stockrowWhat it does
Keurig Dr Pepper is a North American beverage company that makes, markets, distributes and sells cold drinks, coffee and single-serve brewing systems. Timothy Cofer is chief executive officer. Its portfolio has more than 125 owned, licensed and partner brands, including Dr Pepper, Canada Dry, Mott’s, 7UP, Snapple, GHOST, Green Mountain Coffee Roasters and Core Hydration, alongside the Keurig brewing system.
The business has three segments. U.S. Refreshment Beverages makes and distributes liquid refreshment beverages, including concentrates and syrups sold to bottlers, fountain syrups for foodservice customers, and packaged drinks for retail. U.S. Coffee sells Keurig brewers, K-Cup pods, bagged and ground coffee, and ready-to-drink coffee. Its International segment sells beverages in Canada, Mexico, the Caribbean and other markets, and coffee systems and pods in Canada.
Keurig brewers are used at home and away from home, including offices, hotels, restaurants, cafeterias and convenience stores. The company makes K-Cup pods for its own, licensed and partner brands; partner names include Starbucks, Dunkin’, Folgers and Peet’s. It also sells brewers, pods and accessories directly to consumers through Keurig.com and Keurig.ca.
Management said on the Q2 2026 call that the JDE Peet’s acquisition closed in early April and that the company had created an interim operating model for its beverage and coffee operating units while preparing for their separation.
How it makes money
Keurig Dr Pepper earns revenue by selling finished drinks, beverage concentrates, fountain syrups, coffee pods, brewers and related accessories. In refreshment beverages, it sells concentrates to third-party bottlers or uses them in its own manufacturing system; bottlers turn concentrates into packaged beverages. It also makes and distributes finished drinks under its own brands, distributes drinks for partner brands and manufactures products for partners and private labels.
Coffee has a recurring consumables element: the company sells brewers and then sells K-Cup pods for use in those brewers. It manufactures all K-Cup pods for owned and licensed brands, while manufacturing pods for partner brands that then sell them to retailers and consumers. Pods span coffee, tea, cocoa and cider. Appliances are largely designed and engineered by the company but made by third-party contract manufacturers in Asia.
Pricing, volume and product mix all affect sales. In FY2025, U.S. Refreshment Beverages revenue was $10.4 billion; in Q2 2026, total net sales grew 74.6%, including the JDE Peet’s acquisition. The refreshment segment represented 62.9% of FY2025 revenue, compared with 24.0% for U.S. Coffee and 13.1% for International. Liquid refreshment beverages accounted for $11.6 billion of FY2025 revenue, while pods accounted for $3.8 billion.
Management said on the Q2 2026 call that legacy KDP net sales grew 7.3%, comprising 4.2 percentage points of net price realization and 3.1 points of volume mix. It also said that Q2 U.S. Coffee net sales declined 3.2%, with volume mix declining and net price realization contributing five percentage points.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| LRB | $11.6 billion | 69.9% | 9.81% |
| Pods | $3.8 billion | 22.7% | 4.51% |
| Appliances | $646.0 million | 3.89% | −16.3% |
| Other | $578.0 million | 3.48% | 44.9% |
Customers and how it sells
Keurig Dr Pepper sells to retailers, bottlers and distributors, brand partners, away-from-home customers and end-use consumers. Retail customers include supermarkets, mass merchandisers, club stores, e-commerce retailers, convenience stores, drug stores, vending operators and fountain accounts. Retailers can buy finished drinks, pods, appliances and accessories directly from the company.
Walmart was the largest retailer and represented approximately 16% of consolidated net sales in 2025. The company licenses carbonated soft drinks to bottlers in defined geographic territories in the U.S. and Canada, generally through exclusive, long-term arrangements. Some bottlers are affiliated with Coca-Cola or PepsiCo, while others are independent. It also uses smaller distributors, beer wholesalers, wine and spirit distributors, retail brokers and third-party logistics providers.
The U.S. generated $14.5 billion of FY2025 revenue, or 87.3%. Foreign revenue was $2.1 billion, or 12.7%, with activity in Canada, Mexico, the Caribbean and other international markets. Its direct-to-consumer coffee websites serve the U.S. and Canada. Management said on the Q2 2026 call that it consolidated U.S. customers to an integrated sales force and a single invoice for the Keurig and Peet’s portfolio.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| U.S. | $14.5 billion | 87.3% | 8.48% |
| Foreign | $2.1 billion | 12.7% | 5.95% |
Suppliers and costs
Ingredients and packaging represent approximately 55% of cost of sales. Key inputs include green coffee, water, aluminum cans, PET bottles and caps, CO2, sweeteners, paper, K-Cup packaging, fruit, glass, cocoa, tea and juices. Input availability, quality and costs can fluctuate, while supplier pricing can move with commodities such as aluminum, natural gas, resin, corn and pulp.
The company develops direct relationships with coffee farms, estates, cooperatives and exporters, and also buys green coffee through brokers. It uses commodity derivatives and supplier pricing agreements when appropriate to reduce volatility in selected commodities and transportation costs. Fuel matters because it operates a distribution fleet of approximately 8,100 U.S. vehicles and 2,200 Mexico vehicles.
