In a multifaceted agreement, Keurig Dr Pepper Inc. and coffee roaster La Colombe have announced a strategic partnership, including a long-term sales and distribution arrangement covering the La Colombe ready-to-drink coffee line, as well as a long-term licensing, manufacturing and distribution agreement covering the United States and Canada for K-Cup coffee pods under La Colombe brand name.
La Colombe is an independent super-premium coffee company that serves the retail trade, branded cafe, foodservice and direct-to-consumer markets. The brand is uniquely positioned as a vertically integrated ready-to-drink coffee company, involved in the distribution process from roasting through to consumer consumption.
KDP will make a $300 million cash investment in La Colombe, in exchange for a 33% ownership stake, making KDP the second largest investor in the company behind majority owner and chairman, Hamdi Ulukaya. La Colombe intends to use the proceeds of the deal to accelerate growth and pay off debt. The KDP investment in La Colombe represents a multiple of about three times the estimated 2024 consolidated net sales, according to the companies.
The transition of La Colombe ready-to-drink coffee distribution to KDP under the partnership agreement will start in late 2023, while the launch of the branded K-Cup pods will occur during 2024, the companies maintained. The parties expect the equity investment to close by the end of the third quarter. KDP anticipates that the strategic partnership will come in as modestly accretive to its results on a full-year basis beginning in the 2024 back half.
“We are excited to partner with Hamdi and the La Colombe team to drive value for both companies,” noted KDP chairman and CEO Bob Gamgort in announcing the deal. “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.”
