Keurig Dr Pepper Financial Model
Beverages Company Financials Example (Free Excel Download)
Keurig Dr Pepper is a leading North American beverage company that manufactures, markets, and distributes non-alcoholic beverages and single-serve coffee systems.
professionals from Deloitte
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About this model
This model evaluates the equity valuation and credit profile of Keurig Dr Pepper (KDP), specifically focusing on scenario analysis for the impending $23 billion acquisition of JDE Peet's and the subsequent planned spin-off of the combined Global Coffee Co.
Keurig Dr Pepper is a leading North American beverage company that manufactures, markets, and distributes non-alcoholic beverages and single-serve coffee systems. The company operates a unique portfolio combining high-margin carbonated soft drinks and a "razor and razor-blade" coffee model where it sells brewers to drive recurring high-margin K-Cup pod sales.
The business operates through three primary segments: U.S. Refreshment Beverages (approximately 63% of revenue), U.S. Coffee (approximately 25%), and International (approximately 12%). Geographically, the United States and Canada account for roughly 95% of total revenue, with Mexico comprising the bulk of the remainder. KDP operates an asset-light brand ownership model alongside a direct-store-delivery (DSD) network and partner brand distribution agreements. The company holds the number three position in U.S. carbonated soft drinks and the number one position in North American single-serve coffee.
Recently, KDP has undergone massive strategic transformation. In 2025, the company acquired the GHOST energy drink brand to bolster its U.S. Refreshment Beverages segment. More significantly, in early 2026, KDP announced a $23 billion acquisition of JDE Peet's, with the explicit intention of separating the business into two independent publicly traded entities by the end of 2026: a pure-play "Beverage Co." and a "Global Coffee Co."
The downloadable Keurig Dr Pepper financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
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Statements always balancing
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Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
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Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsKeurig Dr Pepper financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $12.68B | $14.06B | $14.81B | $15.35B | $16.60B |
| Gross profit | $6.98B | $7.32B | $8.08B | $8.53B | $9.00B |
| Operating income | $2.89B | $2.60B | $3.19B | $2.59B | $3.58B |
| Net income | $2.15B | $1.44B | $2.18B | $1.44B | $2.08B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Keurig Dr Pepper
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
U.S. Refreshment Beverages
- Revenue driver formula: Prior Year Revenue x (1 + Volume/Mix Growth + Net Price Realisation)
- Historical growth rate: 8% to 12% (11.9% in FY2025)
- Key growth levers and headwinds: Market share gains in carbonated soft drinks, expansion in the energy category (GHOST acquisition contributed 6.2 percentage points to volume/mix in 2025), and sports hydration. Headwinds include consumer shifts away from sugary beverages and GLP-1 drug adoption.
- Pricing dynamics: Highly competitive but rational oligopoly pricing with Coca-Cola and PepsiCo; strong pricing power demonstrated by consistent positive net price realisation.
- Revenue recognition notes: Recognised upon delivery to retail customers or third-party distributors.
- Seasonality: Strongest in the second and third quarters due to warmer weather driving cold beverage consumption.
U.S. Coffee
- Revenue driver formula: (K-Cup Pod Volume x Net Price per Pod) + (Brewer Volume x Net Price per Brewer)
- Historical growth rate: Flat to low single digits (0.6% in FY2025)
- Key growth levers and headwinds: At-home coffee consumption trends, brewer household penetration, and partner brand additions. Headwinds include a recent 19.9% decline in brewer volumes and softness in pod volumes as consumers return to office environments.
- Pricing dynamics: Spot pricing heavily influenced by green coffee commodity costs, though KDP hedges significantly.
- Revenue recognition notes: Recognised upon shipment of pods and brewers to retailers or direct-to-consumer delivery.
- Seasonality: Highly seasonal, with the fourth quarter being the strongest due to holiday brewer sales and winter coffee consumption.
