What changed in this filing

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Item 1. Business

2022-02-24 compared with 2021-02-25 · 121 added, 105 removed, 260 unchanged (47% of the section changed)

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Today, we trade on Nasdaq under the symbol KDP, and we are a member of the Nasdaq 100 Index.

Refer to Note 5 of the Notes to our Consolidated Financial Statements for further information related to the DPS Merger.

OUR STRENGTHS AND STRATEGY

The key strengths of our business are:

Strong portfolio of leading, consumer-preferred brands.

Our scalable business model provides a platform for future growth, focused on:

Strong, balanced portfolio of leading, consumer-preferred brands with proven ability to expand via innovation, renovation and partnerships.

We own a diverse portfolio of well-known CSD, coffee and NCB brands.

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This portfolio provides our retailers, bottlers and distributors, and other customers with a wide variety of products to meet consumers' needs and provides us with a platform for growth and profitability.

Scale distribution and selling system.

We have strategically-located distribution capabilities, which enables us to better align our operations with our customers and our channels, to ensure our products are available to meet consumer demand, to reduce transportation costs and to have greater control over the timing and coordination of new product launches.

We actively manage transportation of our products using our fleet (owned and leased) of approximately 6,100 vehicles in the U.S.

and 1,700 in Mexico, as well as third party logistics providers.

Innovation, renovation, acquisition and partnering capabilities.

We drive growth in our business by a combination of innovating and renovating our portfolio of owned brands and partnerships with other leading beverage brands.

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We continually evaluate making investments in companies that fill in whitespace in our portfolio.

Highly efficient business model.

Flexible and scalable route-to-market network, with unique e-commerce expertise.

We have strategically-located distribution capabilities, which enables us to better align our operations with our customers and our channels, ensure our products are available to meet consumer demand, reduce transportation costs and have greater control over the timing and coordination of new product launches.

We actively manage transportation of our products using our fleet (owned and leased) of approximately 6,300 vehicles in the U.S.

and 1,700 in Mexico, as well as third party logistics providers.

With our Keurig.com website, we have a leading e-commerce platform which provides us insights and expertise in the e-commerce channel.

We have been able to translate those insights and experience into our cold business as the number of fulfillment options that are better suited economically for beverages has evolved, leading to growth in the e-commerce channel.

High-performing team driving better, faster decisions, enabled by technology.

We believe that our team and the culture we have created, through the integration of two companies into one, are truly our competitive advantage.

When we approach our customers, we do so as one fully combined modern beverage company.

This go-to market system is strengthened through sophisticated data and technology.

This includes the only point-of-sale consumption data available in the consumer packaged goods industry through our panel of connected brewers, predictive ordering powered by artificial intelligence for our frontline sales team within our DSD system, and best in class revenue growth management tools.

Bold ESG commitments and collaborations making positive impacts.

ESG is embedded in the way that we do business at KDP, ensuring that we make a positive impact in our environment and communities.

Highly efficient business model, driving significant cash flow and investments.

Our highly efficient business model, both from a cost and a cash perspective, gives us optionality to invest internally and look outside for acquisitions or other options to continue to drive growth and create value.

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We have a portfolio of brands with the ability to satisfy every consumer need, anytime and anywhere – hot or cold, at home or on-the-go, at work or at play.

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The following presents highlights of our major owned and licensed brands as of December 31, 2021:

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Canada Dry #1 ginger ale in the U.S.

A&W #1 root beer in the U.S.

Squirt #1 grapefruit CSD in the U.S.

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Sunkist soda #1 orange flavored CSD in the U.S.

Crush #3 orange flavored CSD in the U.S.

7UP #2 lemon-lime CSD in the U.S.

A&W #1 root beer in the U.S.

Schweppes #2 ginger ale in the U.S.

7UP #2 lemon-lime CSD in the U.S.

Crush #3 orange flavored CSD in the U.S.

NCBs Snapple #2 premium shelf stable ready-to-drink tea in the U.S.

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Core A rapidly growing water brand in the U.S.

Single Serve Coffee Green Mountain #2 K-cup pod in the U.S.

The Original Donut Shop #5 K-cup pod in the U.S.

Van Houtte #2 K-cup pod in Canada

Single Serve Coffee Green Mountain #2 K-cup pod brand in the U.S.

