Keurig Dr Pepper (KDP) and Premier Protein Deal Prediction | DSD Must Embrace Protein Beverages

What happens when you combine the number one brand in the convenient nutrition category, a sales channel revenue diversification opportunity with 150K U.S. locations, and a beverage portfolio that’s recently shown an affinity for strategic partnerships? If you’re an avid follower of my quarterly content that analyzes the performance of the functional CPG brand portfolio BellRing Brands (NYSE: BRBR), that introductory word problem might sound vaguely familiar. And that’s because at the very end of last month’s video, I stated Keurig Dr Pepper (NASDAQ: KDP) needs to consider entering into a strategic sales and distribution partnership with Premier Protein. The protein beverage U.S. market size is estimated to be somewhere just north of $6 billion. Outside of private label penetration, the top five largest protein beverage brands in the U.S. market would be Premier Protein, Coca-Cola owned tag team of Core Power and Fairlife, Ensure (owned by Abbott Labs), Boost (owned by Nestle), and Muscle Milk (owned by PepsiCo). If you look at the entire protein beverages market, multipack SKUs drive the bulk of the sales activity...but I’m not sure that’s ideal long-term from a consumer or market outlook perspective. When you hear players like Premier Protein talk about how the protein beverages have less than half the household penetration of protein bars, it’s used to signal a huge long-term growth opportunity. While I agree with this…you also must realize a key driver of that is the consumer cost of entry. How can brands like Premier Protein create a lower cost of entry for consumers to trial protein beverages? They need to embrace a DSD distribution strategy. With stating that…I’m also acknowledging that’s easier said than done, and it’s a two-way street that requires more of the DSD distribution network to embrace the protein beverage category. I’ve been publicly predicting KDP needs to get more protein beverage exposure since October 2021. It's that 26-month-old YouTube video that’s a bit of a cult classic within the beverage CPG space because it correctly predicted the Nutrabolt/C4 Energy deal, the La Colombe deal, and the Athletic Brewing investment. Protein was mentioned as one of the five beverage categories KDP needed to invest in over the next three years, but I didn’t predict Premier Protein as the conviction M&A target. In fact, it was the only beverage category I didn’t give a prediction because I thought protein input type created too much strategic optionality. But with KDP CEO changes upcoming in 2024, I've adjusted my previous thoughts. KDP typically seeks out sizable deals that are more complex, resulting in portfolio expansion and distribution scale. As an example, when KDP did deals for C4 Energy, La Colombe, and most recently Electrolit to fill category white spaces…those new brands create more scale and expand the KDP portfolio, which makes its capabilities become stronger. So, its drop sizes get bigger, merchandizing gets more impactful, KDP can service each store more frequently, and its commercial relationships tighten. One of the biggest areas of impact from these recent deals has been in the convenience channel. Sounds like just the thing that Premier Protein can benefit from…and they’re also the type of brand that can help feed the KDP flywheel, right? FOLLOW ME ON MY SOCIAL MEDIA ACCOUNTS LINKEDIN - ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.linkedin.com/in/joshuaschallmba⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ YOUTUBE - ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.youtube.com/c/joshuaschall⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TWITTER - ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.twitter.com/joshua_schall⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ INSTAGRAM - ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.instagram.com/joshua_schall⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ FACEBOOK - ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.facebook.com/jschallconsulting