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Item 1. Business

2024-02-22 compared with 2023-02-23 · 146 added, 216 removed, 129 unchanged (74% of the section changed)

Keurig Dr Pepper Inc.

is a leading beverage company in North America, with a diverse portfolio of flavored CSDs, NCBs, including water (enhanced and flavored), RTD tea and coffee, juice, juice drinks, mixers and specialty coffee, and is a leading producer of innovative single serve brewing systems.

With a wide range of hot and cold beverages that meet virtually any consumer need, KDP key brands include Keurig, Dr Pepper, Canada Dry, Snapple, Mott's, Clamato, Core, Green Mountain Coffee Roasters and The Original Donut Shop.

KDP has some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers.

KDP offers more than 125 owned, licensed and partner brands, including the top ten best-selling coffee brands and Dr Pepper as a leading flavored CSD in the U.S.

according to IRi, available nearly everywhere people shop and consume beverages.

KDP was created through the combination of the business operations of Keurig, a leading producer of innovative single serve brewing systems and specialty coffee in the U.S.

and Canada, and DPS, a company built over time through a series of strategic acquisitions that brought together iconic beverage brands in North America such as Dr Pepper, Snapple, 7UP, Canada Dry, Mott's, A&W and the Peñafiel business in Mexico.

The DPS Merger was consummated on July 9, 2018, at which time DPS changed its name to Keurig Dr Pepper Inc.

and began trading on the NYSE under the symbol "KDP".

is a leading beverage company in North America that manufactures, markets, distributes and sells hot and cold beverages and single serve brewing systems.

KDP has a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Green Mountain Coffee Roasters, Snapple, Mott's, The Original Donut Shop, Clamato, and Core Hydration, as well as the Keurig brewing system.

We have some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers.

We offer more than 125 owned, licensed, and partner brands, available nearly everywhere people shop and consume beverages through our sales and distribution network.

KDP was created on July 9, 2018, through the combination of the business operations of Keurig, a leading producer of innovative single serve brewing systems and specialty coffee in the U.S.

and Canada, and DPS, a company built over time through a series of strategic acquisitions that brought together iconic beverage brands in North America.

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

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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.

We own a diverse portfolio of well-known beverage brands.

Many of our brands enjoy high levels of consumer awareness, preference, and loyalty rooted in their rich heritage.

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.

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.

We have a robust innovation program, which is designed to meet consumers' changing flavor and beverage preferences and to grow the number of households using our single serve brewers.

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

We drive growth in our business through investments in innovation, renovation, and marketing to support our portfolio of owned brands and partnerships with other leading beverage brands.

We have a robust innovation program, which is designed to meet consumers' changing flavor and beverage preferences and to grow our share of beverage occasions.

We have cultivated relationships with leading beverage brands to create long-term partnerships that enable us and our partners to benefit equitably in future value creation, and where appropriate, we bring these partner brands into our owned portfolio through acquisitions.

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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 have strategically-located distribution capabilities, which enable us to better align our operations with our customers and our sales 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 6,900 vehicles in the U.S.

and 2,000 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.

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

We have been able to translate those insights and experiences to 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, which includes our line 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.

We believe that our team and the culture we have created are a competitive advantage.

When we approach our customers, we do so as a modern beverage company, strengthened through our use of data and technology.

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.

We have worked diligently to embed conscious and responsible business practices into the foundation of our company.

Our holistic ESG strategy is positioned to drive tangible and scalable solutions in service of doing more and better for our people, our environment and our 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.

PRODUCTS AND DISTRIBUTION

We are a leading integrated brand owner, manufacturer, and distributor of non-alcoholic beverages in the U.S., Canada, Mexico and the Caribbean.

Our highly efficient business model, both from a cost and a cash perspective, gives us optionality to invest internally and pursue investments, partnerships, acquisitions, or other opportunities to continue to drive growth and create value.

OUR PRODUCTS AND OPERATING STRUCTURE

We are a leading integrated brand owner, manufacturer, and distributor of beverages in the U.S., Canada, Mexico and the Caribbean.

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.

The following presents highlights of our major owned and licensed brands as of December 31, 2022:

Category Major Brands North America Market Position

CSDs Dr Pepper #1 in its flavor category and #2 overall flavored CSD in the U.S.

