The company that made coffee pods ubiquitous just dropped $18 billion on Dr. Pepper

Is there a doctor in the house?
Is there a doctor in the house?
Image: AP Photo/Nam Huh
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Keurig Green Mountain, the American company whose success marketing its “K-cups” made coffee pods a staple of offices and hotels everywhere, agreed Monday (Jan. 29) to spend a whopping $18.7 billion to take a commanding 87% stake in the Dr. Pepper Snapple Group.

That means Keurig Green Mountain Inc. will soon be in charge of some of America’s most iconic beverage brands, including Dr. Pepper, 7Up, A&W, and Snapple. First and foremost, this is about distribution for the upstart coffee company.

Keurig has solid relationships with online retailers such as Amazon, but has had severely limited reach into the vast network of brick-and-mortar stores. The deal on Monday will fuse Keurig’s online connections with Dr. Pepper Snapple’s large distributor list of convenience stores, drug stores, and grocery outlets.

The move is also a sort of two-for-one for Keurig, enabling the company to shoehorn its way into two new markets at once. On one hand, it will challenge the market share held by Starbucks, which bottles and sells its drinks in retail outlets across the country. Now Keurig will have an easier way to get products under its umbrella to market, including Peet’s coffees and teas, Caribou Coffee, and Stumptown. On the other hand, Keurig is also now in direct competition with mammoth beverage companies Coca-Cola and PepsiCo, which have been looking for ways to bring more coffee and tea brands into their own folds as sugary sodas have slowly fallen out of consumer favor.

The new company will be called Keurig Dr. Pepper and is expected to bring in about $11 billion in sales annually. The biggest winner in the deal is the owner of Keurig Green Mountain, Austrian-based JAB Holding, a private investment firm that has been expanding into food and drink for the last few years.