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Keurig Dr Pepper CEO reveals $20bn M&A ambitions

Bob Gamgort says the US coffee and soft beverage giant will seek new acquisitions over the next three years amid rising sales

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Keurig Dr Pepper (KDP) will use an anticipated $4bn generated from increased sales over the next three years to fund the next stage of its M&A activity.
 
In an interview with CNBC, the company’s CEO Bob Gamgort said those revenues would equal $20 billion M&A capacity. “Put that on top of our market cap, that’s game-changing in terms of value creation,” Gamgort added.
 
Gamgort also revealed that he anticipated annual revenues at the JAB Holdings-controlled company to grow by mid-to-single digits over the next three years. The growth would largely be driven by sales of Keurig’s coffee pod machines, of which around 11 million have been sold to US consumers since 2016, with a total of 33 million units now regularly used in the US.
 
Keurig Dr Pepper was formed in 2018 after JAB Holding Company acquired US soft drinks manufacturer and distributor, Dr Pepper Snapple, and merged it with its Keurig Green Mountain coffee business in a deal worth $18.7bn.
 
Like many beverage companies, KDP has benefitted from increased home coffee consumption during the pandemic.
 
In July 2021, KDP reported business reported second quarter revenues of $3.14bn, a 9.6% increase on the same period in 2020. Year-to-date revenues rose 10.3% to $6.04bn. Across its coffee systems business, KDP reported net sales of $1.1bn in the second quarter, a 5.6% increase on the $1.04bn earned in the same period in 2020.
 
KDP controls a portfolio of more than 125 owned, licensed, partner and allied brands, including products from prominent US coffee chains, Krispy Kream, Panera Bread, Cinnabon, Caribou Coffee, Tully’s Coffee and Gloria Jeans Coffee. KDP’s retail coffee brands include Green Mountain Coffee Roasters, Van Houte and Diedrich Coffee.

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