A maker of sodas and single-serve coffee, Keurig Dr Pepper produces drinks people sip daily—from Dr Pepper, Canada Dry, and GHOST to Keurig brewers and K-Cup pods under brands like Green Mountain Coffee and Starbucks. It took shape in 2018 when Keurig Green Mountain, born from a small 1979 Vermont coffee shop, merged with the Dr Pepper Snapple Group. Fun fact: the "Dr Pepper" name famously carries no period after "Dr"—the company dropped it in the 1950s—and its signature soda is its own category, not a cola. In 2025 it agreed to acquire coffee giant JDE Peet's.
JDE Peet's acquisition closed, doubling revenue but pushing EPS to $0.04 on $624M in deal and integration costs.
Keurig Dr Pepper absorbed JDE Peet's and became a coffee-and-beverage giant overnight. rose 75.6% to $7.3 billion, but fell 90% to $0.04 as $624 million in acquisition, integration, and financing costs — plus a $314 million charge — overwhelmed the top-line gain. The company is now carrying $21.6 billion in and racing toward a planned split into two standalone companies.
Key takeaways
The JDE Peet's acquisition closed, adding $2.8 billion of in the quarter but posting a $62 million operating loss that included a $314 million non-cash charge tied to purchase accounting.
fell 90% to $0.04, driven by $624 million in pre-tax acquisition, integration, and financing costs in the first half, an 86.7% increase in to $336 million, and a higher from state deferred tax revaluation.
Section summaries
Management's Discussion and Analysis
KDP Q2 2026 net sales rose 75.6% to $7.3B on JDE Peet's acquisition, but diluted EPS fell 90% to $0.04 on integration costs.
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Consolidated Q2 2026 rose 75.6% to $7,309 million, driven by the JDE Peet's acquisition (67.3% of volume/mix growth), net price realization of 4.2%, and FX of 1.0%, while fell 12.3 percentage points to 41.9%.
Q2 attributable to KDP fell 74.0% to $142 million and fell 90% to $0.04, reflecting $68 million of (primarily Pod Manufacturing JV), an 86.7% increase in to $336 million, and a 7.3 percentage point higher from state deferred tax revaluation.
U.S. Coffee fell 36.1% as coffee volume dropped 12.8% and integration costs compounded the decline, even as K-Cup pod volume rose 4.5% for the second consecutive quarter.
U.S. Refreshment Beverages rose 14.9% on 10.0% growth, with the GHOST energy brand and sports hydration driving volume in the energy subcategory.
contracted 12.2 percentage points to 41.9%, largely because the acquired JDE Peet's business carries a structurally lower margin profile and the charge inflated cost of sales.
rose to $21.6 billion, up 55.1% , as the company drew on financing to fund the acquisition; credit ratings were downgraded but remain .
What changed
The JDE Peet's acquisition closed during the quarter, resolving the uncertainty flagged in Q1 FY2026 about final cost and timing; the deal added $2.8 billion in quarterly and pushed to $21.6 billion.
K-Cup pod volume rose 4.5% in Q1 and the filing does not report a Q2 figure, but U.S. Coffee volume fell 12.8% overall, suggesting the pod recovery flagged last quarter was not enough to offset broader coffee volume declines.
rose to $336 million from $180 million a year ago, confirming the trajectory flagged in Q1 when the quarterly run-rate hit $281 million; the increase reflects the full quarter of JDE Peet's financing costs and unfavorable derivative mark-to-market activity.
The planned separation of the beverage and coffee businesses into two public companies remains on track for early 2027, but the risk factors now explicitly warn that the spin-off may not be completed on that timeline and is consuming significant management attention.
fell to 41.9%, well below the 52.8% reported in Q1, as the JDE Peet's business — with its structurally lower margin and the $314 million — was consolidated for the first time.
What to watch
Whether U.S. Coffee stabilizes after a 36.1% drop, and whether the 12.8% coffee volume decline represents a new run-rate or reflects one-time integration disruption.