The Original Donut Shop #5 K-cup pod brand in the U.S.

McCafé #6 K-cup pod brand in the U.S.

Van Houtte #2 K-cup pod brand in Canada

Single Serve Brewers Keurig #1 single serve brewer in the U.S.

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Our Keurig single serve brewers are aimed at changing the way consumers prepare and enjoy coffee and other beverages both at home and away from home in places such as offices, restaurants, cafeterias, convenience stores and hotels.

We create value by developing and selling our Keurig single serve brewers and by expanding Keurig brewer household adoption, which increased nearly 10% for the year ended December 31, 2020 to approximately 33 million U.S.

We create value by developing and selling our Keurig single serve brewers and by expanding Keurig brewer household adoption, which increased approximately 9% for the year ended December 31, 2021 to nearly 36 million U.S.

households, based on third party survey data and our own estimates.

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based on IRi.

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PRODUCT INNOVATION

PRODUCT AND PACKAGE INNOVATION

We are focused on a robust innovation pipeline within our portfolio of products to build household penetration of our business.

We regularly launch new brewers with new features and benefits, technological advances, and changes in aesthetics and sustainability to provide a variety of options to suit individual consumer preferences.

We regularly launch new brewers with new features and benefits, technological advances, sustainable attributes, and changes in aesthetics to provide a variety of options to suit individual consumer preferences.

We also continuously innovate and renovate our portfolio of K-cup pods, CSDs and NCBs to provide an expansive array of flavors.

During 2020, we introduced the K-Supreme and the K-Supreme Plus brewers, which include multi-stream technology to provide the consumer better extraction compared to previous models, while adding new controls for temperature and strength.

We also launched a limited-edition brewer designed by Jonathan Adler.

We achieved our longstanding commitment to make all of the K-Cup pods that we produce recyclable, as the pods are now made from polypropylene #5 plastic.

We launched a line of K-Cup pods to provide one-step lattes with our Original Donut Shop Vanilla and Mocha lattes.

Within our CSD portfolio, we launched Dr Pepper & Cream Soda, which was the best-selling CSD innovation in 2020 according to IRi, and Canada Dry Bold.

Within our NCB portfolio, we launched Zambia Bing Cherry and Blackberry Lemonade, two new flavors for Bai, and Snapple’s Mystery Flavor as a limited time offer.

We have also begun the rollout of new PET bottles made from 100% recycled PET for Snapple and Core.

During 2021, we launched our Keurig Supreme Plus Smart brewer, which incorporates our new BrewID technology platform.

BrewID creates value through consumer connectivity in our brewers by recognizing the specific K-cup pod brand and roast to automatically customize brew settings, tracking K-cup pod usage to enable automatic reordering, and recommending future purchases and trials based on consumer preferences.

Additionally, the Keurig mobile app provides enhanced control over temperature, strength, and beverage size.

We also designed and launched easy-peel K-Cup pod lids with a tab to make it simpler to recycle.

Within our NCB portfolio, in 2021, we completed the transition of our Core brand and select packaging sizes of our Snapple and Aguafiel brands to bottles made with 100% rPET.

We expanded our Bai portfolio to include Bai Boost, a line of beverages with plant-based energy providing 110 mg of caffeine, in three flavors:

Buka Black Raspberry, Togo Tangerine Citrus, and Watamu Strawberry Watermelon.

We also launched the Mott’s Mighty collection in both the juice and applesauce categories.

Mott’s Mighty juices are made with vitamins A, C and E to help support a healthy immune system and 50% less sugar, and Mott’s Mighty applesauces are made with no added sugars and added fiber to help support healthy digestive systems.

In our CSD portfolio, we expanded our Zero Sugar collection to include 7UP, Sunkist and A&W.

OUR BUSINESS OPERATIONS

As of December 31, 2020, our operating structure consists of four operating segments:

As of December 31, 2021, our operating structure consists of four reportable segments:

Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages.

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Our Coffee Systems segment is primarily a producer of innovative single serve brewers and specialty coffee in the U.S.

Our Coffee Systems segment manufactures over 75% of the pods in the single-serve K-Cup pod format in the U.S.

