Keurig Dr Pepper takes 33% stake in La Colombe coffee

Founded in 1994, 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. KDP highlights the brand as the 'only vertically integrated ready-to-drink coffee company', owning the entire coffee journey from conscious bean sourcing and premium roasting to the creation of products. Under the 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 US and Canada. 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. KDP will make a cash investment in La Colombe of $300m, 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. "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," said KDP Chairman and CEO Bob Gamgort. La Colombe's Hamdi Ulukaya said: "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 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. In November last year, La Colombe Coffee Roasters and Molson Coors agreed to end their distribution agreement, effective March 2023.