| US

JAB Holdings pushes coffee into US soft drinks market

Successful completion of Keurig Green Mountain-Dr Pepper merger creates third-largest US beverage company with revenues of approximately $11bn

The completion of the merger, announced in January 2018, realises JAB Holdings’ ambition to use Dr Pepper’s distribution network to sell Keurig’s single-serve coffee products. The $18.7bn deal forms a crucial part of the German-owned conglomerate’s strategy to push coffee sales within the US soft drinks market.

In a press statement JAB said Keurig Dr Pepper (KDP) represented a “new challenger” in the beverages industry.

“The combination of these two great companies creates the scale, portfolio, selling and distribution capabilities to compete differently in the beverage industry,” said Keurig Dr Pepper CEO Bob Gamgort.

“With a large stable of iconic brands and the leading single-serve coffee brewing system on the market, KDP has the ability to satisfy any beverage need or consumption occasion—hot or cold, at work or at play, at home or on the go,” he added.

The creation of KDP gives JAB a strong foothold in the US beverages market, but the company is still some way behind market leader Coca Cola in sales terms.

The world’s largest beverages company reported revenues of $35.4bn in 2017, a 15% drop on 2016, reportedly because of a $3.6bn bill generated by new US tax laws.

Typically lower in sugar and calories than many soft drinks, coffee beverages have the potential to tap into growing US appetites for healthier food and beverages. In June 2018, JAB-owned Peet’s coffee launched a low-sugar RTD iced espresso range containing between 100 and 130 calories for retail across the US.

However, KDP’s closest market rival, Pepsico, reported lower than expected sales of $16.24bn in 2017, in part due to shelf space given to smaller, low-calorie products at the expense of its core Pepsi and Mountain Dew brands. Pepsico announced in 2017 it expected at least two thirds of its products to contain 100 calories or less per 12oz serving by 2025.

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