, on-trend coffee drinks and better-for-you beverages under one umbrella.
At the time, executives said Keurig Dr Pepper could tap into a vast distribution system and sweeping portfolio to offer an array of both hot and cold products that people consumed throughout the day — from morning coffee and an afternoon tea to a late-night soda.
However, a lot has changed since the beverage blockbuster. While coffee consumption remains robust, several challenges have weighed on the sector.
Keurig Dr Pepper, in particular, has languished amid rising competition, high prices for beans and, most recently, 50% tariffs levied on coffee and other Brazilian goods that took effect Aug. 6.
Net sales at Keurig Dr Pepper’s coffee business decreased 2.6% to $4 billion in 2024. Higher coffee prices helped the business rebound a bit during the second quarter of 2025, with net sales dropping 0.2% to $900 million.
The merger with JDE Peet would create a coffee company expected to have approximately $16 billion in annual net sales, making it the world’s largest pure-play coffee business with a presence in more than 100 countries.
The beverage unit, which will house soda, tea, water, energy drinks and other products, is expected to have more than $11 billion in annual net sales. Last quarter, net sales for the beverage operation at Keurig Dr Pepper jumped 10.5% to $2.7 billion due to strength in carbonated soft drinks such as Dr Pepper, energy and sports hydration, as well as the acquisition of Ghost.
“Today’s announcement marks a transformational moment in the beverage industry, as we build on KDP’s disruptive legacy by creating two winning companies, including a new global coffee champion,” Tim Cofer, Keurig Dr Pepper’s CEO, said in a statement. “This is the right time for this transaction, with KDP in a position of operational and financial strength, momentum across our evolved portfolio, and increasing coffee category resilience.”
Cofer will become CEO of the beverage company while Sudhanshu Priyadarsh, Keurig Dr Pepper’s CFO, will run the coffee spinoff.
Since the merger seven years ago, Keurig Dr Pepper has expanded its portfolio from its legacy soda while deepening its presence in trendy beverage categories, such as energy drinks and nonalcoholic beer.
It spent more than $1 billion on Ghost in 2024 and bought a 30% stake in Nutrabolt, the maker of energy drinks such as C4 Energy and Xtend Energy, for $863 million in 2022.
Keurig Dr Pepper also doled out $300 million for a 33% stake in La Colombe, which it rolled over into equity in Chobani after the yogurt maker purchased the coffee roaster two years ago. And in 2022, Keurig Dr Pepper purchased a minority stake in nonalcoholic craft beer maker Athletic Brewing.
