Keurig Dr Pepper Expands DSD Operations With Kalil Bottling Acquisition
Keurig Dr Pepper (KDP) is expanding its direct-store delivery (DSD) reach through a bottling and distribution acquisition of independent bottler Kalil Bottling Co.
The transaction includes Kalil's Arizona production, sales, and distribution for key KDP brands like Canada Dry, 7UP, A&W, Snapple, and Core Hydration, serving 7.4 million consumers across 4,500 retail locations.
KDP gains access to a Tucson production facility, along with distribution centers in Tucson and Tempe. The company will be adding on about 425 employees as a result, and will be working with Kalil on workforce recruitment.
The acquisition, said CEO Tim Cofer, will strengthen the company’s national DSD capabilities, providing added opportunities for enhanced scale and brand building in a fast-growing region for beverages.
"Amplifying our route to market advantage is a key investment priority for KDP, and this strategic move will extend our system's reach while providing us more direct insight into the local consumer base and stronger retail collaboration," he added.
As KDP bolsters its DSD strategy, the company has made leadership changes to support the effort. Last November, the company named Andrew Archambaul its president of U.S. refreshment beverages, a new role leading the company’s nationwide direct store delivery network.
"Kalil has been an amazing independent bottling partner to KDP for decades, and we look forward to continuing Kalil's commitment to service excellence for our Arizona customers and consumers," said Archambault in a statement. "As we continue to optimize the best possible route to market throughout the U.S. for our portfolio of leading brands, we are thrilled about adding the first KDP-owned manufacturing, sales, and distribution operation in the state."
The Kalil transaction is expected to finalize in Q3 of 2024.
KDP’s DSD History
Last year, the company said it had completed about 25 transactions thus far related to growing its direct-store delivery. This includes the acquisition of manufacturing, sales, and distribution rights to key KDP-owned and -licensed brands in 37 counties in Texas and Louisiana through The Red River Beverage Group and The Made-Rite Company.
Additionally, last year, KDP invested $300 million to sell and distribute La Colombe ready-to-drink coffee beverages through its DSD network. It will also manufacture, sell, and distribute La Colombe-branded K-Cup coffee pods in the U.S. and Canada
“We have always stated that we want to be a catalyst for consolidation on the distribution side of the business,” Keurig Dr Pepper CEO Bob Gamgort said in a previous statement.
“We think it is what retailers are going to want over time. We believe it's highly cost-efficient. We also think, from an environmental impact, taking miles off the road is a smart thing to do. Our way of doing that has been to consolidate overlapping territories where our company-owned routes match up against independent operators.”
