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Beverage NewsTea and Coffee

Keurig Dr Pepper, La Colombe announce strategic partnership

Transition of La Colombe RTD coffee distribution to KDP to begin in late 2023

LaColombe_KDP_900.jpg
July 21, 2023

Keurig Dr Pepper Inc. (KDP), Burlington, Mass., and Frisco, Texas, and La Colombe, Philadelphia, announced a strategic partnership, including a long-term sales and distribution agreement for La Colombe ready-to-drink (RTD) coffee and a long-term licensing, manufacturing and distribution agreement for La Colombe branded K-Cup coffee pods. Keurig Dr Pepper also will make an equity investment in La Colombe, enabling KDP to participate in the value creation upside expected from the partnership. 

La Colombe is an independent, high-growth, super premium coffee company that serves consumers across multiple channels, including the retail trade, branded cafes, foodservice and direct to consumer. The brand is a vertically integrated ready-to-drink coffee company, owning the entire coffee journey from conscious bean sourcing and premium roasting to the creation of exceptional product experiences for loyal customers.

Under the long-term sales and distribution agreement, KDP will sell and distribute shelf-stable La Colombe RTD coffee beverages in KDP’s direct store distribution network, which is expected to drive meaningful growth in the brand’s availability across these mainstream retail channels. In addition, KDP will manufacture, sell and distribute La Colombe branded K-Cup coffee pods, under a license agreement, in the U.S. and Canada.

KDP will make a cash investment in La Colombe of $300 million, in exchange for a 33% ownership stake in the company, making KDP the second largest investor in La Colombe behind its majority owner and Chairman, Hamdi Ulukaya. La Colombe plans to use the proceeds to accelerate growth and pay off debt. KDP's investment in La Colombe represents a multiple of approximately 3.0X estimated 2024 consolidated net sales. 

“We are excited to partner with Hamdi and the La Colombe team to drive value for both companies,” stated KDP Chairman and CEO Bob Gamgort. “This partnership will enable KDP to expand its reach into high growth ready-to-drink and super premium coffee segments and will meaningfully increase La Colombe’s availability to consumers.”

Ulukaya added: “I’m extremely excited to join forces with Bob and his team at KDP to bring La Colombe to every corner of this amazing country. I joined the La Colombe journey eight years ago because I believe in its mission, quality, craftsmanship and social impact – and that everyone deserves quality, crafted, natural coffee. With this partnership we'll be closer to fulfilling the mission of providing exceptional coffee to all.”

The transition of La Colombe ready-to-drink coffee distribution to KDP will begin in late 2023, while the launch of La Colombe branded K-Cup pods will occur during 2024. The equity investment, which is subject to regulatory approval, is expected to close by the end of the third quarter. KDP expects the strategic partnership to be modestly accretive on a full-year basis, beginning in the back half of 2024.

Advisors on the deal for KDP included Guggenheim Securities LLC and Skadden, Arps, Slate, Meagher & Flom LLP. La Colombe's advisors included Blank Rome LLP.


KEYWORDS: distribution deal Keurig Dr Pepper (KDP) La Colombe Coffee Roasters Ready-to-Drink (RTD) Coffee

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