International
- Revenue driver formula: Volume x Net Price Realisation x FX Translation
- Historical growth rate: 5% to 10% (5.9% in FY2025)
- Key growth levers and headwinds: Mineral water growth in Mexico (Peñafiel) and single-serve coffee adoption in Canada. Headwinds include foreign exchange volatility, particularly the Mexican Peso and Canadian Dollar.
- Pricing dynamics: Local currency pricing adjustments to offset inflation and currency depreciation.
- Revenue recognition notes: Standard delivery-based recognition.
- Seasonality: Similar to U.S. Refreshment Beverages, peaking in summer months.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Ingredients (sweeteners, concentrates, green coffee beans), packaging materials (aluminium, PET plastic, K-Cup materials), manufacturing labour, overhead, and inbound freight.
- Gross margin range: 53.0% to 55.0% (53.8% in Q4 2025).
- Key input costs and commodity exposures: Aluminium, PET resin, green coffee, and transportation fuel.
- How COGS scales with revenue: Generally linear, though the coffee segment experiences margin compression when green coffee prices spike if pricing actions lag.
Operating Expenses
- R&D: Minimal, typically less than 1% of revenue (e.g., $16M in Q4 2025), covering flavour formulation and brewer engineering.
- SG&A: Major expense category including marketing, advertising, direct-store-delivery (DSD) fleet costs, warehousing, and corporate overhead.
- Depreciation & Amortisation: Significant due to historical M&A. Amortisation of intangibles (brands, franchise rights) is a major non-cash charge that KDP adds back for "Adjusted" metrics.
- Stock-Based Compensation: Relatively low compared to tech, typically 1% to 2% of revenue.
- Restructuring / one-time charges: Frequent due to serial M&A, including network optimisation and integration costs.
Margin Profile
- Gross margin: 53% to 55%
- EBITDA margin (Adjusted): 28% to 31%
- Operating margin (Adjusted): 25% to 30% (29.8% in FY2025)
- Net margin: 9% to 13% (12.5% trailing in early 2026)
- Margin trend: Expanding due to strong pricing power and productivity savings, partially offset by inflation and higher SG&A costs.
Balance Sheet Structure
- Total assets: Approximately $50 billion pre-JDEP acquisition.
- Key asset categories: Intangible assets and goodwill dominate the balance sheet due to the 2018 Keurig and Dr Pepper Snapple merger, plus subsequent acquisitions (Bai, Core, GHOST).
- Goodwill & intangibles as % of total assets: Typically 70% to 80%.
- Working capital profile:
- Days Sales Outstanding (DSO): 30 to 40 days.
- Days Inventory Outstanding (DIO): 40 to 50 days.
- Days Payable Outstanding (DPO): 90 to 110 days (extended supplier terms).
- Net working capital as % of revenue: Negative, typically -5% to -10%.
- Working capital dynamic: The company operates with negative working capital, meaning it uses supplier financing to fund operations, a structural advantage common in large CPG firms.
- PP&E: Manufacturing facilities, DSD distribution centres, and fleet vehicles.
- Right-of-use assets: Material operating leases for warehouses and fleet.
Capital Expenditure & Investment
- Capex as % of revenue: 3.0% to 4.5% (e.g., $148M in Q4 2025).
- Maintenance capex vs. growth capex: Approximately 60% maintenance, 40% growth (new production lines, DSD fleet upgrades).
- Major capex programmes underway: Supply chain optimisation and new roasting facilities.
- Capitalised software: Minimal compared to physical infrastructure.
- M&A pattern: Transformational acquirer. The company relies on massive, debt-funded acquisitions (Keurig + DPS, JDE Peet's) interspersed with strategic bolt-ons (GHOST).
Debt & Capital Structure
- Total debt: Approximately $16.2 billion principal pre-JDEP ($13B long-term, $2.2B commercial paper).
- Debt/EBITDA ratio: Management leverage ratio was roughly 3.1x at the end of 2025. Pro-forma leverage is expected to spike to approximately 6.0x upon closing the JDE Peet's acquisition in early 2026.
- Credit rating: Downgraded to BBB- by S&P in March 2026 due to the JDE Peet's acquisition leverage.
