Keurig Dr Pepper is anticipating approximately $200 million in supply chain savings for its coffee business over the next three years following its acquisition of JDE Peet’s, according to information shared in an investors presentation.
In connection with the acquisition, Keurig Dr Pepper will be spinning off its coffee unit into a separate entity. Executives believe that this move will bring about improved sourcing resiliency and network optimization for the company. The acquisition is expected to be finalized in early 2026, with the operational readiness of the business separation anticipated later in the same year, as revealed in an earnings call held last week.
CEO and Director Tim Cofer highlighted the advantages of being a larger company with enhanced supply chain capabilities, stating that this positioning will enable Keurig Dr Pepper to better navigate external challenges such as tariffs and commodity price fluctuations.
The company is aiming to reinforce its coffee business amidst a challenging period for coffee manufacturers. Apart from facing increased tariffs on imports from key coffee-producing countries like Brazil and Vietnam, the industry has also been impacted by rising bean prices due to climate change-induced harvest reductions.
By combining the coffee businesses of Keurig Dr Pepper and JDE Peet’s, the company will have stronger green coffee sourcing capabilities and enhanced direct and indirect spend pools, as explained by Cofer. Additionally, the company plans to focus on blend optimization to further enhance its offerings.
In addition to procurement benefits, Keurig Dr Pepper is looking to make manufacturing and logistics improvements through the acquisition and spinoff process. The company intends to streamline its manufacturing footprint and optimize its logistics network, with JDE Peet’s recently announcing the closure of two facilities in Brazil and the U.S.
Out of the projected $400 million in cost reductions expected for the separated coffee business, approximately half will come from supply chain savings. The remaining half will be achieved through savings in SG&A and IT costs.
Roger Johnson, Chief Transformation and Supply Chain Officer at Keurig Dr Pepper, emphasized that the target for supply chain savings has been thoroughly vetted through detailed planning and is deemed actionable. Johnson, who took on the additional role of Chief Transformation Officer in September, is overseeing the establishment of a transformation management office focusing on commercial and supply chain functions, as well as managing the separation of the company’s coffee and beverage businesses.
Overall, Keurig Dr Pepper’s strategic moves in the coffee sector are aimed at strengthening its position in the market, optimizing operations, and driving cost efficiencies to ensure long-term sustainability and growth.