Our Coffee Systems segment manufactures over 80% of the pods in the single-serve K-Cup pod format in the U.S., on a dollar share basis.

We manufacture and sell 100% of the K-Cup pods of the following brands to retailers, away from home channel participants and end-use consumers:

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We manufacture and sell K-Cup pods for the following brands to our partners, who in turn sell them to retailers:

Starbucks, Smuckers, Peet's, Dunkin' Donuts, Folgers, Newman’s Own Organics, Caribou Coffee, Eight O’Clock, Maxwell House, and Tim Hortons, as well as private label arrangements.

Starbucks, Dunkin', Folgers, Peet's, Newman’s Own Organics, Caribou Coffee, Eight O’Clock, Maxwell House, and Tim Hortons, as well as private label arrangements.

Generally, we are able to sell these brands to our away from home channel participants and end-use consumers.

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Our Coffee Systems segment manufactures its K-Cup pods in facilities in North America that include specialty designed proprietary high-speed packaging lines using freshly roasted and ground coffee as well as tea, cocoa and other products.

We offer high-quality coffee including certified single-origin, organic, flavored, limited edition and proprietary blends.

We offer high-quality, responsibly sourced coffee including certified single-origin, organic, flavored, limited edition and proprietary blends.

We carefully select our coffee beans and appropriately roast the coffees to optimize their taste and flavor differences.

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The loss of one of those customers could have a material adverse effect on the Coffee Systems segment.

Beverage Concentrates

Our Beverage Concentrates segment is principally a brand ownership business where we manufacture and sell beverage concentrates and syrups in the U.S.

Most of the brands in this segment are CSD brands.

Key brands include Dr Pepper, Canada Dry, Schweppes, Crush, Sunkist, A&W, SunDrop, 7UP, Squirt, Big Red, Hawaiian Punch and RC Cola.

Beverage concentrates are shipped to third party bottlers, as well as to our own manufacturing systems, who combine them with carbonation, water, sweeteners and other ingredients, package the combined product in aluminum cans, PET bottles, and glass bottles, and sell them as a packaged beverage to retailers and, ultimately, the end consumer.

Beverage concentrates are also manufactured into syrup, which is shipped to fountain customers, such as fast food restaurants, who mix the syrup with water and carbonation to create a finished beverage at the point of sale to consumers.

Dr Pepper represents most of our fountain channel volume.

Our Beverage Concentrates brands are sold by our bottlers through all major retail channels.

As our Beverage Concentrates business is reliant upon a small number of customers, the loss of any of our bottlers in this segment could have a material adverse effect on the segment.

Packaged Beverages

Our Packaged Beverages segment is principally a brand ownership, manufacturing and distribution business.

In this segment, we primarily manufacture and distribute packaged beverages of our brands.

Our Packaged Beverages segment is a manufacturing and distribution business of both NCBs and CSDs, as well as a brand ownership business, focused primarily on NCB brands.

In this segment, we primarily manufacture and distribute packaged beverages of our brands to retailers and, ultimately, the end consumer.

Additionally, in order to maximize the size and scale of our manufacturing and distribution operations, we also distribute packaged beverages for our partner brands and manufacture packaged beverages for other third parties in the U.S.

The larger NCB brands in this segment include Snapple, Mott's, Bai, Clamato, Hawaiian Punch, Core, Yoo-Hoo, ReaLemon, evian, Vita Coco and Mr and Mrs T mixers.

The larger CSD brands in this segment include Dr Pepper, Canada Dry, A&W, 7UP, Sunkist, Squirt, Big Red, RC Cola, and Vernors.

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The larger NCB brands in this segment include Snapple, Mott's, Bai, Hawaiian Punch, Clamato, Yoo-Hoo, Core, ReaLemon, evian, Vita Coco and Mr and Mrs T mixers.

The majority of our Packaged Beverages net sales come from the manufacturing and distribution of our own brands and the contract manufacturing of certain private label and emerging brand beverages.

We also recognize net sales in this segment from the distribution of our partner brands such as evian, Vita Coco, Peet's RTD coffee, A Shoc energy drinks and Runa energy drinks.

We provide a route-to-market for third party brand owners seeking effective distribution for their new and emerging brands.