- Key debt instruments: Senior unsecured notes, commercial paper programme, and new transaction debt for JDEP ($6 billion senior debt, $3.9 billion delayed-draw term loan).
- Maturity profile: Laddered senior notes, but near-term maturities will increase significantly with the JDEP bridge financing.
- Interest rate profile: Primarily fixed-rate senior notes, with floating exposure on commercial paper and term loans.
- Share repurchase programme: Paused or minimal ($9M in 2025) to preserve cash for M&A and deleveraging.
- Dividend policy: $0.92 per share declared in 2025, representing a payout ratio of roughly 45% of Adjusted EPS.
Cash Flow Characteristics
- Operating cash flow conversion: Strong, typically 1.2x to 1.5x GAAP Net Income due to heavy non-cash amortisation add-backs. OCF was nearly $2.0 billion in 2025.
- Free cash flow margin: 8% to 10% ($1.5 billion FCF on $16.6 billion revenue in 2025).
- Major non-cash items: Depreciation, amortisation of intangibles, and impairment charges.
- Working capital cash flow impact: Generally a source of cash as the business grows, due to extended payable terms.
- Capex intensity: Low, allowing for high free cash flow conversion.
- Cash tax rate: Typically lower than the statutory rate due to amortisation tax shields.
Sheet Structure
- Assumptions: Hardcoded drivers for macro environment, segment growth, margins, and JDE Peet's M&A inputs.
- Income Statement: Consolidated GAAP and Adjusted views, mirroring the 10-K format.
- Revenue & Margin Build: Detailed build for U.S. Refreshment Beverages, U.S. Coffee, and International segments.
- Balance Sheet: Standard CPG format, highlighting Goodwill, Intangibles, and Debt tranches.
- Cash Flow Statement: Indirect method starting from Net Income, detailing OCF, CFI, and CFF.
- Debt & Interest Schedule: Tranche-by-tranche build including commercial paper, existing senior notes, and the $9.9B new JDEP transaction debt.
- M&A & Spin-off Pro-Forma: A dedicated sheet to consolidate JDE Peet's financials and model the subsequent spin-off of the Global Coffee Co., calculating pro-forma leverage and standalone entity profiles.
- DCF Valuation: Unlevered free cash flow build, WACC calculation, and terminal value.
Key Financial Relationships
- `U.S. Refreshment Beverages Revenue = Prior Year Revenue * (1 + Volume/Mix % + Net Price Realisation %)`
- `U.S. Coffee Revenue = (K-Cup Pod Volume * Average Price per Pod) + (Brewer Volume * Average Price per Brewer)`
- `International Revenue = Prior Year Revenue * (1 + Volume/Mix % + Net Price Realisation %) * (1 + FX Impact %)`
- `Consolidated Net Sales = U.S. Refreshment Beverages Revenue + U.S. Coffee Revenue + International Revenue`
- `Gross Profit = Consolidated Net Sales - Cost of Sales`
- `Adjusted Operating Income = GAAP Operating Income + Amortisation of Intangibles + M&A Integration Costs + Mark-to-Market Adjustments`
- `Adjusted EBITDA = Net Income + Interest Expense + Provision for Income Taxes + Depreciation + Amortisation of Intangibles + Other Amortisation + Items Affecting Comparability`
- `Management Leverage Ratio = (Total Principal Amounts of Debt - Cash and Cash Equivalents) / Adjusted EBITDA`
- `Free Cash Flow = Net Cash Provided by Operating Activities - Purchases of Property, Plant and Equipment`
- `Pro-Forma JDEP Debt = Existing KDP Debt + JDEP Rolled Debt ($5.3B) + New Senior Transaction Debt ($6.0B) + Delayed-Draw Term Loan ($3.9B)`
- `Interest Expense = (Average Commercial Paper Balance * CP Rate) + SUM(Senior Notes Tranches * Respective Fixed Rates) + (Term Loan Balance * Floating Rate)`
Cross-Sheet Dependencies
- The Assumptions sheet feeds segment growth rates and margin targets into the Revenue & Margin Build.
