Coca-Cola’s rocky path as a Keurig investor now has taken an unexpected turn: The coffee company is becoming one of its biggest competitors.
Keurig Green Mountain’s move to take control of Dr Pepper Snapple Group will make it the third-largest soft-drink seller in North America — directly in contention with market leader Coke and No. 2 PepsiCo, which owns the Quaker Oats facility in Cedar Rapids.
Those companies may find it best to respond in kind, with deals of their own, said Bloomberg Intelligence analyst Kenneth Shea.
“The market is rewarding growth, whether it’s organic or through acquisitions,” he said. In food and beverage, the companies “that are doing the best are the ones that are making bold acquisitions. They’re doing something about the sluggish environment.”
Deal pressure has mounted because beverage companies are struggling to cope with shifting consumer preferences on their own. Drinkers are moving away from traditional colas and other sugary sodas in favor of healthier options.
In response, Coca-Cola, PepsiCo and Dr Pepper have acquired smaller brands that fit with what’s en vogue — from cold-brew coffee to high-pressure processed juices to kombuchas.
For Coke in particular, Monday’s deal may cause the company to reflect on past investments and future possibilities. The Atlanta-based soda giant owned 17 percent of Keurig before it was taken private by JAB in 2016.