Keurig Dr Pepper’s Stake In La Colombe Brings It Into KDP DSD Fold
Keurig Dr Pepper will distribute and manufacture La Colombe products as part of a $300 million investment in the premium coffee company, with the consumer goods company leveraging its robust direct-store-delivery (DSD) network to grow the brand.
Under the agreement, KDP will sell and distribute La Colombe ready-to-drink coffee beverages through its DSD network. It will also manufacture, sell, and distribute La Colombe-branded K-Cup coffee pods in the U.S. and Canada as part of a licensing agreement.
La Colombe currently sells through retail and direct-to-consumer, as well as in cafes and foodservice. Keurig Dr Pepper, which is the No. 49 publicly owned consumer goods company, becomes the second largest investor in La Colombe, with Chobani founder and La Colombe chairman Hamdi Ulukaya as the first.
Keurig Dr Pepper CEO Bob Gamgort said in a statement that the partnership will enable the company to expand its reach into the high-growth RTD and super-premium coffee segments.
The global RTD tea and coffee market size was estimated to reach $103.62 billion in 2022, according to Grand View Research, which projected the category to grow at a compound annual growth rate of 6.2% from 2023 to 2030, propelled in part by consumer shift towards healthier and more convenient beverage options.
Distribution will begin transitioning in late 2023, and La Colombe-branded K-Cups will launch next year.
Keurig Dr Pepper Direct-Store Delivery
KDP indeed brings a strong DSD network to the table, something the company has indicated it expects to consolidate moving forward. While a portion of the company’s volume is distributed through Coca-Cola and PepsiCo, most of its brands run through its own distribution system that covers about 75% of the U.S. population, according to Gamgort in an April call with investors.
The remainder is covered by a network of independent operators, of which he touted their long-term relationships.
“We have always stated that we want to be a catalyst for consolidation on the distribution side of the business,” he noted. “We think it is what retailers are going to want over time. We believe it's highly cost efficient. We also think from an environmental impact, taking miles off the road is a smart thing to do. Our way of doing that has been to consolidate overlapping territories where our company-owned routes match up against independent operators.”
He added that they’ve completed about 25 transactions over the past few years as part of that goal. “We think that consolidation will continue over time. … we stand ready and are driving our role as a catalyst to continue to make that happen.”
