Soft drinks company Keurig Dr Pepper (KDP) and La Colombe have entered into a strategic partnership, which includes a long-term sales and distribution agreement for La Colombe ready-to-drink coffee and a long-term licensing, manufacturing and distribution agreement for La Colombe branded K-Cup coffee pods.
Keurig Dr Pepper will also make an equity investment in La Colombe, enabling KDP to participate in the value creation upside expected from the partnership.
La Colombe is an independent coffee company that serves consumers across multiple channels, including the retail trade, branded cafes, foodservice and direct to consumer.
The brand is the only vertically integrated ready-to-drink coffee company, owning the entire coffee journey from conscious bean sourcing and premium roasting to product experiences for customers.
Mainstream Retail Channels
Under the long-term sales and distribution 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 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.
KDP will make a cash investment in La Colombe of $300 million (€269 million), in exchange for a 33% ownership stake in the company, making KDP the second largest investor in La Colombe behind its majority owner and chair, Hamdi Ulukaya.
La Colombe plans to use the proceeds to accelerate growth and pay off debt.
'Premium Coffee Segments'
"We are excited to partner with Hamdi and the La Colombe team to drive value for both companies," said KDP chair and CEO, Bob Gamgort.
"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."
The transition of La Colombe ready-to-drink coffee distribution to KDP will begin in late 2023, while the rollout of La Colombe branded K-Cup pods will occur during 2024.
The equity investment, which is subject to regulatory approval, is expected to close by the end of the third quarter.
KDP added that it expects the strategic partnership to be modestly accretive on a full-year basis, beginning in the back half of 2024.