We also recognize net sales in this segment from the distribution of our partner brands such as evian, Vita Coco, Polar Beverages seltzer water, A Shoc energy drinks, Peet's RTD coffee and Runa energy drinks.

We provide a route-to-market for our partner brands seeking effective distribution for their new and emerging brands.

These brands give us exposure in certain markets to fast growing segments of the beverage industry with minimal capital investment.

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The loss of this customer could have a material adverse effect on the Packaged Beverages segment.

Beverage Concentrates

Our Beverage Concentrates segment is principally a brand ownership business where we manufacture and sell beverage concentrates in the U.S.

Most of the brands in this segment are CSD brands.

Key brands include Dr Pepper, Canada Dry, Schweppes, Crush, Sunkist, A&W, 7UP, Sun Drop, Squirt, Big Red, Hawaiian Punch and RC Cola.

Almost all of our beverage concentrates are currently manufactured at our plant in St.

Louis, Missouri.

We are expanding our manufacturing capabilities to include a concentrate manufacturing facility in Ireland in 2021.

Beverage concentrates are shipped to third party bottlers, as well as to our own manufacturing systems, who combine them with carbonation, water, sweeteners and other ingredients, package the combined product in aluminum cans, PET containers and glass bottles, and sell them as a finished beverage to retailers.

Dr Pepper represents most of our fountain channel volume.

Our Beverage Concentrates brands are sold by our bottlers through all major retail channels.

As our Beverage Concentrates business is reliant upon a small number of customers, the loss of any of our bottlers in this segment could have a material adverse effect on the segment.

Latin America Beverages

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This segment participates mainly in the carbonated mineral water, flavored CSD, bottled water and vegetable juice categories.

The largest brands include Peñafiel, Clamato, Squirt, Mott's, Dr Pepper, Aguafiel and Crush.

The largest brands include Peñafiel, Clamato, Squirt, Mott's, Dr Pepper, Crush and Aguafiel.

In 2021, Walmart was the Latin America Beverages segment's largest customer.

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Certain NCB brands, such as Snapple, Bai, Core, Yoo-Hoo, Mistic and Nantucket Nectars are licensed for distribution in various territories to bottlers and a number of smaller distributors such as beer wholesalers, wine and spirit distributors, independent distributors and retail brokers.

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We have differentiated ourselves and the Keurig brand through our ability to create and sustain partnerships with other leading coffee, tea and beverage brand companies through multi-year licensing and manufacturing agreements that best suit each brand's interests and strengths.

Typically, we manufacture pods on behalf of our partners, who in turn sell them to retailers.

As of December 31, 2020, our partner brands included, but were not limited to, Starbucks, Kirkland Signature, Dunkin' Donuts, Great Value, Peet's, Caribou Coffee, Eight O’Clock, Folgers, Newman’s Own Organics, McCafé, Maxwell House, Kroger, Krispy Kreme, Celestial Seasonings, Lipton, Tazo, Panera, and Tim Hortons.

As of December 31, 2021, our partner brands included, but were not limited to, Starbucks, Kirkland Signature, Dunkin', Great Value, Peet's, Caribou Coffee, Eight O’Clock, Folgers, Newman’s Own Organics, McCafé, Maxwell House, Kroger, Krispy Kreme, Celestial Seasonings, Lipton, Tazo, Panera, and Tim Hortons.

Away from Home Channel Participants

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The Kraft Heinz Company Packaged Coffee

NCBs (Water), Packaged Coffee, Single-serve brewers

NCBs, Packaged Coffee, Single-serve brewers

PepsiCo CSDs, NCBs, Coffee

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Our Raw Materials

The principal raw materials we use in our business, which we commonly refer to as ingredients and materials, approximate 58% of our cost of sales and include green coffee, PET bottles and caps, including both virgin and recycled PET, aluminum cans and ends, sweeteners, paper products, K-Cup pod packaging materials, fruit, glass bottles and enclosures, juices, teas, water, and other ingredients.

The principal raw materials we use in our business, which we commonly refer to as ingredients and materials, approximate 59% of our cost of sales and include green coffee, PET bottles and caps, including both virgin and rPET, aluminum cans and ends, sweeteners, paper products, K-Cup pod packaging materials, fruit, glass bottles and enclosures, juices, teas, water, and other ingredients.

