Keurig Dr Pepper said yesterday it would acquire Peet’s Coffee owner JDE Peet’s for $18 billion and then break up its soft drink and coffee businesses into separate entities in 2026. The spinoff will essentially reverse the 2018 merger between Keurig and Dr Pepper that placed all the drinks that get you through your mid-afternoon malaise under one umbrella.
So, why is the company acting like Sandra Bullock and Ryan Reynolds in The Proposal and simultaneously planning a marriage and a divorce? The coffee side could use a pick-me-up:
- While Dr Pepper was the second-most-popular soda in the US behind Coca-Cola last year, and Keurig Dr Pepper reported that US beverage (non-coffee) sales grew ~11% year over year in Q2, coffee sales were down 0.2%.
- That comes as the coffee industry has slowed in recent years. Now, prices are expected to rise due to President Trump’s 50% tariffs on Brazil, the world’s biggest coffee producer.
The companies have done the bean counting and expect this deal to create $400 million in savings over three years.
Parting shots: It’s not the only major food company going through a breakup. Kellogg Co. split off its lucrative snack company (Kellanova) from its underwhelming cereal branch (WK Kellogg) in 2023. Last year, Mars bought Kellanova for $36 billion, and in July, Ferrero said it intends to purchase WK Kellogg for $3.1 billion. Kraft Heinz is reportedly planning a similar separation that would effectively undo the 2015 merger that created it.—DL