- The Revenue & Margin Build aggregates into the Income Statement for consolidated Net Sales and Operating Income.
- The M&A & Spin-off Pro-Forma sheet injects new debt balances into the Debt & Interest Schedule and adds JDEP revenue/EBITDA to the consolidated figures.
- The Debt & Interest Schedule calculates Interest Expense, which flows to the Income Statement, and debt principal changes, which flow to the Cash Flow Statement.
- The Cash Flow Statement calculates the ending cash balance, which flows to the Balance Sheet to ensure it balances. Circularity exists between interest expense, net income, cash balances, and debt paydown; a circuit breaker toggle must be included.
Sign Convention
- Revenue, Assets, and Equity are modelled as positive numbers.
- Expenses (COGS, SG&A, Interest) are modelled as positive numbers and subtracted in subtotal formulas.
- Liabilities are positive numbers.
- On the Cash Flow Statement, cash inflows are positive and cash outflows (e.g., Capex, dividends, debt repayment) are negative.
Things Most Likely to Go Wrong
- The JDE Peet's acquisition financing is highly complex; failing to model the $4.5 billion convertible preferred equity and $4 billion minority investment correctly will break the leverage calculations.
- KDP reports both GAAP and Adjusted EPS. The model must clearly bridge the two, as valuation is typically based on Adjusted EPS which excludes massive non-cash amortisation of intangibles.
- The U.S. Coffee segment has a razor/razor-blade dynamic; modelling pod volume growth while brewer volumes are declining 19.9% (as seen in 2025) will create an unrealistic divergence.
- The $225 million one-time distribution termination payment for GHOST in 2025 depresses historical operating cash flow; this must be adjusted out for run-rate cash flow forecasting.
- Foreign currency translation can swing International segment revenue by 1% to 3% YoY; the model should include a constant-currency toggle.
- Pro-forma leverage will spike to 6.0x in 2026. If the debt schedule does not aggressively sweep free cash flow to pay down debt, the model will fail to show the S&P required deleveraging to 4.5x by 2028.
- KDP operates with negative working capital. Projecting working capital as a positive percentage of revenue will incorrectly drain cash during growth periods.
- The planned spin-off of Global Coffee Co. requires splitting the balance sheet; failing to allocate the correct proportion of historical goodwill to the spun-off entity will distort return on capital metrics.
Validation Checks
- Gross margin should remain in the 53.0% to 55.0% range based on historical performance; flag if outside this band.
- Adjusted Operating Margin should be between 25.0% and 30.0%.
- Pro-forma Debt/Adjusted EBITDA must hit approximately 6.0x at the end of 2026 and deleverage to <4.5x by 2028 to maintain the BBB- rating.
- Free Cash Flow conversion (FCF / Adjusted Net Income) should be >70%.
- The Balance Sheet must balance: Total Assets = Total Liabilities + Equity in every period.
- Dividend payout ratio should remain near 45% of Adjusted EPS based on stated policy.
- U.S. Refreshment Beverages volume/mix growth should normalise to 2% to 4% after the GHOST acquisition laps in 2026.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| U.S. Refreshment Beverages Vol/Mix Growth (2026+) | 3.0 | % | Normalised growth after lapping 6.2% GHOST contribution in 2025 |
| U.S. Refreshment Beverages Pricing Growth | 2.5 | % | Historical average pricing power |
| U.S. Coffee Pod Volume Growth | -1.0 | % | Reflects ongoing post-pandemic normalisation and office return |
| U.S. Coffee Brewer Volume Growth | -5.0 | % | Continued softness following 19.9% decline in 2025 |
| International Revenue Growth (Constant FX) | 5.5 | % | Driven by Mexican mineral water and Canadian single-serve |
| Consolidated Gross Margin | 54.0 | % | Aligns with Q4 2025 actuals (53.8%) and historical averages |
| SG&A as % of Net Sales | 24.5 | % | Required to bridge to ~29.5% Adjusted Operating Margin |
| Effective Tax Rate | 22.0 | % | Historical adjusted effective tax rate |
| Capex as % of Net Sales | 3.5 | % | Historical average maintenance and growth spend |
| Dividend per Share | 0.92 | $ | Actual 2025 declared dividend |
| JDEP Acquisition New Debt | 9.9 | $B | $6.0B senior debt + $3.9B term loan per S&P report |
| JDEP Rolled Debt | 5.3 | $B | Existing JDEP debt assumed in transaction |
| Target Leverage Ratio (2028) | 4.4 | x | S&P downgrade report target for BBB- maintenance |
| WACC | 7.5 | % | Standard consumer staples discount rate |
| Terminal Growth Rate | 2.0 | % | Long-term GDP / inflation proxy |
Data Sources & Benchmarks
- Filings: SEC EDGAR (KDP 10-K, 8-K for JDE Peet's acquisition announcement), Keurig Dr Pepper Investor Relations website.
