The deal brings together a wide range of beverage brands. Dr Pepper Snapple also has a $1B+ concentrates business, supplying raw soft drink materials to PepsiCo, Coca-Cola, and others, which could help Keurig roll out flavored coffees.
It also shows that JAB is looking beyond its now-major cafe business toward grocery. It plans to use Dr Pepper Snapple’s relationships with Walmart and other retailers to sell bottled coffees from JAB’s other brands.
So what’s next?
A coming coffee clash.
Starbucks is sweating. JAB has competed with Starbucks cafes since the 2012 Peet’s acquisition — now, it may compete more directly in selling bottled, ready-to-drink coffees through retailers. Starbucks is a leader in bottled coffees and plans to expand its portfolio in 2018. It may bump up against Dr Pepper-bottled Keurig coffees going forward.
Nestle is exploring similar territory. The Swiss giant (and owner of Nespresso) has ramped up its US coffee business by acquiring cafe chain Blue Bottle and cold brew startup Chameleon Cold Brew. Like JAB, it seems to be seeking both a cafe presence (Blue Bottle) and grocery dominance (Chameleon and other brands).
Nestle repeatedly cited coffee as a high-growth area over the past few months, and with an increasingly restless activist investor, it may pick up its coffee activity.
At the same time, unexpected players like Anheuser Busch are nabbing healthy energy brands that compete with coffee.
As JAB, Nestle, Starbucks, and other leaders look to slurp down more high-momentum coffee and energy brands, competition will heat up. We may see higher company valuations and more outreach (like this) to earlier-stage, emerging brands.