The pace of debt reduction from $21.6 billion, particularly as quarterly has reached $336 million and the company must also fund the planned separation into two public companies.
Whether recovers from 41.9% as the $314 million charge rolls off and the JDE Peet's business is fully integrated, or whether the combined company's margin profile settles at a structurally lower level.
The timeline and structure of the planned tax-free spin-off of the coffee business, now targeted for early 2027, and whether the credit rating downgrades or integration demands alter the separation plan.
U.S. Refreshment Beverages rose 10.0% to $2,925 million and rose 14.9% on energy and sports hydration volume, while U.S. Coffee net sales fell 3.2% and operating income fell 36.1% on a 12.8% coffee volume decline and integration costs.
KDP International rose 19.6% to $664 million on favorable FX, volume/mix, and price, but rose only 6.3% as higher IEPS taxes in Mexico and unfavorable ingredient costs offset gains.
JDE Peet's added $2,802 million of but posted a $62 million operating loss, including a $314 million charge; acquisition, integration, and financing costs totaled about $624 million pre-tax in the first six months of 2026.
First-half rose $536 million to $1,176 million on favorable , and management expects operating cash flows to meet obligations for the next twelve months and foreseeable future, with no numeric provided.
Quantitative and Qualitative Disclosures About Market Risk
The JDE Peet's Acquisition increased FX, interest-rate, and commodity risk, hedged with derivatives.
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Foreign exchange exposure increased due to the JDE Peet's Acquisition's geographic diversity, primarily Euro versus U.S. dollar and various other currencies, with transaction gains or losses recognized in earnings as incurred.
The acquired business uses foreign exchange forward contracts and , with of $5,906 million as of June 30, 2026 maturing through February 2034, and a 10% weakening in the Euro is estimated to decrease by approximately $73 million, offset by the underlying hedged risk.
Interest rate risk is managed through fixed-rate and variable-rate debt mix and interest rate contracts, with JDE Peet's Notes face values of $4,506 million fixed and $686 million variable as of June 30, 2026, and derivatives generally based on or plus a , resulting in limited impact on .
Commodity risk is mainly coffee beans, with ability to recover increased costs through higher pricing limited by competition, and the company uses commodity and supplier pricing agreements to hedge price movements for limited periods.
As of June 30, 2026, commodity derivative contracts had of $269 million maturing through January 2028 and net asset of $25 million, and a 10% change in commodity prices is estimated to change fair value by approximately $27 million, offset by the underlying hedged risk.
We are occasionally subject to litigation or other legal proceedings relating to our business. See Note 17 of the Notes to our Unaudited Consolidated Financial Statements for more information related to commitments and contingencies, which is incorporated herein by reference.
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We are occasionally subject to litigation or other legal proceedings relating to our business. See Note 17 of the Notes to our Unaudited Consolidated Financial Statements for more information related to commitments and contingencies, which is incorporated herein by reference.
JDE Peet's acquisition and planned coffee separation create material integration, debt, geopolitical, and execution risks atop ongoing cost and competition pressures.
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The JDE Peet's acquisition introduces substantial integration complexity, significant new debt, and exposure to geopolitical and operational risks in Russia, where operations represent ~6% of JDE Peet's .
The planned tax-free spin-off of the coffee business may not be completed on the expected early 2027 timeline, could fail to achieve intended benefits, and is consuming significant management attention and resources.
Supply chain disruptions and input cost inflation, particularly for green coffee, packaging, and labor, could compress margins if the company cannot pass through price increases or effectively hedge.
Intense competition, evolving consumer preferences toward sustainability and e-commerce, and reliance on a limited number of third-party bottlers, distributors, and co-manufacturers threaten market share and operations.
and totaling ~$68 billion are at risk of material non-cash charges if business performance falls short of forecasts, as occurred in fiscal 2025.
Evolving regulations on packaging (e.g., EU PPWR), climate disclosure, and product labeling could increase costs, restrict sales, or require costly reformulations.