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.

and a leading grapefruit CSD in Mexico

Peñafiel #1 carbonated mineral water in Mexico

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

Hawaiian Punch A leading branded shelf-stable fruit punch in the U.S.

Mott's #1 branded multi-serve apple juice and apple sauce in the U.S.

Clamato A leading spicy tomato juice in the U.S., Canada and Mexico

Bai #3 enhanced water in the U.S.

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

Single Serve Coffee Green Mountain Coffee Roasters #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.

All information regarding our brand market positions in the U.S.

is based on retail market dollars in 2022.

beverage information is from IRi;

brewing system information is from NPD.

In the CSD market in the U.S.

and Canada, we participate primarily in the flavored segment of the CSD category.

In addition to our major brands above, we also own regional and smaller niche brands, such as Big Red, Sun Drop and Vernors.

In the CSD market, we distribute finished beverages and manufacture beverage concentrates and fountain syrups.

Our beverage concentrates, which are highly concentrated proprietary flavors used to make syrup or finished beverages, are used by our own Packaged Beverages segment, as well as sold to third party bottling companies through our Beverage Concentrates segment.

According to IRi, we had a 24.2% share of the U.S.

CSD market in 2022 (measured by retail sales).

We also manufacture fountain syrup that we sell to the foodservice industry directly and indirectly through bottlers or through other third parties.

In the NCB market segment in the U.S., we participate primarily in the premium water category, including enhanced and flavored water, RTD tea, juice, juice drinks, and mixer categories.

In addition to our major brands above, we also sell regional and smaller niche brands, such as Nantucket Nectars.

We manufacture most of our NCBs as RTD beverages and distribute them through our own distribution network and through third parties or direct to our customers' warehouses.

In addition to NCB beverages, we also manufacture Mott's apple sauce as a finished product.

In Mexico and the Caribbean, we participate primarily in the carbonated mineral water, flavored CSDs, bottled water and vegetable juice categories.

In Mexico, we manufacture and sell our brands through both our own manufacturing and distribution operations as well as third party bottlers.

In the Caribbean, we distribute our products solely through third party distributors and bottlers.

We also distribute certain products in other international jurisdictions through various third party bottlers and distributors.

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 grew to nearly 38 million U.S.

households for the year ended December 31, 2022, an increase of approximately 2 million U.S.

households from the prior year, based on third party survey data and our own estimates.

Expansion of Keurig system household adoption enables sales of specialty coffee and a variety of other specialty beverages in K-Cup pods (including hot and iced teas, hot cocoa and other beverages) for use with Keurig brewers.

We also offer traditional whole bean and ground coffee in other package types, including bags, fractional packages and cans.

We, together with our partners, are able to bring consumers high-quality coffee and other beverage experiences from the brands they love, all through the one-touch simplicity and convenience of Keurig brewers.

We currently offer a portfolio of more than 125 owned, licensed, partner and private label brands, including the top ten best-selling coffee brands in the U.S.

based on IRi.

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, 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 2022, we launched our K-Café SMART single-serve coffee, latte and cappuccino maker, which combines our BrewID technology platform with a built-in milk frother to create a full range of hot, iced, and specialty coffee drinks.

The K-Café SMART also connects to our mobile app, which provides more than 80 easy-to-follow coffeehouse drink recipes.

We also launched Keurig iQ, a proprietary database providing insights on K-Cup pod consumption and shopping behaviors that we believe will enhance our consumer experience.

We additionally entered into new partnerships with BLK & Bold Specialty Beverages and Intelligensia Coffee to provide these premium brands in K-cup pod format.

In our NCB portfolio, we launched Snapple Elements, a line of teas and juice drinks in three flavors:

Rain (agave cactus juice drink), Fire (dragon fruit juice drink) and Air (prickly pear and peach white tea).

We acquired the global rights to Atypique in 2022, which provides a range of RTD non-alcoholic cocktails, such as margaritas, gin & tonic and mojitos.

We also invested in Nutrabolt, a global active health and wellness company with a portfolio of brands, including C4 Energy, a RTD performance energy drink;

Tractor, which offers certified organic, non-GMO beverage solutions in the fountain foodservice business;

and Athletic Brewing Company, a leading non-alcoholic craft beer maker.

OUR BUSINESS OPERATIONS

As of December 31, 2022, our operating structure consists of four reportable segments:

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

Operating and Reportable Segments

As of December 31, 2023, our operating structure consists of three operating and reportable segments:

Refreshment Beverages, U.S.