It manufactures beverages, concentrates, syrups and pods, but uses Asian third-party contract manufacturers for brewer appliances. Management said on the Q2 2026 call that U.S. Coffee faced elevated green coffee costs and tariffs in the quarter, while it expected lower-cost inventory and easing tariff effects to improve its second-half cost position.
- Revenue$16.6B
- Cost of revenue−$7.6B
- Selling, general and administrative−$5.4B
- Other operating costs−$73.0M
- Operating income$3.6B
Competitive position
Keurig Dr Pepper competes in beverages and coffee on brand recognition, taste, quality, price, availability, selection and convenience. Its named primary competitors are Coca-Cola, PepsiCo, Starbucks Corporation, The J.M. Smucker Company, The Kraft Heinz Company and Nestlé S.A. These companies can also be partners or customers because they purchase products from Keurig Dr Pepper. The company also competes with smaller bottlers, distributors, regional manufacturers and private-label producers.
In coffee, competition includes brands sold in packaged coffee, ready-to-drink coffee, brewers and pods. In refreshment beverages, it competes in carbonated soft drinks, energy, hydration, water and other drink categories. Some bottlers affiliated with Coca-Cola and PepsiCo hold territorial licenses to bottle the company’s drinks; outside the U.S., third parties, including Coca-Cola in some cases, own manufacturing and distribution rights for certain carbonated soft-drink brands.
Our reading: Brand ownership and a portfolio spanning owned, licensed and partner products are a meaningful moat source because the company sells more than 125 brands, but consumer preference, price and availability remain direct bases of competition. [item1]
Our reading: The direct-store-delivery network, fleet, bottler relationships and retailer access are a meaningful distribution moat, because they support product availability and launches, although the company still depends on third-party bottlers and distributors for a significant portion of the business. [item1; item1a]
Our reading: Keurig’s installed-brewer and pod model provides a recurring-consumables moat source, reinforced by coffee licensing relationships, but appliance and pod volumes can be sensitive to pricing and category demand. [item1; item7]
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Coca-Cola | North American beverages and bottling | Medium |
| PepsiCo | North American beverages and bottling | Medium |
| Starbucks Corporation | Coffee, pods and ready-to-drink coffee | Medium |
| The J.M. Smucker Company | Coffee and beverage categories | Medium |
| The Kraft Heinz Company | Coffee and beverage categories | Medium |
| Nestlé S.A. | Coffee, pods and beverage categories | Medium |
Growth opportunities
The company’s growth plans include brand innovation, extending existing brands, adding partner brands, selective acquisitions, and expanding distribution and marketing. It seeks to grow beverage occasions through product renovation and new formats, and to use partnerships to enter categories where it does not have an established brand. In 2025 it distributed Bloom Pop in prebiotic carbonated soft drinks, released new beverage flavors and launched new Keurig brewers.
Energy is a growth category for the refreshment business. Management said on the Q2 2026 call that its energy portfolio crossed 9% market share in the quarter and that it was targeting double-digit market share. Management also said that the energy portfolio was operating at a $1.5 billion net-revenue run rate. The company sizes the North American refreshment beverages market at $300.0 billion and the global coffee market at $400.0 billion.
The company acquired JDE Peet’s in April 2026 and is integrating its coffee operations. Management said on the Q2 2026 call that initial coffee cost synergies had begun and that it was reaffirming low double-digit constant-currency EPS growth guidance for 2026. The company expects to separate its beverage and coffee portfolios into independent public companies; management targets operational readiness by the end of 2026 and expects a separation in early 2027, subject to market conditions.
- $12.7BFY2021
- $14.1BFY2022
- $14.8BFY2023
- $15.4BFY2024
- $16.6BFY2025
- $0.01FY2026 guidance
Structural risks
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Manufacturing, distribution or supply-chain disruption, including higher input costs, could adversely affect results. Ingredients and packaging costs move with commodities, and fuel, freight, tariffs and other transportation costs can also fluctuate.
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The company depends on third-party bottlers and distributors for a significant portion of its business. Bottler agreements can be long-term and geographically exclusive, limiting flexibility if a relationship changes.
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U.S. Coffee has faced price elasticity, category softness and retailer inventory management. In FY2025, appliance volume decreased 19.9% and K-Cup pod volume decreased 4.8%.
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The JDE Peet’s acquisition and planned separation create execution risks. The acquisition required integration of operations, systems, employees, reporting and controls, while separation requires time, expenses and resources and may not occur on the currently contemplated terms or timeline.
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Debt financing, interest expense and credit ratings affect liquidity. A ratings downgrade could increase interest expense and reduce cash available for obligations; management said on the Q2 2026 call that it expected approximately $1.12 to $1.14 billion of interest expense for 2026.
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Regulation can affect ingredients, labeling, packaging, water use, marketing and sales. Jurisdictions have adopted or may adopt beverage taxes, packaging restrictions, chemical requirements and product-warning rules.
Bottom line
Our reading
Our reading: Keurig Dr Pepper combines a broad North American drink portfolio and distribution system with a coffee model that pairs brewers with recurring pod sales; its revenue base is concentrated in U.S. refreshment beverages. [item1; segment.u_s_refreshment_beverages.share.fy2025]
Our reading: The business is being reshaped by the JDE Peet’s integration and the intended beverage-and-coffee separation, while coffee demand, commodity costs, tariffs, third-party distribution reliance and leverage are central operating constraints. [call_prepared; item1a; item7]