Table of Contents
Key Points:
- Keurig Dr Pepper anticipates approximately $200 million in supply chain savings for its coffee business over the next three years following the acquisition of JDE Peet’s.
- The company plans to spin off its coffee unit into a separate entity post-acquisition, expecting benefits from enhanced sourcing resiliency and network optimization.
- CEO Tim Cofer highlighted the advantages of navigating external volatility like tariffs and commodity fluctuations with the expanded supply chain capabilities of the larger entity.
Keurig Dr Pepper’s Coffee Spinoff Savings Target
Percentage of the projected $400 million cost reductions from certain business functions for the coffee spinoff of Keurig Dr Pepper.
Insight:
Keurig Dr Pepper is strengthening its coffee business amidst challenging market conditions for coffee makers, including increased tariffs and rising bean prices due to climate change impact on harvests.
The combined coffee business is set to benefit from enhanced green coffee sourcing capabilities, direct and indirect spend pools, and blend optimization strategies, according to Cofer.
Aside from procurement advantages, the company aims for manufacturing and logistics enhancements through the acquisition and spinoff, including manufacturing footprint consolidation and logistics network optimization.
Projected supply chain savings represent half of the total $400 million cost reductions expected for the separated coffee business, with the remaining savings to come from SG&A and IT cost reductions.
Chief Transformation and Supply Chain Officer Roger Johnson confirmed the actionable nature of the savings target, emphasizing the establishment of dedicated teams for post-acquisition priorities.
Johnson, who assumed the chief transformation officer role in September, is leading the newly formed transformation management office overseeing the separation of Keurig Dr Pepper’s coffee and beverage businesses.