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Keurig Dr Pepper has announced its acquisition of a 60% stake in energy-drink maker Ghost for $990 million, with plans to buy the remaining stake by 2028. This move is aimed at enhancing Keurig’s refreshment beverages portfolio in response to the growing popularity of energy drinks, particularly among the younger demographic in the U.S.
In recent years, the demand for energy drinks has surged as more people prioritize fitness and lifestyle products, leading companies like PepsiCo and Keurig Dr Pepper to make strategic investments in this sector. In 2022, PepsiCo acquired an 8.5% stake in Celsius Holdings for $550 million, while Keurig Dr Pepper purchased a 30% stake in Nutrabolt, the maker of C4 Energy, for $863 million.
Ghost, founded in 2016 by Dan Lourenco and Ryan Hughes as a lifestyle sports nutrition brand, will now be integrated into Keurig Dr Pepper’s U.S. refreshment beverages segment. This segment accounted for nearly 60% of the company’s total sales in 2023.
Keurig CEO Tim Cofer highlighted the growth potential in the energy drinks category, emphasizing the room for increased household penetration compared to other beverage categories. The initial acquisition of the 60% stake in Ghost is expected to be finalized in late 2024 or early 2025, with a projected positive impact on Keurig’s adjusted profit starting in 2025.
J.P.Morgan analysts noted that Ghost’s performance has been driven by strong volumes, with sales remaining positive. Keurig Dr Pepper plans to invest up to $250 million from mid-2025 to transition Ghost’s distribution agreements before taking over the brand’s sales and distribution.
Despite reporting lower-than-expected net sales in the third quarter, Keurig Dr Pepper remains optimistic about its future prospects. The company, known for brands like 7UP, Sunkist, Schweppes, and Sun Drop, is experiencing softer demand in its U.S. coffee segment, attributed to weaker at-home consumption among lower income consumers.
Keurig’s adjusted profit of 51 cents per share met analysts’ expectations, although the company’s shares were down 2.5% in early trading.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
