Shares of Keurig Dr Pepper Inc. (KDP - Free Report) have been witnessing robust growth over the past year, owing to its focus on making partnerships and acquisitions to enhance the portfolio. Furthermore, its efforts to bolster business through the launch of innovative product lines as well as investing in production and supply-chain facilities to support growth bode well.
These actions have led the company’s shares to gain 20% in the past year compared with the industry’s growth of 16.2%.
Moreover, Keurig’s robust earnings surprise trend, with a bottom-line beat in three of the last four quarters, testify the effectiveness of its strategies.
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In sync with its partnership and buyout strategy, the company acquired Big Red and CORE Hydration, after its merger with Dr Pepper Snapple Group. It also partnered with Forto Coffee Energy Shots and expanded distribution terms with Peet's for ready-to-drink Iced Expresso. It will distribute Forto throughout its network and Peet's primarily through its network of convenience stores.
Additionally, Keurig signed a long-term agreement to sell, distribute and merchandise the Evian brand across the United States. It also added the iconic Canadian coffee brand, Tim Horton’s, and the United States-based bakery-cafe brand, Panera, as partners. Furthermore, Keurig partnered with Met café in Canada, which was previously an unlicensed brand, and will begin distributing in 2020. Meanwhile, Keurig exited FIJI Water and BODYARMOR drink brands as part of the recent reorganization of its allied brands.
In its latest effort, the company signed a long-term master licensing and distribution agreement with McDonald’s USA LLC, a subsidiary of McDonald’s Corp. (MCD - Free Report) , for McCafe Packaged coffee. With this partnership, Keurig will be the exclusive manufacturer of McCafe K-Cup pods in the United States, effective from the second half of 2020.
Keurig will also be in charge of coffee sourcing, distribution and marketing of McCafe K-Cup pods as well as the packaging of bagged and canned coffee. Additionally, the company will take on the responsibility to trade the brand in all channels, including retail and e-commerce.
From the second half of 2020, the McCafe brand will be marketed by Keurig’s single-serve brewing system apart from the coffee aisle. With the new venture, the company expects to make McCafe a leading go-to-coffee brand for its customers while also strengthening McCafe’s presence in the retail channel. Further, it expects to bring innovation through its sourcing, roasting, distribution and marketing expertise to drive the brand’s growth and expansion.
Further, as part of its initiatives to bring new products to customers, the company is set to launch the K-Duo portfolio, which is an innovative coffee-maker product line. The latest innovation combines the functionalities of single-serve and carafe brewing experiences into one machine. This is the first time the Keurig brand has combined these functionalities.
The K-Duo offers convenience and flexibility of brewing a single cup of coffee, using K-Cup pods, and premium drip coffee, using coffee powders. It comprises three modern coffee markers, with different features and price points, to suit the taste and budgets of consumers. These include K-Duo Essentials Coffee Maker, K-Duo Coffee Maker and K-Duo Plus Coffee Maker, which will be sold in stores and websites of leading retailers like Walmart (WMT - Free Report) , Best Buy (BBY - Free Report) and Target (TGT - Free Report) .
Additionally, Keurig is planning to open a high-tech production and warehouse facility in Allentown, PA. The facility is likely to facilitate capacity expansion for its new and existing brands while also enhancing the supply-chain network in the Northeast, driven by large-scale warehouse operations.
Evidently, the aforementioned strategies promise further growth for the Keurig stock. Moreover, the Zacks Rank #2 (Buy) company’s impressive long-term earnings growth rate of 15.4% indicates that the stock’s momentum is likely to continue. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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