Coffee, and International.

Segment financial data, including financial information about foreign and domestic operations, is included in Note 7 of the Notes to our Consolidated Financial Statements.

Coffee Systems

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 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:

Green Mountain Coffee Roasters, The Original Donut Shop, McCafé, Van Houtte, and REVV.

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

Starbucks, Dunkin', Folgers, Tim Hortons, Peet's, Maxwell House, Eight O’Clock, Newman’s Own Organics, Caribou Coffee, Community Coffee, Intelligensia, and BLK & Bold, 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.

We also have agreements for manufacturing, distributing, and selling K-Cup pods for tea under brands such as Celestial Seasonings, Lipton and Tazo.

Refreshment Beverages

Refreshment Beverages segment is a brand owner, manufacturer, and distributor of liquid refreshment beverages, or LRBs, in the U.S.

In this segment, we manufacture and distribute beverage concentrates, syrups, and finished beverages of our brands to third-party bottlers, distributors, retailers, and, ultimately, the end consumer.

We manufacture beverage concentrates and syrups, which we then sell throughout the U.S.

to third party bottlers or use them in our own manufacturing systems.

Beverage concentrates, which are highly concentrated proprietary flavors, are combined with carbonation, water, sweeteners, and other ingredients, packaged in aluminum cans, PET bottles, and glass bottles, and sold 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.

We manufacture and distribute finished beverages of our own beverage brands.

Additionally, in order to maximize the size and scale of our manufacturing and distribution operations, we also distribute finished beverages for our partner brands and manufacture finished beverages for other third parties, including partners and private labels.

We partner with other brands seeking effective route-to-market capabilities, including national selling and distribution scale.

These brands can also give us exposure in certain markets to fast growing segments of the beverage industry in a capital-efficient manner.

We sell finished beverages through our DSD and our WD systems, both of which include sales to all major retail channels.

Key brands in this segment include Dr Pepper, Canada Dry, Mott’s, Snapple, A&W, 7UP, Sunkist soda, Squirt, Hawaiian Punch, Core Hydration, Bai, C4 Energy, Clamato, Evian, Yoo-Hoo, Big Red, and Vita Coco.

Coffee segment is primarily a brand owner, manufacturer, and distributor of innovative single serve brewers, specialty coffee (including hot and iced varieties), and RTD coffee in the U.S.

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, hotels, restaurants, cafeterias, and convenience stores.

We create value by developing and selling our Keurig single serve brewers and by expanding Keurig brewer household adoption, which enables sales of specialty coffee and a variety of other specialty beverages in K-Cup pods (including hot and iced teas, hot cocoa, and other beverages) for use with Keurig brewers.

We also compete in the broader coffee category through traditional whole bean and ground coffee in other package types, including bags, fractional packages, and cans, as well as RTD coffee beverages.

We manufacture approximately 80% of the pods in the single serve format in the U.S.

on a dollar share basis.

We manufacture and sell 100% of the K-Cup pods of certain brands, including Green Mountain Coffee Roasters, The Original Donut Shop, and McCafé, to retailers, away from home channel participants, and end-use consumers.

We also manufacture K-Cup pods for our partner brands, who in turn sell them to retailers and consumers.

Our partner brands include Starbucks, Dunkin', Folgers, Peet's, Newman’s Own Organics, Caribou Coffee, and Community Coffee, among others.

We also participate in private label manufacturing arrangements.

Generally, we are able to sell these brands to our away from home channel participants and directly to consumers through our website at www.keurig.com.

We also have agreements for manufacturing, distributing, and selling K-Cup pods for tea under brands such as Celestial Seasonings and Bigelow.

We also produce and sell K-Cup pods for cocoa, including through a licensing agreement for the Swiss Miss brand, and hot apple cider, including under our own brand, Mott's.

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.

Coffee segment manufactures K-Cup pods using freshly roasted and ground coffee as well as tea, cocoa, and other products.

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.

We carefully select our coffee beans and roast them to optimize their taste and flavor differences.

We engineer and design most of our single serve brewers and utilize third-party contract manufacturers located in various countries in Asia for brewer appliance manufacturing.

We distribute our brewers using third-party distributors, retail partners and through our website at www.keurig.com.

In 2022, Walmart and Costco were the Coffee Systems segment's largest customers.

