Greedy When Fearful

Keurig (KDP) has been on my radar for over a decade. By the time I learned how amazing Keurig was in 2012, their patent was expiring on the K-Cups. I wasn’t interested in the razor sale of the Keurig machine, I wanted the blades (the K-Cups), so I never bought the stock. Fast forward to 2020 and now Keurig owns so many blades they give Freddy Krueger nightmares. Not only that, Keurig has fixed the three major problems I have had with the company in the past:

• Who’s selling the blades now that the patent expired? They are. A lot of them (see below). A decade later, their Green Mountain brand (Keurig’s brand) is #2 in the K-Cup business, only behind Starbucks. This is incredible. Plus, they own a dozen more brands that dominate the shelves.
• Only single serve coffee? Not anymore. With their successful K-Duo, you can brew fresh carafe with coffee grounds or use a single serve.
• Bad for the environment? K-Kups are now moving to a 100% recyclable material. Combine this with K-Duo and this really improves the environment impact.

Now KDP is drowning in blade sales since they control so many brands:

• COFFEE BRANDS! They make money from their K-Cups on the following brands: Green Mountain, Donut Shop, Laughing Man, Peet’s Coffee, Caribou Coffee, Van Houtte, REVV, Tully’s Coffee, Krispy Crème, Newman’s Own Organics, Barista Bros, Barista Prima Coffee House, Bruleire Mont Royal, Café Escapes, Café Punt del Cielo, Cinnabon, Coffee People, Diedrich Coffee, Donut House, Emeril, Gloria Jen’s, Holly’s Coffee, Kahlua, Laura Second, Orient Express, Timothy’s, Panera Bread, High Brew, Gila Café, FOrto, Adagio.
• SODA BRANDS! Talk about blades. They own the following soda brands: Dr. Pepper, 7-Up, A&W, Canada Dry, Schweppes, Sunkist, Crush, Sun Drop, IBC, Diet Rite, Squirt, Vernors, RC Cola, Hires, Stewarts, Big Red, C-Plus, Cactus Cooler, Nehi Cola, Tahitian Treat Fruit Punch.
• TEAS & WATER BRANDS: Bai, Canada Dry, Dejua Blue, Penafiel, Schweppes, Snapple, Straight Up Tea, Evian, Neuro, Vita Coco, Core, Limitless
• Clamato, Hawaiian Punch, Margaritaville, Mott’s, Mr & Mrs. T, Nantucket Nectras, ReaLemon, ReaLIme, Rose’s, Swiss Miss, Venom Energy, Yoo Hoo, Sunny D, XYience Energy, Hydrive Energy Water, Mistic.

Not only is their brand power heroic, in 2020 they are doing fantastic.

• They are the best performing, non-alchoholic, beverage company in the past few months. Take that Coke and Pepsi!
• More than 10% of their sales are coming from ecommerce.
• They are expanding distribution for the family owned Polar Seltzer. Polar is the #1 unsweetened flavored sparkling water in the 1/3^rd of the country they are currently distributing to. There’s a good chance they can take this same position in the other 2/3rds of the country.
• The soda Dr. Pepper has grown 17 straight quarters in sales! I thought this soda peaked in the ‘80s.
• The Canada Dry (ginger ale, club soda, tonic water, and sparkling seltzer water) has grown for 13 consecutive years!

Keurig Dr. Pepper has an arsenal of brands that will make them an unstoppable competitor for decades to come. They are only 20% the size of Coke and Pepsi and yet are in 3^rd place in the beverage wars. This means massive amounts of upside in the future during the battle of the best drink.

Monty