Keurig Dr Pepper announced plans to acquire European coffee powerhouse JDE Peet’s in a landmark $18 billion all-cash deal, signaling a major reshaping of the company’s portfolio. Once finalized, the transaction will split the business into two separate entities: a coffee-focused company combining Keurig’s single-serve pods with JDE Peet’s global coffee brands, and a soft drink company housing iconic beverages such as Dr Pepper, Snapple, and 7UP.
The deal is being framed as a strategic response to shifting consumer trends and mounting pressures in the coffee market. While the beverage segment has remained strong, Keurig Dr Pepper’s coffee business has faced challenges in recent years due to rising coffee bean prices, supply disruptions, and competition from store brands. By separating the two businesses, the company aims to allow each entity to pursue tailored growth strategies suited to their respective markets.
The new coffee company, projected to generate around $16 billion in annual sales, will be headquartered in Burlington, Massachusetts, with international operations managed from Amsterdam. Meanwhile, the beverage business, with roughly $11 billion in annual sales, will operate out of Frisco, Texas. This structural shift allows both companies to focus on specialized operational efficiencies and innovation. Keurig Dr Pepper executives expect that the coffee-focused entity will be better equipped to navigate global commodity pressures, including droughts in major coffee-exporting regions like Brazil and Vietnam, as well as newly imposed U.S. tariffs on Brazilian coffee imports.
JDE Peet’s brings nearly 50 coffee and tea brands from around the world, including France’s L’Or, Germany’s Jacobs coffee, and New Zealand’s Ti Ora tea. The company has demonstrated strong pricing power, with first-half sales rising nearly 20% to just under $6 billion, driven primarily by strategic price increases. Keurig Dr Pepper anticipates leveraging JDE Peet’s international reach and brand diversity to accelerate innovation and expand global market share.
In contrast, Keurig Dr Pepper’s soft drink division has outperformed in recent quarters, with sales rising 10.5% year-over-year to $2.7 billion, fueled by strong demand for flavored beverages. By keeping this segment distinct, management aims to maintain focus on profitable core brands while continuing to pursue growth in emerging beverage trends.
Industry analysts view the transaction as part of a broader trend among major food and beverage companies to realign portfolios. Similar moves in recent years include Kellogg’s spin-off of its snack brands and the acquisition activity by Mars and Ferrero, highlighting the increasing importance of market specialization in maintaining competitiveness.
The deal is expected to close in the first half of 2026, pending shareholder and regulatory approvals. Management changes are also slated: Timothy Cofer, CEO of Keurig Dr Pepper, will lead the beverage business, while CFO Sudhanshu Priyadarshi will oversee the newly formed coffee company. Executives emphasize that the separation will create two highly focused, growth-oriented companies, each with the agility to respond to consumer demand and evolving market conditions.
As consumer habits continue to evolve and commodity prices fluctuate, the split positions Keurig Dr Pepper to optimize value across both the coffee and soft drink markets, potentially unlocking growth and operational efficiencies that were harder to achieve under a unified structure.