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 beverage concentrates and syrups in our manufacturing facilities in St.

Louis, Missouri, and Newbridge, Ireland, and sell them throughout the U.S.

Most of the brands in this segment are CSD brands.

Key brands include Dr Pepper, Canada Dry, Schweppes, Crush, A&W, Sunkist, 7UP, SunDrop, 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.

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 a manufacturing and distribution business of both NCBs and CSDs.

Our Packaged Beverages segment also includes a brand ownership business, primarily focusing on our 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 CSD brands in this segment include Dr Pepper, Canada Dry, A&W, 7UP, Sunkist, Squirt, Big Red, RC Cola, and Vernors.

The larger NCB brands in this segment include Mott's, Snapple, Bai, Clamato, Core, Hawaiian Punch, Yoo-Hoo, evian, ReaLemon, 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, Polar Beverages seltzer water, A Shoc energy drinks, and Peet's RTD coffee.

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.

We sell our Packaged Beverages products through our DSD and our WD systems, both of which include sales to all major retail channels.

In 2022, Walmart was the Packaged Beverages segment's largest customer.

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

Latin America Beverages

Our Latin America Beverages segment is a brand ownership, manufacturing and distribution business, with operations in Mexico representing approximately 90% of the segment's net sales.

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, Crush and Aguafiel.

In 2022, Walmart was the Latin America Beverages segment's largest customer.

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

OUR CUSTOMERS

We distribute our brewers using third-party distributors, retail partners and directly to consumers through our website at www.keurig.com.

International

Our International segment includes:

• Sales in Canada, Mexico, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of the Company's own brands and third-party brands, to third-party bottlers, distributors, and retailers.

Key beverage brands include Peñafiel, Clamato, Squirt, Canada Dry, Dr Pepper, Mott’s, and Crush.

• Sales in Canada from the manufacture and distribution of finished goods relating to the Company's single serve brewers, K-Cup pods, and other coffee products to partners and retailers.

Key K-Cup pod brands include Van Houtte, Tim Hortons, and McCafé, as well as other partner and private label brands.

Product Innovation and New Partnerships

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

We also continuously innovate and renovate our portfolio of K-Cup pods and beverages to provide an expansive array of flavors.

During 2023, we launched our Keurig K-Iced family of brewers, featuring an innovative brew over ice process that allows consumers to brew both hot and iced beverages with a single coffeemaker.

In addition, we expanded our ICED K-Cup pod offerings to include a variety of options that can be brewed over ice and are compatible with all Keurig models.

We launched a limited edition “Start Me Up” iced coffee kit in collaboration with The Rolling Stones, which featured a custom-designed K-Iced brewer and a customized coffee blend.

We launched Dr Pepper Strawberries & Cream and Dr Pepper Strawberries & Cream Zero Sugar.

We also expanded our Core Hydration enhanced water portfolio with Core Hydration+, a nutrient enhanced water with real fruit extracts and essences, in Vibrance (grapefruit), Immunity (lemon), and Calm (cucumber).

In Mexico, we elevated our mineral water portfolio with Peñafiel Soft, which has no calories or sugar.

Finally, we joined forces with Blue Bell Creameries to create Dr Pepper Float ice cream, which provides us a royalty from these sales.

We entered into a new partnership with Philz Coffee to provide two unique coffee blends in K-Cup pod format.

We invested in, and simultaneously entered into a long-term strategic partnership with, La Colombe, which enables us to sell and distribute La Colombe shelf-stable varieties of RTD coffee and to license, manufacture, and distribute La Colombe branded K-Cup pods, both of which began in the fourth quarter of 2023.

We also entered into a long-term agreement with Grupo PiSA to sell, distribute and merchandise Electrolit, a premium hydration beverage, across the U.S, beginning in early 2024.

We primarily serve the following types of customers:

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Retailers purchase finished beverages, K-Cup pods, appliances, and accessories directly from us.

Our portfolio of strong brands, operational scale and experience in the beverage industry has enabled us to maintain strong relationships with major retailers in the U.S., Canada and Mexico.

In 2022, our largest retailer was Walmart, representing approximately 16% of our consolidated net sales.

Our portfolio of strong brands, operational scale and experience in the beverage industry has enabled us to maintain strong relationships with major retailers throughout the U.S., Canada, and Mexico.

Our largest retailer, Walmart, represented approximately 17% of our consolidated net sales in 2023.

