In a major move set to reshape the international coffee landscape, U.S. beverage giant Keurig Dr Pepper has announced its acquisition of Dutch coffee company JDE Peet’s, while competitor Coca-Cola is reportedly exploring a sale of its Costa Coffee chain. These developments signal a period of significant strategic realignment among the world’s largest beverage corporations.
Keurig Dr Pepper’s Multi-Billion Dollar Coffee Bet
Keurig Dr Pepper revealed on the 25th that it will acquire JDE Peet’s in a cash deal valued at €15.7 billion (approximately $17 billion USD). The acquisition is a bold strategy aimed at revitalizing Keurig’s underperforming coffee division. The offer of €31.85 per share represents a 20% premium over JDE Peet’s closing price from the previous weekend. Keurig Dr Pepper, known for its iconic soft drinks like Dr Pepper and 7-Up, has struggled to gain traction in the coffee market, particularly with its capsule-based systems, which have seen sluggish shipment growth since its 2018 merger with Keurig Green Mountain.
Global Expansion and Corporate Restructuring
The acquisition of JDE Peet’s, which operates popular European coffee brands such as Jacobs and L’OR, will provide Keurig Dr Pepper with a powerful distribution network outside the United States. This strategic move is expected to expand its coffee sales footprint to over 100 countries. Following the merger, the company plans to separate its operations into two distinct, publicly traded U.S. entities: a consolidated coffee division, including the newly acquired brands, and a beverage division focused on its core soft drinks. This restructuring is projected to generate $400 million in synergies over three years. “This is a unique opportunity to create a global coffee powerhouse,” said Keurig Dr Pepper CEO Tim Cofer. “We are poised to deliver both short-term and long-term value to our shareholders.”
Industry Headwinds and Market Reactions
This acquisition comes at a turbulent time for the coffee industry, which is grappling with economic and environmental pressures. The U.S. administration’s 50% tariff on Brazilian coffee beans, coupled with rising coffee prices due to climate change, has significantly increased costs for producers. Wall Street reacted to the news with caution; Keurig Dr Pepper’s stock fell 8% in after-hours trading. In contrast, JDE Peet’s shares surged 17% on the London Stock Exchange.
Coca-Cola Considers Exit from Costa Coffee
Meanwhile, in a contrasting move, Coca-Cola is reportedly evaluating strategic options for its U.K.-based Costa Coffee chain, including a potential full or partial sale. The company, which is working with investment bank Lazard, is said to have held preliminary discussions with a small number of potential bidders, including private equity firms. Coca-Cola acquired Costa for just over $5 billion in 2018 to compete with rivals like Starbucks and Nestlé. However, the investment has not met expectations. At a recent earnings call, Coca-Cola CEO James Quincey admitted, “Our investment in Costa has not performed as we had hoped from an investment thesis standpoint.” While no final decision has been made, initial offers are anticipated in the early fall.
