Keurig Dr Pepper Just Cashed in "Park Place" with $1 Billion Energy Drink Deal

Apparently, Keurig Dr Pepper woke up, looked at its mountain of drink brands, and thought, “Nah, we need more.” So, naturally, they dropped $990 million (yes, nearly a billion dollars) on a 60% stake in Ghost, the energy drink that’s hotter than your kids’ phone after a 3-hour TikTok binge. 

After their latest earnings report made investors rub their eyes in disbelief, KDP figured it was time to make some more headlines. And what better way to keep us all wide-eyed than by diving headfirst into the energy drink world?

It’s important to note that the energy drink market is booming like my buddy’s excitement over Red Lobster’s all-you-can-eat shrimp. It’s currently valued at $19 billion with sales growing by 10% annually. 

CEO Tim Cofer confidently stated, “Energy remains one of the fastest growing scaled categories in beverages.” Translation: “We want in on this sweet, sweet action before everyone else fills their carts with cans.”

Okay, so what’s the deal with Ghost? They popped up in 2016 and have quickly turned into a lifestyle brand that fitness lovers and party people can’t get enough of. I mean, their sales have quadrupled in just three years. What’s really cool is that they’re totally upfront about being an energy drink (no pretending to be healthy and pulling a fast one on us). And it’s clearly working. With flavors like Electric Limeade and Sour Patch Blue Raspberry, it’s like drinking a party in a can. 

But let’s not get too carried away. KDP is cautiously eyeing the missteps of Pepsi’s relationship with Celsius. Remember when Pepsi thought everyone would be drinking 10 Celsius’ a day, and they ended up with warehouses full of the stuff? Not exactly a win. KDP’s looking to avoid that kind of awkward “too much, too soon” situation and make sure they don’t end up with shelves full of Ghost collecting dust.

The plan is to close that initial stake in Ghost by late 2024 or early 2025, and then scoop up the rest in 2028. Plus, KDP is set to invest up to $250 million to transition Ghost’s distribution agreements.

Let’s be real: KDP’s portfolio is already packed with iconic brands like Bai, Snapple, and Yoo-Hoo, but now they’re stepping into the energy drink ring, where heavyweights like Red Bull and Monster are dominating. With Ghost’s bold branding and unique flavors, KDP is hoping to carve out its own corner in this ultra-competitive market.

But after some not-so-great earnings news, KDP’s stock took a hit, dropping almost 5% on Tuesday. However, their $990 million investment in Ghost seems to have softened the blow, giving investors something to be happy about. 

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Stock.News has positions in Monster, Pepsi and Keurig Dr Pepper as mentioned in article.