Dr Pepper to Split After £18 Billion Acquisition of Peets Owner Amid Coffee Tariff Turmoil

Keurig Dr Pepper has announced plans to acquire the owner of Peet’s Coffee, Douwe Egberts and Kenco, in a deal valued at £18bn, signalling a dramatic shift in the global beverage landscape. The agreement will see the group subsequently split itself in two: one entity focusing on coffee, while the other will concentrate on cold beverages such as Snapple, Dr Pepper, 7UP and a range of energy drinks.

This strategic move unwinds the conglomerate’s 2018 merger and comes during a period of economic tightening among consumers and escalating trade tensions. With tariffs imposed by US President Donald Trump including a 50% duty on most Brazilian imports, coffee prices are expected to spike considerably, leaving companies and consumers alike facing significant challenges. The tariffs were introduced in response to political developments involving Brazil’s former president Jair Bolsonaro and his links to Trump.

Keurig Dr Pepper’s chief executive, Tim Cofer, described the split as a pivotal moment for the sector. He emphasised the growth potential for both coffee and cold beverages as independent organisations. In his prepared remarks, Cofer said, “By creating two sharply focused beverage companies with attractive and tailored growth propositions and capital allocation strategies, we are poised to generate significant shareholder value in both the near and long term.”

The coffee business, once separated, is expected to generate approximately £16bn in sales, while the cold beverages division will achieve around £11bn, according to the companies. Cost efficiencies stemming from the merger are anticipated to save roughly £400m over three years. Despite these ambitions, shares of Keurig Dr Pepper fell 9% after the announcement was made public, reflecting investor caution during turbulent economic conditions.

The acquired company, JDE Peet’s, is based in Amsterdam and holds notable brands such as L’OR, Jacobs, Pilao, OldTown, Super and Moccona in its portfolio. Once the separation is completed, Tim Cofer will remain at the helm of the cold beverage business, headquartered in Frisco, Texas. Keurig Dr Pepper’s current chief financial officer, Sudhanshu Priyadarshi, will lead the coffee business, which will have its main office in Burlington, Massachusetts, while retaining international headquarters in Amsterdam.

Large coffee chains are already feeling the pressure. Starbucks, for example, has experienced six consecutive quarters of declining same-store sales and a 23% downturn in share value since March. While Keurig Dr Pepper has mitigated some losses through price increases, coffee sales slipped by 0.2% in the last quarter. As tariff pressures mount and consumer habits shift, the beverage industry faces a period of intense transformation and renewed competition.