Net sales to Walmart are included in all reportable segments.

Bottlers and Distributors

and Canada, we generally grant licenses for CSD brands and packages to bottlers for specific geographic areas that are exclusive and long-term, and they have historically been perpetual in many cases.

These bottlers may be affiliated with Coca-Cola, with PepsiCo, or may be independent.

These agreements prohibit bottlers and distributors from selling the licensed products outside their exclusive territory and selling any imitative products in that territory.

and Canada, we generally grant manufacturing and distribution licenses for our carbonated soft drinks to bottlers for specific geographic areas that are exclusive and long-term, and they have historically been perpetual in many cases.

These bottlers may be affiliated with Coca-Cola or with PepsiCo, or they may be independent.

These agreements prohibit bottlers and distributors from selling the licensed products outside their exclusive territory and from selling any imitative products in that territory.

Generally, we may terminate bottling and distribution agreements only for cause, change in control, or breach of agreements, and the bottler or distributor may terminate without cause upon giving certain specified notice and complying with other applicable conditions.

Fountain agreements for bottlers generally are not exclusive for a territory, but do restrict bottlers from carrying imitative product in the territory.

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.

These bottlers and distributor agreements may also contain provisions for fountain distribution rights, which are not exclusive for a territory, but generally do restrict bottlers from carrying imitative product in the territory.

Certain other brands, such as Snapple, Bai, and Core, 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.

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, 2022, 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, Tim Hortons, Maxwell House, Kroger, Krispy Kreme, Community Coffee, Intelligensia, BLK & Bold, Celestial Seasonings, Lipton, and Tazo.

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

Away from Home Channel Participants

We distribute brewers, accessories and K-Cup pods (owned, licensed, and partner brands) to away from home channel participants, which include restaurants, hotel chains, and office coffee distributors.

We distribute brewers, accessories, and K-Cup pods (owned, licensed, and partner brands) to away from home channel participants, which include office coffee distributors and hotel chains.

End-use Consumers

We have a robust e-commerce platform at www.keurig.com where end-use consumers can purchase brewers, accessories, K-Cup pods, and other coffee products, such as bagged traditional coffee and cold brew.

OUR COMPETITORS

The beverage industry is highly competitive and continues to evolve in response to changing consumer preferences.

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In our bottling and manufacturing operations, we also compete with a number of smaller bottlers and distributors and a variety of smaller, regional, and private label manufacturers.

The following represents a list of our major competitors:

Competitor Categories

Coca-Cola CSDs, NCBs, RTD Coffee

Smucker Company Packaged Coffee

The Kraft Heinz Company Packaged Coffee

NCBs, Packaged Coffee, Single-serve brewers

PepsiCo CSDs, NCBs, RTD Coffee

Although these companies offer competing brands in categories we participate in, they are also our partners and customers, as they purchase beverage concentrates or K-Cup pods directly from us.

OUR MATERIAL RESOURCES

Our Raw Materials

The principal raw materials we use in our business, which we commonly refer to as ingredients and materials, represent approximately 55% 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, CO 2 , and other ingredients.

Our primary competitors include Coca-Cola, PepsiCo, Starbucks Corporation, The J.M.

Smucker Company, The Kraft Heinz Company, and Nestlé S.A.

Although these companies offer competing brands in categories we participate in, many are also our partners or customers, as they purchase beverage concentrates or K-Cup pods directly from us.

MATERIAL RESOURCES

Raw Materials

The principal raw materials we use in our business, which we commonly refer to as ingredients and materials, represent approximately 55% of our cost of sales and include green coffee, water, aluminum cans and ends, PET bottles and caps, including both virgin and rPET, CO 2 , sweeteners, paper products, K-Cup pod packaging materials, fruit, glass bottles and enclosures, cocoa, teas, juices, and other ingredients.

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

The availability, quality, and costs of many of these materials have fluctuated, and may continue to fluctuate, over time.

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

When appropriate, we mitigate the exposure to volatility in the prices of certain commodities used in our production process and transportation to our customers through the use of various commodity derivative contracts or supplier pricing agreements.

The intent of the contracts and agreements is to provide a certain level of predictability in our operating margins and our overall cost structure, while remaining in what we believe to be a competitive cost position.

Ingredients and materials, excluding green coffee .

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.

Green coffee.

We purchase green coffee through outside brokers.