- Peers for Benchmarking: Coca-Cola (KO), PepsiCo (PEP), Monster Beverage (MNST), Celsius Holdings (CELH).
- Industry Data: Nielsen or IRI scanner data for U.S. retail beverage market share; National Coffee Association for at-home consumption trends.
- Consensus Estimates: FactSet or Bloomberg for forward EPS and revenue estimates.
- Credit Data: S&P Global Ratings reports for exact debt tranches and leverage targets.
Sources
- Keurig Dr Pepper Inc. Q4 and Full Year 2025 Earnings Release (February 24, 2026)
- Keurig Dr Pepper Inc. 2025 Form 10-K
- S&P Global Ratings: "Keurig Dr Pepper Inc. Downgraded To 'BBB-' From 'BBB'" (March 10, 2026)
- Seeking Alpha: "Investor pushback on JDE Peet's acquisition drags Keurig Dr Pepper to 4-yr low" (October 2025)
- Simply Wall St: "Keurig Dr Pepper (KDP) Margins Improve To 12.5% Net Profit" (February 2026)
Do more with the Keurig Dr Pepper model
Frequently asked
What is Keurig Dr Pepper's primary business model and product portfolio?+
Keurig Dr Pepper is a leading North American beverage company that manufactures, markets, and distributes non-alcoholic beverages and single-serve coffee systems. The company operates a unique portfolio combining high-margin carbonated soft drinks with a "razor and razor-blade" coffee model, selling brewers to drive recurring K-Cup pod sales.
What are the main revenue drivers for Keurig Dr Pepper?+
Keurig Dr Pepper's revenue is primarily driven by its U.S. Refreshment Beverages segment, which accounts for approximately 63% of revenue, and its U.S. Coffee segment, contributing about 25%. The company's "razor and razor-blade" coffee model, where brewer sales drive high-margin K-Cup pod sales, is a significant recurring revenue stream.
What is the assumed annual revenue growth rate in the Keurig Dr Pepper financial model?+
The financial model for Keurig Dr Pepper assumes an annual revenue growth rate of approximately 7.4%. This growth rate is a key input for forecasting the company's future financial performance over the FY2026–FY2030 horizon.
What is the assumed capital expenditure as a percentage of revenue in the Keurig Dr Pepper financial model?+
The financial model for Keurig Dr Pepper incorporates a capital expenditure (Capex) assumption of approximately 3.1% of revenue. This figure reflects the company's ongoing investments in manufacturing facilities, DSD distribution centers, and fleet vehicles, balancing maintenance and growth capex.
What is the primary purpose of the Keurig Dr Pepper financial model?+
The Keurig Dr Pepper financial model is designed to evaluate the company's equity valuation and credit profile. It specifically focuses on scenario analysis related to the impending $23 billion acquisition of JDE Peet's and the subsequent planned spin-off of the combined Global Coffee Co.
Can I download an Excel financial model for Keurig Dr Pepper, and what forecast period does it cover?+
Yes, an Excel financial model for Keurig Dr Pepper is available for download. This model provides a forecast horizon covering fiscal years 2026 through 2030, allowing for detailed analysis of the company's future performance.
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