BOSTON — Olympic gold medalist Michael Phelps might disapprove, but Robert J. Gamgort likes swimming in different lanes. The chief executive officer for Keurig Dr Pepper, Inc., Mr. Gamgort was referring to expanding into different beverage categories when he spoke Sept. 6 at the Barclays Global Consumer Staples Conference in Boston.
The company turned to that strategy in 2018 after Keurig Green Mountain, Inc. acquired the Dr Pepper Snapple Group, Inc. to form Keurig Dr Pepper.
“Our approach to beverage at that time was creating a company that looked at beverage holistically,” Mr. Gamgort said. “We thought that previously, people were staying too much in their swim lanes. So we thought there was a lot of interest and growth on the edges, and that was a unique idea at the time, and certainly, this concept of blurring of the lines is talked about pretty much every day.”
Over the next five years Mr. Gamgort said he expects beverage companies to keep expanding into different categories.
“Now you see people are doing that, not just between hot and cold, but also alcohol and non-alcohol,” he said. “I think it's still very, very relevant.”
Keurig Dr Pepper and Nutrabolt in December 2022 announced a partnership that included a sales and distribution agreement under which Keurig Dr Pepper will sell and distribute the C4 Energy drink in the majority of Keurig Dr Pepper’s company-owned direct-store distribution territories. With less than a 5% share, Keurig Dr Pepper still has room to grow in the energy drink market, Mr. Gamgort said.
“We’ve got a great position in energy,” Mr. Gamgort said. “It’s doubling in size, and we’re really excited about that.”
In July of this year, Keurig Dr Pepper and La Colombe announced a sales and distribution agreement for La Colombe ready-to-drink coffee and a licensing, manufacturing and distribution agreement for La Colombe branded K-Cup coffee pods.
“We also know that ready-to-drink coffee is a big factor,” Mr. Gamgort said. “We’ve got this powerful DSD distribution system. We've got the ability to access great plans through our partnerships, and yet we've not had great success in being focused in delivering its ready-to-drink coffee.
“So we're really excited now that we have a ready-to-drink coffee platform that we're forming. We've got people who are dedicated to that. We’ve had the Peet’s brand, but we really haven’t activated the Peet’s brand.”
Keurig Dr Pepper will prepare for a possible recession.
“In my opinion, all of the real disruptors over my career have been things that nobody forecasted,” Mr. Gamgort said. “So this would be the most forecasted recession ever, and usually, when something is forecasted and there's consensus around it, it never happens.”
He expects less pricing in 2024 as inflation moderates. Elasticity has varied by beverage category.
“Interestingly, carbonated soft drinks has been the area we've seen the least amount of elasticity,” he said. “One of my hypothesis is because it was too good of a value at the start of this. It was underpriced.”