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.

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

We also purchase green coffee through outside brokers.

Energy and Transportation Costs

In addition to ingredients and packaging costs, we are significantly impacted by changes in fuel costs, which can also fluctuate substantially, due to the large truck fleet we operate in our distribution operations and the energy costs consumed in the production process.

The fuel costs associated with our distribution operations are reflected within our SG&A expenses.

In addition to ingredients and packaging costs, we are significantly impacted by changes in fuel costs, which can also fluctuate substantially, due to the large truck fleet we operate in our distribution operations (reflected within SG&A expenses) and the energy costs consumed in the production process (reflected within cost of sales).

We are also significantly impacted by changes in other transportation costs, such as ocean freight and tariffs.

Transportation costs associated with the transportation and import of certain raw materials and finished goods to our manufacturing and distribution facilities are reflected within cost of sales.

Our Intellectual Property

Intellectual Property

Trademarks and Patents

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Although these licenses vary in length and other terms, they generally are long-term, cover the entire U.S.

and/or Canada and generally include an upfront payment to the partner in order to use their trade names to manufacture and/or distribute the K-Cup pods.

For CSDs and NCBs, we license various trademarks from third parties, which generally allow us to manufacture and distribute certain products or brands throughout the U.S.

and/or Canada, and may include royalty payments, upfront payments, or some combination of the two, to the partner in order to use their trade names to manufacture and/or distribute the K-Cup pods.

We license various trademarks from third parties, which generally allow us to manufacture and distribute certain products or brands throughout the U.S.

and/or Canada and Mexico.

For example, we license trademarks for Sunkist soda, Stewart's, Rose's and Margaritaville from third parties.

For example, we license trademarks for Sunkist soda, Rose's, and Margaritaville from third parties.

Although these licenses vary in length and other terms, they generally are long-term, cover the entire U.S.

and/or Canada and Mexico and generally include a royalty payment to the licensor.

For CSDs and NCBs in emerging and fast growing categories where we may not currently have a brand presence, we license various trademarks from third party partners, which generally allow us to manufacture and distribute certain products or brands throughout the U.S., Canada or Mexico.

For beverages in emerging and fast growing categories where we may not currently have a brand presence, we license various trademarks from third party partners, which generally allow us to sell and distribute certain products or brands throughout the U.S., Canada, or Mexico.

These partners view us as a distributor with strong route-to-market resources to grow their brands.

Although these licenses vary in length and other terms, they generally are long-term, cover the entire U.S.

and/or Canada and Mexico, and generally require a payment from the partner if the licensing agreement is terminated.

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, 2022, our portfolio of partner brands included, but was not limited to, evian water, Polar Beverages seltzer water, Vita Coco coconut water, A Shoc energy drinks, and Peet's RTD Coffee.

In December 2022, we also added Nutrabolt’s C4 line of energy drinks to our portfolio, with distribution expected in early 2023.

OUR HUMAN CAPITAL RESOURCES

Although these licenses vary in length and other terms, they generally are long-term and require a payment from the partner if the licensing agreement is terminated.

In some instances, we make investments in these companies, which may include a path to acquire the company.

As of December 31, 2023, our portfolio of partner brands included, but was not limited to, C4 energy drinks, evian water, Vita Coco coconut water, Polar Beverages seltzer water, Accelerator energy drinks, La Colombe shelf-stable RTD coffee, and Peet's RTD coffee.

The beverage market is subject to some seasonal variations.

Our cold beverage sales are generally higher during the warmer months, while hot beverage sales are generally higher during the cooler months.

Overall beverage sales can also be influenced by the timing of holidays and weather fluctuations.

Sales of brewers and related accessories are generally higher during the second half of the year due to the holiday shopping season.

HUMAN CAPITAL RESOURCES

Our Employees

We have nearly 28,000 employees, primarily located in North America.

We have approximately 28,100 employees, primarily located in North America.

In the U.S., we have approximately 21,700 employees, of which approximately 5,000 employees are covered by union collective bargaining agreements.

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In Canada, we have approximately 1,400 employees, with approximately 500 covered by union collective bargaining agreements.

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

We also have approximately 200 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.

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 any representative organizations for our unionized employees.

Our compensation programs are designed to ensure that we attract and retain the right talent.

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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.