We also use post-consumer recycled materials in the manufacturing of our single serve brewers.

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Under many of our supply arrangements for these raw materials, the price we pay fluctuates along with certain changes in underlying commodities costs, such as aluminum in the case of cans and ends, natural gas in the case of glass bottles, resin in the case of pods, PET bottles and caps, corn in the case of sweeteners and pulp in the case of paperboard packaging.

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Green coffee.

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We also develop and pursue direct relationships with farms, estates, cooperatives, and cooperative groups in order to support our broader traceability and sustainable supply chain initiatives.

During 2020, 82% of our purchases of green coffee were responsibly sourced through third party sourcing programs, and by the end of 2020, all coffee contracted to be received going forward is 100% responsibly sourced.

These purchases include a corresponding premium to recognize the effort required to achieve the sustainability standard and are traceable back to the exporter mill, farm or group of farms.

We believe that traceability helps us manage social and environmental risk, secure long-term supplies of high-quality coffee and identify opportunities for supply chain investments.

During 2021, nearly 100% of our delivered purchases of green coffee were responsibly sourced through third party sourcing programs, with the remaining purchased as conventional coffee due to increased demand and COVID-19-related impacts.

Responsibly sourced means the coffee we purchase is grown and sold in adherence to a credible sourcing program that aligns with our Supplier Code of Conduct.

Energy costs.

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In some instances, we make investments in these companies, which may include a path to acquire the company after a period of time based on a pre-determined formula.

As of December 31, 2020, our portfolio of partner brands included, but was not limited to, Vita Coco coconut water, evian water, A Shoc energy drinks, Peet's RTD Coffee, Runa energy drinks, Polar Beverages seltzer water, and Don't Quit nutrition shakes.

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As of December 31, 2021, our portfolio of partner brands included, but was not limited to, Vita Coco coconut water, evian water, Polar Beverages seltzer water, A Shoc energy drinks, Peet's RTD Coffee, Runa energy drinks, and Don't Quit nutrition shakes.

OUR HUMAN CAPITAL RESOURCES

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In Canada, we have approximately 1,500 employees, with approximately 500 covered by union collective bargaining agreements.

These collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years.

We also have a small number of employees in Europe and Asia.

Our collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years.

We generally believe that these agreements can be renegotiated on terms satisfactory to us as they expire and that we have good relationships with our employees and their representative organizations.

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We generally review and consider median market pay levels when assessing total compensation, but pay decisions are based on a more comprehensive set of considerations such as company performance, individual performance, experience, and internal equity.

We continually monitor key talent metrics including employee engagement and employee turnover.

Due to the ongoing impacts of COVID-19 on the global economy and workforce, we have been experiencing higher employee turnover than in the past, particularly in our frontline workforce.

Our employee benefits programs strive to deliver competitive benefits that are effective in attracting and retaining talent, that create a culture of well-being and inclusiveness, and that meet the diverse needs of our employees.

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Diversity and Inclusion

With our DPS Merger integration complete, in early 2020, our focus turned to accelerating our work in the area of diversity and inclusion, and we made significant progress, despite the pandemic.

In 2020, we began to focus on accelerating our work in the area of diversity and inclusion, and we made significant progress, despite the pandemic.

We approached this effort as we approach critical business priorities, using our playbook from integration and transformation initiatives.

To date, we have:

• Defined our aspiration and strategy for diversity and inclusion;

• Established executive-level governance, including participation by our Chairman and CEO, as well as a Diversity and Inclusion leadership team, comprised of committed leaders from across KDP to help set priorities and lead two-way dialogue throughout the organization;

• Launched eight Employee Resource Groups, which are each sponsored by a member of the executive leadership team and are open to all employees;

• Expanded our participation in the Organisation for Economic Co-operation and Development's Business for Inclusive Growth global coalition, joining the Inclusive Workplaces project team in addition to the Human Rights and Inclusive Value Chain teams;

• Partnered with professional external resources to provide guidance on best practices to ensure that we are capturing a broad range of employee perspectives.

We will report our progress with expanded disclosures in our Corporate Responsibility Report, which is expected to be published in June 2021.

