Who is Global Coffee, this new “world’s largest pure-play coffee company”?

Global Coffee Co. is a potential global champion, the emerging giant from the €15.7 billion merger between the American group Keurig Dr Pepper (KDP) and the Dutch group JDE Peet's, owner of the Douwe Egberts and Senseo brands, among others. It is a direct challenger to Nestlé, the current leader in the coffee market.

With approximately $16 billion in combined annual net sales, a presence in more than 100 countries and a dominant market position in most, Global Coffee Co. is expected to become the world's largest coffee company.

This is how the managers of KDP and JDE Peet's presented their "new champion" with the evocative name, which will soon benefit from an "unparalleled" portfolio in all coffee segments, "all channels and at all price points."

To create Global Coffee, which will be split between a global headquarters in Burlington and an international headquarters in Amsterdam, KDP is paying €15.7 billion, all in cash. This is the largest acquisition in Europe in more than two years.

“This transaction will create compelling growth opportunities for our employees, customers, and other stakeholders,” assured Rafa Oliveira, CEO of JDE Peet's until the acquisition closes. Afterward, he will hand over to KDP's current CFO, Sudhanshu Priyadarshi, who will be heading Global Coffee. The record-breaking transaction certainly makes sense in many ways.

Commercially offensive, economically defensive

The sales push is tailor-made to compete with coffee market leader Nestlé, as the new entity that will bring together the brands with those of JDE Peet's will be comparable to that of the Swiss multinational's coffee business. "The two would each have a market share of around 20% of the global consumer goods market, coffee and tea," Maxime Stranart, an analyst at ING, told Reuters.

Then, from a more defensive perspective on a broader economic scale, the transaction judiciously combines two complementary businesses. "It reduces the Eurocentric and standardized nature of most of JDE Peet's activities, and gives Keurig international exposure," added Jon Cox, an analyst at Kepler Cheuvreux.

The creation of Global Coffee Co. comes amid record coffee prices, driven by drought in major producers, Brazil and Vietnam, and the U.S. president's decision to impose 50 percent tariffs on beans imported from Brazil.

Keurig had conceded last month that the financial performance of its coffee machines would remain "lower" due to higher production costs since Trump's tariffs.

Double whammy

“Today’s announcement marks a transformative moment in the beverage industry,” said Tim Cofer, KDP Group’s current CEO. The consumer goods industry veteran is choosing his words carefully, knowing he will soon be leading Beverage Co., Global Coffee’s sister company.

Indeed, upon closing of the acquisition, KDP plans to split into two independent, publicly traded companies in the United States, with the aim of also establishing a new giant in the North American soft drinks market.

Simply called Beverage, the entity born from the Keurig spin-off will have more than $11 billion in annual net sales, for a market capitalization of $300 billion.

Here too, the portfolio will rely on iconic brands (Dr Pepper, of course, which alone generates more than $5 billion, Canada Dry >$1 billion, 7UP and A&W, etc.) as well as emerging brands. Not to mention a "differentiated and expanding" direct store delivery system and a "capital-efficient" growth model.

These two new major players, Beverage and Global Coffee, should firmly position themselves in their respective markets by leveraging already proven, if not optimized, operating models in key categories and geographies.

Ironically, this major consolidation in the beverage industry comes at the very moment when Coca-Cola is seeing its dream of becoming a global coffee brand dissipate ...