Our total package of benefits is designed to support the physical, mental, and financial health of our employees, and we currently provide access to medical, dental, vision, life insurance and retirement benefits, as well as disability benefits, and assistance with major life activities such as adoption, childbirth, and eldercare, among other benefits.

Our total package of benefits is designed to support the physical, mental, and financial health of our employees, and we currently provide access to medical, dental, vision, life insurance, retirement benefits,and disability benefits, as well as assistance with major life activities such as adoption, childbirth, and eldercare, among other benefits.

Together with our employees, we created a set of core values that are a unifying force for our team and are the cornerstone of KDP's culture.

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Diversity and Inclusion

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.

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 our Employee Resource Groups, among other initiatives.

Global Employee Snapshot as of December 31, 2022

Employee Snapshot as of December 31, 2022

SEASONALITY OF OUR BUSINESS

The beverage market is subject to some seasonal variations.

Our cold beverage sales are generally higher during the warmer months, while hot beverage sales are generally higher during the cooler months.

Overall beverage sales can also be influenced by the timing of holidays and weather fluctuations.

Sales of brewers and related accessories are generally higher during the second half of the year due to the holiday shopping season.

Innovative ideas come from a diverse workforce, and KDP is committed to both.

Just as each of our brands brings its own personality to our product portfolio, each KDP employee brings their own unique set of experiences, perspectives, and background to our business.

KDP is embracing those differences to drive rapid change, inspire innovation, and better connect with our customers and consumers.

To focus our efforts on diversity and inclusion at KDP, we have established executive-level governance, including participation by our 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, including in our Employee Resource Groups.

In 2020, we set representation goals for management at or above the Director level, known as Director+.

As of December 31, 2023, our global workforce was approximately 21% female, while our global Director+ workforce was approximately 32%, as compared to our baseline of 26% in 2020.

Approximately 48% of our U.S.

workforce was comprised of people of color, with our U.S.

Director+ workforce comprised of approximately 19% of people of color, as compared to our baseline of 17% in 2020.

GOVERNMENTAL REGULATIONS ON OUR BUSINESS

In the normal course of our business, we are subject to a variety of federal, state, and local laws and regulations in the countries in which we do business.

Regulations apply to many aspects of our business, including our products and their ingredients, manufacturing, safety, labeling, transportation, recycling, advertising and sale.

Regulations in the U.S., as well as jurisdictions including Canada, Mexico, and the European Union, apply to many aspects of our business, including our products and their ingredients, manufacturing, safety, labeling, transportation, packaging, advertising, and sale.

For example, our products and their manufacturing, labeling, marketing and sale in the U.S.

are subject to various aspects of the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Robinson-Patman Act, the Clayton Act, the Sherman Act, the Lanham Act, state consumer protection laws and state warning and labeling laws, such as Proposition 65.

are subject to various aspects of the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Robinson-Patman Act, the Clayton Act, the Sherman Act, the Lanham Act, state consumer protection laws, and state warning and labeling laws, such as the state of California’s Safe Drinking Water and Toxic Enforcement Act of 1986.

Various countries, states, provinces, and other authorities have enacted eco-taxes, extended producer responsibility laws, deposit or reuse/refill mandates, fees on certain products or packaging, restrictions or bans on the use of certain types of packaging, including single-use plastics, and regulations on PFAS, and other chemicals of concern.

Certain cities and municipalities within the U.S.

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

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.

We expect that legislation or regulations like those described above will continue to 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 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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Sustainable packaging is a top priority for us, and we continue to innovate for circular solutions across our portfolio.

We contribute to the circular economy via our public goals to convert our packaging to be recyclable or compostable and to use more post-consumer recycled content across our packaging portfolio, including plastics.

We aim to reduce the use of unnecessary materials and offer packaging that is compatible with recycling, reuse, and composting systems.

We also aim to use more post-consumer recycled content across our packaging portfolio.

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

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Our approach includes a corporate policy, governance structures and 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 climate goals provide a path for us to reduce our share of greenhouse gas emissions from our 2018 baseline through continuation of existing efforts, like improving energy efficiency in our operations, and the development of new focus areas, such as packaging improvements and value chain engagement.

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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 last conducted a water risk assessment of our operations and supply chain in 2021.

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

KDP cross-functional teams collaborate to source materials and inputs that meet our established quality requirements and sustainability goals.

We identify key suppliers, farmers and business partners to encourage sustainable practices across our supply chain.