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As part of this process, we established executive-level governance, including participation by our Chairman and CEO, as well as a Diversity and Inclusion leadership team, comprised of committed leaders from across KDP to help set priorities and lead two-way dialogue throughout the organization, and launched eight Employee Resource Groups, among other initiatives.

Based on our work thus far, in 2021 we set two new goals for KDP in the area of diversity and inclusion.

Our first goal is to increase female representation in positions at and above the “director” management level, also known as “Director +”, by 25% by 2025;

in 2020, our baseline year, women represented 26% of our Director + workforce.

Our second goal is to increase people of color representation in our Director + workforce by 25% by 2025;

in 2020, people of color represented 17% of our Director + workforce.

During 2021, we rolled out an extensive diversity and inclusion training program across all employees except for frontline hourly employees, which provides weekly engagement in an online content platform and regular opportunities to apply, practice and reinforce the learnings from the program over the course of several months.

In 2022, the concepts from the program will be shared through trainings and meetings designed to embed these concepts in the culture of our hourly frontline employees.

Global Employee Snapshot as of December 31, 2021

Employee Snapshot as of December 31, 2021

Employee Health and Safety

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have also passed various taxes on the distribution of sugar-sweetened and diet beverages, which are at different stages of enactment.

In Canada and Mexico, the manufacture, distribution, marketing and sale of many of our products are also subject to similar statutes and regulations.

Various states, provinces and other authorities require deposits, eco-taxes or fees on certain products or packaging.

In Canada, Mexico and the European Union, the manufacturing, distribution, marketing and sale of many of our products are also subject to similar statutes and regulations.

Various states, provinces and other authorities require deposits, eco-taxes, extended producer responsibility laws, or fees on certain products or packaging.

Similar legislation or regulations may be proposed in the future at local, state and federal levels, both in the U.S.

and elsewhere.

In Mexico, the government has encouraged the soft drink industry to comply voluntarily with collection and recycling programs for plastic materials, and we are in compliance with these programs.

In Mexico, the government has encouraged the beverage industry to comply voluntarily with collection and recycling programs for plastic materials, and we are in compliance with these programs.

CORPORATE RESPONSIBILITY

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We are committed to transparency and disclosure of corporate responsibility strategies, programs, progress and governance.

In 2021, Newsweek named us to their 2022 America’s Most Responsible Companies list, and we were the top beverage company in their rankings.

Additionally, in 2021, we were awarded the 2021 Reuters Responsible Business award in the Social and Human Capital category.

Please refer to our Corporate Responsibility Report, available on our website at www.keurigdrpepper.com.

Select highlights from the report are discussed below.

As a result of our sustainability efforts, in 2020, Newsweek named us one of America's most responsible companies.

Newsweek ranked us as the top beverage company, as well as giving us the top environmental score for all consumer goods companies.

Sustainable Packaging

Product Design and Circular Economy

Sustainable packaging is a top priority for us, and we continue to innovate for circular solutions across our portfolio.

We have set a goal to make 100% of our packaging recyclable or compostable by 2025.

We also want to further contribute to the circular economy with our commitment to use 30% recycled material across our packaging portfolio by 2025.

In the fourth quarter of 2020, we began transitioning our Snapple and Core brands to bottles made with 100% post-consumer recycled PET.

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Already, the majority of our bottles are recyclable and we are ensuring that our packaging materials are optimally designed to be the highest value possible for recycled plastic buyers, which will increasingly include us.

To reduce contamination in the recycling stream, we are replacing dark-colored plastics with clear plastic, making our bottles, labels and caps compatible with widely-used bottle recycling processes, and supporting consumer education campaigns on how to "recycle right".

We have also partnered with the American Beverage Association and other beverage industry leaders on the Every Bottle Back initiative , a breakthrough effort to reduce our industry’s use of new plastic and increase the recycling and reuse of our PET bottles.

The initiative includes a $100 million industry-backed fund to invest in improved sorting, processing and collection efforts that would increase the quality and availability of recycled plastic across the country.

In December 2020, we achieved our goal of making all K-Cup pods sold in the U.S.

recyclable by the end of 2020, having converted all K-Cup pods sold in Canada to a recyclable format in 2018.

