Keurig Dr Pepper Inc. (KDP) September 2026 Conference Transcript

Okay, we're going to get started. So next up, we have current Dr. Pepper. As you all know, the KDP story has changed meaningfully over the past year. What began as a complex transaction debate around the JDP's acquisition and plan separation has increasingly become a discussion about whether the company can prove out two distinct investment cases, a growth-oriented beverage company with strong momentum and a scaled a global coffee company with more diversification, but still some near-term pressure in the U.S. So joining us from the company today are both CEO Tim Kofer and CFO Anthony DiSilvestro. Welcome and thank you both for being here this year. I'm going to skip any discussion of transaction rationale. I feel like that's been really well covered at this point. And instead, focus our time on how you're thinking about execution, proof points, and what investors should be watching from here. So assuming all goes according to plan, you're about half a year out, maybe a little bit less, from the plan separation timing, which you've described as milestone-based. Where do you stand on that journey today? How are you balancing near-term execution with integration and separation work happening simultaneously?

Yeah, thanks, Lauren. Good morning. Great to be back at the Barclays Conference here in Boston. 2026 is a pivotal year for KDP as we seek, as you said, to establish two advantaged pure play companies next year. This year, our priorities were very clear, oriented around three big themes. Number one, successfully complete the acquisition and the integration of J.D. Pete's. Number two, prepare for a successful separation in 2027 into two advantage peer plays. And number three, and I think most importantly, continue to deliver on the base business results and deliver on our commitments. I feel we've made very good progress on all three, and I would tell you as a headline, we are on track. Let me unpack each of the three. First, on the acquisition and integration. Closed it right on schedule, no major surprises, early April, immediately got to work thanks to our work on diligence, a transformation management office. We, for example, in the U.S., moved immediately to one invoice, one sales team, one truck of our combined coffee entity. We started buying coffee together as one entity. We are now the world's largest buyer of green coffee. And third is we started capturing the synergies, right? We've talked about 400 million of synergies over three years, and we hit the ground running in second quarter. You're going to see that ramp in Q3 and Q4 and into 27. So feel good about early days of integration. Number two is plan for the separation. And as you think about what's required to execute a separation, there's a lot. But I feel good, based on the milestones we've set, that we're making the progress required to set up this 27th separation. What are those? Number one, name management teams for both new companies. We've not only named the leadership teams, we've named all of the players all the way down through the organization that will go to Coffee Co. and go to BevCo. With one, I think, notable exception, as you know, Lauren, and that is the new CEO of Coffee Co. And I can tell you today here at Barclays, we've made tremendous progress on that. I'm very excited about that future potential CEO, and I think you should expect to hear from us in the near term on naming that CEO that will lead Coffee Co. in the future. Second is Board of Directors. We have to establish two independent boards, made good progress there. You would have seen we named two new directors to KDP in the last couple of months. You'll probably see a few more of KDP in the year-to-go time frame. and then the balance will come on for respective Coffee Co. and BevCo. next year. Third, making progress on deleverage. You would have seen just in the last 10 days an announcement about monetization of our Chobani minority equity and a broader deal that we struck with Hamdi and the Chobani team that we feel very good about. Continuing to progress the disentanglements required for separation, the TSAs, etc. et cetera. The other thing I'd tell you is making good progress on the new corporate identities. Newsflash, Lauren, these two companies will not be called BevCo and CoffeeCo. There will be proper names. That's well underway, so we'll have the new names, the new corporate identities, the new strategic frameworks, et cetera, so that we're ready for next year. And then finally, get ready for early in the year, Investor Day, Investor Roadshow, Investor Narrative. So great progress on separation. Third and final and most important, deliver on our base business commitments. You saw our Q2 print. It ended a very strong front half for the year. We feel very good about what we'll do in the back half. I'll ask Anthony to talk in more detail, but we feel good about the guidance we've provided and our ability to deliver on that guidance on a full-year basis in the back half. And that's really underpinned by the way we've set up this interim operating structure. We've got strong TMO, Transformation Management Office, capability, internal, external advisors, to prosecute that transformation agenda while allowing the vast majority of our colleagues to focus on base business delivery. We've also set up an interim operating structure of a coffee operating unit, a beverage operating unit, leaders accountable and empowered to deliver their results. Overall, the model's working well, no real surprises, and as I said, I think we're on track with this transformation journey. You want to talk about 26 Outlook.

Great. Thanks, Tim. Good morning, everyone. Great to be here. Just a quick note, Tim and I will be making forward-looking statements this morning referencing non-GAAP metrics. Additional information is on our website and in our filings. As Tim mentioned, the business is performing well. We had a strong first half, and we have good visibility to our full-year guidance, which we can reaffirm here this morning. Our top line is expected to be $25.9 to $26.4 billion. That's comprised of two parts. Legacy KDP at the upper end of our 4% to 6% range and an incremental $8.5 to $8.7 billion contribution from JDE Peets for the nine months of ownership. At EPS, we expect low double-digit constant currency EPS growth underpinned by legacy KDP at 46% and an additional six to seven points of accretion from the JDP acquisition. For free cash flow, we're forecasting $2.5 billion of free cash flow, which will support our deleveraging efforts, which I'll talk about later. And as we do this, we are making investments in both of our coffee and beverage businesses to drive long-term sales growth. So sitting here today, we are very confident in the delivery of the guidance and positioning both companies, Coffee Co. and Beverage Co., for long-term success.

