A secretive family of German billionaires extended its reach deep into the American beverage market on Monday by adding Dr Pepper Snapple to its portfolio, which already includes such iconic US brands as Peet’s Coffee and Keurig pod coffee machines.
Keurig Green Mountain, which is controlled by JAB Holding, the investment arm of Germany’s Reimann family, announced that it is buying Dr Pepper for $18.7 billion (€15.1 billion.) The new firm, Keurig Dr Pepper, will be controlled by JAB Holding with 13 percent owned by Dr Pepper Snapple shareholders and another 13-14 percent owned by Mondelez International, maker of Oreo cookies and Dentyne gum.
Bob Gamgort, chief executive of Keurig, will become CEO of the new firm and Ozan Dokmecioglu, CFO of Dr Pepper, will become the firm’s CFO. Bart Becht, chairman of JAB Holding, will become chairman of the firm.
Mr. Gamgort said in a statement that the merged firm “unlocks the opportunity to combine hot and cold beverages and create a platform to increase exposure to high-growth formulas.” But it also raises the possibility that Keurig, which dominates the pod coffee market, might use its expertise to sell soft drink pods for Dr Pepper and 7Up, allowing the consumer to make their drinks at home without buying cans or bottles of soda.
The acquisition immediately intensifies competition in two of the most fertile growth areas of US beverages. Howard Helford, Soft drinks research at Euromonitor International
“The acquisition immediately intensifies competition in two of the most fertile growth areas of US beverages: food service consumption and premium, retail brewed beverages (meaning bottled coffee and tea),” said Howard Helford, head of soft drinks research at Euromonitor International, a London-based market research firm, in a statement.
While smaller than its rivals Pepsi or Coca-Cola, Dr Pepper Snapple has developed an extensive distributor network in the US and Canada that can be used by Keurig to get its products on more grocery shelves.
One of the key benefits of the merger is Keurig’s expanding influence in the coffee world. It recently purchased a Dutch coffee company, Douwe Egberts, and established a joint venture with Mendelez International to produce Jacobs coffee, a famed German brand. Dr Pepper has recently found a bestseller with High Brew, a canned, cold brew coffee that is more portable than a paper cup.
“Consumers are obsessed with it,” said Duane Stanford, executive editor of Beverage Digest, a drinks industry publication. “They love the convenience and it becomes a habit in the afternoon.”
As a result of recent acquisitions, JAB Holding is well on its way to controlling the American breakfast thanks to its purchase of café and bakery Panera Bread last year for $7.5 billion and Krispy Kreme Donuts for $1.35 billion, as well’s as Peet’s Coffee and Tea, Espresso House and Baresso Coffee.
The Reimann family, little known outside Germany, is apparently on a quest to turn their privately held business fortune into a rival of the Swiss food giant Nestlé. The family are heirs to a fortune made by the Joh. A. Benckiser (hence the name JAB Holdings) which originally invested in cosmetics and clothing.
While it sold Jimmy Choo, the maker of luxury high heels featured on “Sex and the City,” Swiss firm Bally International and British luxury coat maker Belstaff, it still owns American perfume maker Coty and such soap brands as Calgon and Finish as well as cosmetic names such as Clearasil and Wella.
JP Morgan, Bank of America and Goldman Sachs are providing $16.6 billion to finance the deal.
This article was reported by Thomas Jahn and Katharina Kort, correspondents for Handelsblatt in New York, and Christoph Kapalschinski who covers consumer goods, textiles and food for Handelsblatt. It was written by Charles Wallace, an editor for Handelsblatt Global in New York. To contact the authors: [email protected], [email protected], [email protected] and [email protected]