The new pods are made of polypropylene #5 plastic, a material that is accepted curbside for recycling by many communities, and we have conducted extensive testing with municipal recycling facilities to validate that they can be effectively recycled.

We continue to engage with municipalities and recycling facilities to advance the quantity and quality of recycled polypropylene and have committed $10 million toward the advancement of polypropylene recycling in the U.S.

through the Polypropylene Recycling Coalition, an effort led by The Recycling Partnership and funded by leading brands, recyclers, converters and producers of polypropylene.

We have set a goal to make 100% of our packaging from recyclable or compostable material by 2025.

We also want to further contribute to the circular economy with our commitment to use an average of 30% recycled material across our packaging portfolio by 2025.

In 2021, we completed the transition of our Core brand and select packaging sizes of our Snapple and Aguafiel brands to bottles made with 100% rPET, and we are in the process of transitioning additional products to rPET.

We also designed and launched easy-peel K-Cup pod lids with a tab to make it simpler to recycle.

Already, the majority of our packaging is made from materials that can be recycled, and we are ensuring that our packaging materials are optimally designed to be among the highest value possible for recycled plastic buyers, which will increasingly include us.

To reduce contamination in the recycling stream, we are continuing to replace dark-colored PET with PET that is preferred for recycling systems, making our bottles, labels and caps compatible with widely-used bottle recycling processes, and supporting consumer education campaigns on how to "recycle right".

We have also partnered with the American Beverage Association and other beverage industry leaders on the Every Bottle Back initiative , a breakthrough effort to help facilitate our objectives to reduce our industry’s use of new plastic and increase the recycling and reuse of our PET bottles.

The initiative includes a $100 million industry-backed fund to invest in improved sorting, processing and collection efforts to directly support the increase in quality and availability of recycled plastic across the country.

In 2020, we achieved our goal of making all of our K-Cup pods sold in the U.S.

and Canada from recyclable materials.

The K-Cup pods are made of polypropylene #5 plastic, and we continue to engage with municipalities and recycling facilities to advance the quantity and quality of recycled polypropylene.

To that end, KDP is a cofounder and the largest funder of the Polypropylene Recycling Coalition, an effort led by The Recycling Partnership to advance polypropylene recycling in the U.S.

KDP invested $10 million in the coalition and is joined by leading brands, recyclers, retailers, converters and producers of polypropylene, all of whom have also provided funding to the coalition.

Improving packaging solutions for product quality, consumer use, recoverability and reuse requires collaboration of all parties along the value chain.

Using our strength in forming partnerships, we collaborate closely with a number of stakeholders, including industry groups, non-governmental organizations and investment firms, to move our commitments beyond independent ambitions to collective action.

Climate Change and Resilience

Sustainable Facilities

As we invest in infrastructure, we have focused on sustainably built facilities.

Our new K-cup pod manufacturing site in Spartanburg, South Carolina, is the largest industrial manufacturing facility certified under the LEEDv4 BD+C rating system in North America, and it includes a separation room that moves all waste from production to be recycled, reused, repurposed or converted to energy.

Additionally, our new high-speed cold beverage production facility in Allentown, Pennsylvania, incorporates sustainability focused design, including a central room with magnetic bearing chillers that provide cooling for air conditioning as well as chilled water for production processes, a highly energy-efficient approach.

Our new Frisco, Texas headquarters location is LEED v4 ID+C Gold certified, and our Newbridge, Ireland manufacturing facility is focused on renewable energy sources, with 100% of its energy provided by wind in 2021.

Climate Change

KDP is working to address climate change and build the resilience of our business and supply chain.

In 2019, we laid the groundwork for important new climate targets to reduce greenhouse gas emissions from a 2018 baseline.

This foundation included a corporate policy, governance structures and greater transparency, including reporting to CDP Climate.

In 2019, we laid the groundwork for important climate targets to reduce greenhouse gas emissions from a 2018 baseline.

This foundation included a corporate policy, governance structures and greater transparency.

Our targets have been approved by the Science Based Targets initiative and are in line with the reductions that are required to meet the Paris Agreement on climate change goal of keeping global warming well below 2 degrees Celsius.

Our new climate goals provide a clear path for us to reduce our share of greenhouse gas emissions through continuation of existing efforts and the development of new focus areas, such as packaging improvements and value chain engagement.

