Neuro Termination Draws Lawsuit. Smart Bottle Startup Folds.
AB InBev At-home Cocktail JV, DrinkWorks, Forges Ahead.
Keurig Dr Pepper made the latest in a string of territory changes that executives have said will improve distribution performance and efficiency for the company’s ready-to-drink portfolio. As of mid-June, Polar Beverages now distributes the majority of KDP’s packaged carbonated and non-carbonated drinks in New Hampshire, a KDP spokeswoman said. The brands had been handled by Anheuser-Busch aligned New Hampshire Distributors. Polar already carried KDP’s core carbonated soft drink brands in the grocery channel in New Hampshire. Now, Polar handles those brands in the convenience and gas channel, as well. And that is just the kind of disparity KDP has said it wants to clear up as part of the company’s system optimization. Polar also gets Snapple, Adrenaline Shoc, Venom, Evian, Nantucket Nectars, Mistic and Stewart’s in both the large and small format stores across the state. New Hampshire now closely mirrors Polar’s Massachusetts DSD brand and channel footprint with KDP. Last year, KDP signed a long-term national agreement to distribute Polar Seltzer in the US, further strengthening the relationship between the two companies.
PARTNER BRAND SHUFFLE. Last year, Keurig Dr Pepper dropped the “allied brands” nomenclature for non-owned brands such as Evian, opting instead for the term “partner brands.” The previous term was a carryover from Dr Pepper Snapple prior to the 2018 merger with Keurig Green Mountain. The new term, used in KDP’s most recent annual regulatory filing for 2020, is in keeping with Keurig’s terminology for coffee brands, such as Starbucks and Great Value (Walmart’s store brand), that it partners with to make pods for single-cup coffee brewers. According to a BD review of KDP filings, the company’s current stable of partner brands includes Polar Seltzer, Evian water, Vita Coco coconut water, Peet’s ready-to-drink coffee, Adrenaline Shoc energy drink, and Don’t Quit protein shakes. Vita Coco’s natural energy drink Runa also is distributed by the KDP system in some markets.
NEURO BREAKUP. One company no longer referenced by KDP in filings or on its website as a partner brand is functional drink Neuro. In fact, the company has sued KDP for breach of contract and trade libel, among other claims. The lawsuit, filed in California Superior Court in January and later moved to federal court in Los Angeles, alleges that KDP’s orders for Neuro under a license to sell and distribute the product fell “precipitously” and “with no cogent explanation” after Dr Pepper Snapple Group merged with Keurig Green Mountain in July 2018. Neuro had been with Dr Pepper Snapple since 2010, under an agreement that eventually covered 27 states. As of 2020, KDP handled as much as 70% of Neuro’s retail sales, according to the lawsuit. Neuro claims that KDP “disparaged” Neuro in emails to industry players including other distributors saying Neuro was financially unstable and suffering from a “lack of promotion.” The letter led to the brand being dropped by Neuro’s second largest distributor, Admiral Beverage (also a Pepsi bottler), Neuro claims. A KDP spokeswoman declined to comment about the pending legal matter or Neuro’s status. In a motion to dismiss the lawsuit, KDP alleges that a lack of consumer demand for the drinks led to declining sales in 2019 and early 2020, which in turn prompted Kroger to drop the brand. KDP then moved to terminate its distribution of the brand, prompting the lawsuit, KDP alleged.
SEED INVESTMENTS. Meanwhile, ready-to-drink coffee brands Forto and High Brew also have departed as KDP partner brands even as KDP continues to hold investments in the companies. Both brands were part of Dr Pepper Snapple prior to the merger with Keurig Green Mountain, which brought with it a significant competing coffee portfolio. KDP still owns 12.4% of Forto parent Dyla Brands, according to a regulatory filing. KDP also holds a small stake in High Brew. Other KDP investments include a 12.5% stake in BodyArmor, an investment and path to ownership in energy brand Adrenaline Shoc, and a seed stake in Don’t Quit, co-founded by Danny Stepper’s LA Libations. LifeFuels, another KDP seed investment that marketed a reusable electronic water bottle and associated consumption tracking app, closed its doors this year after the “crippling” effects of the Covid-19 pandemic, according to the company’s website. KDP took a $16 million impairment charge on the investment last year, according to a regulatory filing. Separately, a partnership with AB InBev for an at-home cocktail appliance called DrinkWorks by Keurig was the subject of $86 million in non-cash impairments last year amid the global pandemic. The venture, 30% owned by KDP, continues to operate and recently announced a partnership with Pernod Ricard for various cocktails using Absolut vodka, Kahlua coffee liqueur, and Malibu rum.
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