We are committed to responsibly sourcing coffee, cocoa, and other priority crops, relying on third-party certifications and verification programs to foster social, environmental and economic protections.

We are committed to responsibly sourcing coffee, cocoa, and other priority crops, relying on third-party certification or verification programs to foster social, environmental and economic protections.

We aim to responsibly source manufactured products by prioritizing and engaging key suppliers to implement and maintain effective social and environmental management systems in their own operations.

We continue to build out new programs focused on supporting regenerative agriculture and conservation 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.

We continue to focus on supporting regenerative agriculture and conservation in our supply chains, as well as advancing inclusion and improving livelihoods for the people in KDP’s upstream supply chain.

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 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.

In 2022, we launched our updated KDP Product Facts website, found at www.kdpproductfacts.com, which contains important nutrition, certification, and allergen information to empower consumers to make informed decisions and find products that meet their needs.

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

Over the past few years, we have expanded our product offerings that deliver nutritional and functional benefits, as well as reducing sugar and calories.

We have 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.

Our KDP Product Facts website, found at www.kdpproductfacts.com, contains important nutrition, certification, and allergen information to empower consumers to make informed decisions and find products that meet their needs.

To advance our transparency and rigor around our marketing practices and standards, we published a new Responsible Marketing Policy for the U.S.

Employees and media agencies with primary responsibility for adhering to the Responsible Marketing Policy are required to complete mandatory training on our marketing standards.

OTHER INFORMATION

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MARKET AND INDUSTRY DATA

The market and industry data in this Annual Report on Form 10-K is from IRi, an independent industry source, and is based on retail dollar sales and sales volumes in 2022.

The market and industry data in this Annual Report on Form 10-K is from Circana, an independent industry source, and is based on retail dollar sales and sales volumes in 2023.

Although we believe that this independent source is reliable, we have not verified the accuracy or completeness of this data or any assumptions underlying such data.

IRi is a marketing information provider, primarily serving consumer packaged goods manufacturers and retailers.

We use IRi data as our primary management tool to track market performance because it has broad and deep data coverage, is based on consumer transactions at retailers, and is reported to us monthly.

IRi data provides measurement and analysis of marketplace trends such as market share, retail pricing, promotional activity and distribution across various channels, retailers and geographies.

Measured categories provided to us by IRi include K-Cup pods, CSDs, including energy drinks and carbonated waters, and NCBs, including RTD teas and coffee, single-serve and multi-serve juice and juice drinks, sports drinks, still waters and non-alcoholic mixers.

IRi also provides data on other food items such as apple sauce.

IRi data we present in this report is from IRi service, which compiles data based on scanner transactions in key retail channels, including grocery stores, mass merchandisers (including Walmart), club stores (excluding Costco), drug chains, convenience stores and gas stations.

Circana is a market information provider, primarily serving consumer packaged goods manufacturers and retailers.

We use Circana data as our primary management tool to track market performance because it has broad and deep data coverage, is based on consumer transactions at retailers, and is reported to us weekly.

Circana data provides measurement and analysis of marketplace trends such as market share, retail pricing, promotional activity, and distribution across various channels, retailers, and geographies.

Measured categories provided to us by Circana include K-Cup pods, carbonated soft drinks, RTD teas and coffee, single serve and multi-serve juice and juice drinks, sports drinks, energy drinks, still waters, carbonated waters, and non-alcoholic mixers.

Circana also provides data on other food items such as apple sauce.

Circana data we present in this report is compiled from scanner transactions in key retail channels, including grocery stores, mass merchandisers (including Walmart), club stores (excluding Costco), drug chains, convenience stores, and gas stations.

However, this data does not include the fountain or vending channels, or small independent retail outlets, which together represent a meaningful portion of the U.S.

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This data does not include certain customers and e-commerce sales which represents a significant portion of our Coffee Systems segment.

Our market share data for our brewers is based on information provided by NPD.

NPD data is based upon Consumer Panel Track SM (consumer-reported sales) calibrated with selected retailers' point of sale data, based on NPD's definition of the coffeemaker category.

The data presented is based upon The NPD/Consumer Tracking Service for Coffeemakers in the U.S.

Our market share data for our brewers is also based on information provided by Circana.

The data presented is based upon Circana’s Consumer Tracking Service for Coffeemakers in the U.S.

and represents the twelve month period ended December 31, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business