Our climate goals provide a path for us to reduce our share of greenhouse gas emissions through continuation of existing efforts and the development of new focus areas, such as packaging improvements and value chain engagement.

We report non-financial data annually on our climate efforts to CDP Climate.

Water Stewardship

KDP conducts periodic water risk assessments of its operations and supply chain.

Water is a precious natural resource that is essential to our business.

As water is the primary ingredient in most of our beverages, we have a particular responsibility to be good stewards of water use in our operations, our communities and throughout our supply chain.

Our water stewardship goals are focused on safeguarding water resources and building healthy communities resilient to climate change.

We conduct periodic water risk assessments of our operations and supply chain.

To refine our understanding of challenges for our high water-risk sites, we assess each site in the context of the surrounding watershed, the local water issues and other local entities’ interest and perspective on those issues.

We have public goals and programs to both increase operational efficiency and to replenish water through conservation and restoration projects with conservation organizations in communities where we operate that have high water risk.

We report annually on our water stewardship efforts to CDP Water.

In 2020, KDP joined a water stewardship effort to increase water supply reliability for Arizona, Nevada, and California through a system conservation project with the Colorado River Indian Tribes.

Additionally, we were a founding company member in the first-of-its kind beverage industry collaboration project to improve water quantity and quality in Jalisco, Mexico through activities such as planting native vegetation and restoring water infrastructure in the area.

We report non-financial data annually on our water stewardship efforts to CDP Water.

We engage our suppliers, farmers and business partners to ensure sustainable practices are used across our supply chain.

Having achieved our previous goal of responsibly sourcing 100% of our coffee by 2020, we have now extended that goal to include cocoa and will look to add additional priority crops over time.

We continue working towards our goal of 100% responsibly sourced brewers.

From 2021, we are also building out new programs focused on supporting regenerative agriculture in our coffee, corn and apple supply chains, as well as advancing inclusion and improving livelihoods for the people in KDP’s upstream supply chain.

Our participation in the Business for Inclusive Growth (B4IG) coalition continues to inform our efforts around an inclusive sourcing approach for KDP.

Health and Well-Being

We are committed to providing a balanced portfolio of beverage options and the resources consumers need to make informed choices for positive nutrition.

We are committed to providing a balanced portfolio of beverage options and the resources consumers need to make informed choices for positive hydration, including an expansion of our product offerings that deliver nutritional and functional benefits, as well as reducing sugar and calories.

We have dramatically transformed our portfolio over the past decade, offering a low- or no-calorie option for virtually every full-calorie brand in our portfolio, and we have also added smaller portion-size offerings.

We are collaborating with Partnership for a Healthier America, which is a national nonprofit working to transform the food landscape in pursuit of health equity in the U.S.

Our approach to product development and marketing is rooted in what our diverse universe of consumers want from their beverage occasion.

We are committed to advertising our products in a responsible and truthful manner, aligned with the Children’s Food and Beverage Advertising Initiative.

In 2014, we joined industry peers to form the Balance Calories Initiative, managed by the American Beverage Association and in partnership with the Alliance for a Healthier Generation.

The Balance Calories Initiative is the single-largest voluntary effort by an industry to help fight obesity, and its target is to reduce beverage calories consumed per person nationally by 20% by 2025.

We also know that health equality is about ensuring opportunities for physical activity.

Since 2011, we’ve provided more than 14 million kids and their families in underserved areas with play opportunities through our Let’s Play initiative, building or improving play spaces and supplying sports equipment to schools and youth groups across the country.

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We are committed to advertising our products in a responsible and truthful manner, aligned with the Children’s Food and Beverage Advertising Initiative, and our beverage containers include voluntary product transparency with front-of-pack calorie labeling.

We continue to work on industry solutions through our work with the Balance Calories Initiative, managed by the American Beverage Association.

The Balance Calories Initiative is the single-largest voluntary effort by an industry to help fight obesity.

OTHER INFORMATION

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Information on our website is not incorporated by reference in this document.

We make available, free of charge through this website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Exchange Act, as soon as reasonably practicable after such material is electronically filed, or furnished to, the SEC.

MARKET AND INDUSTRY DATA

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What changed 10-K

Item 1. Business