Great. Let's turn to where execution has been the strongest and talk a bit about the USRB business, broad-based sales growth. What gives you confidence in the durability of the momentum for that business?

Yeah, we are very pleased with U.S. refreshment beverages. As you look at our performance over the last couple of years, Lauren, you'll see both on the top line and bottom line, high single-digit, even in some quarters, low double-digit performance. I'm not going to promise that type of performance going forward, per se, at the double-digit rate, but feel very good that U.S. refreshment beverage can continue to deliver on that algorithmic outlook of MSD sales and HSD EPS. Why, to your question? One, it starts with a great category. North American Refreshment Beverage, $300 billion TAM. I've worked in CPG 35 years across a lot of different categories. I would tell you, Refreshment Beverage in North America is one of the most attractive spaces in CPG. It's a consistent growing category. It is a very dynamic category. It's a category where consumers continue to seek out new experiences, new brands that fit with their lifestyle, their wellness, and they're willing to pay for it. It's also a fairly rational category as it relates, you know, pricing dynamics. And for those reasons, we continue to favor the category in which we compete. Now, number two, our portfolio. I think we have an advantage portfolio. It's obviously anchored by our CSDs, carbonated soft drink position, flagship Dr. Pepper, obviously largest among them. But this is a $50 billion category, once again, a consistent grower, and I think still has tailwinds for growth. It's still, on a price per ounce basis, is one of the most affordable verticals within LRB, and that suggests to me, with the right innovation and RGM tools that we and other leaders bring, that that category can continue to grow. I like our portfolio within it. You know, CSDs is roughly half cola, half flavor. We're the leader in flavor. Youth are attracted more to flavor CSDs, multicultural, so there's a lot of growth tailwind there. We have strong positions there. Another trend in CSDs we feel great about is zero sugar. Dr. Pepper is now the second largest zero sugar brand in the marketplace and over a billion dollars in retail sales. You would have seen in Q2, I mentioned, at a 30% growth rate. So like that position. Beyond CSDs, we've done, I think, a good job of evolving our portfolio into more growth-accretive consumer-preferred spaces.

Think energy, right?

Four years ago, we basically had a zero share in energy. If you look at the most recent scanner data, last month we crossed a 10 share in energy. Sports hydration, ready-to-drink coffee. I see you enjoying the La Cologne there, premium water. So we've done a good job of building out the portfolio. And the third and final point I'd make is around our capabilities, right, whether it's the strength of the brands, the precision marketing capability at KDP that we're investing in and will get better. We can talk more about that if you wish. Our DSD capability and the way that we go to market with that DSD strength. And I think our secret sauce is just our attitude, or entrepreneurial challenger culture in the company. You put all that together, it does suggest to me that the strength you've seen in U.S. refreshment beverage can and will continue.

Going forward, do you expect BevCo, or BevCo under its eventual name, to be more selective or simply more flexible in how it pursues partnership opportunities? How should we think about the longer-term contribution of owned versus partner or distributed brands to that mid-single-digit algorithm for Bevco?

Okay. Let me start first talking about our white space strategy and how we approach that as it relates to partners. And then Anthony can kick in and talk about how partners versus owned brands play into the growth algorithm, as you said there at the end. So, you know, for us, it is about continuing to curate a portfolio that is exposed to consumer-preferred growth accretive spaces. And when we see a durable, attractive white space, we look to capitalize on that opportunity where the non-negotiables are, will we have brands that have enduring strength in that area? And will our model, our economic model, generate attractive returns? But with those two non-negotiables, we're actually quite flexible in how we get there. And let me demonstrate that through the last few years' examples. We talk at KDP about a build-by-partner approach, a flexible approach. So examples could be we see a white space, and we elect to take an existing brand within our portfolio, extended into that adjacency with our own R&D, our own supply chain, our own capital investment DSD. That's a build example. You could do a partner example purely on a distribution agreement. We have a track record of doing just that. Most recent great example is Electrolite. Electrolite is now America's fastest growing scaled sports hydration brand. We are the distribution partner with Grupo Pisa, created a great win-win partnership there, didn't require capital. Third example would be a minority ownership. A good example there is what we've done with Nutribolt, Doss Cunningham, our great partner with brands like C4 and Bloom in energy and prebiotic sodas. There's a minority ownership and a distribution agreement. And the final example is an outright acquisition. In the case of Ghost, we elected the best return would be to buy that business outright and consolidate that into our financials while keeping all the founders and what made Ghost great. So as you can see, Lauren, it is a flexible approach. It's not a one-size-fits-all. It's bespoke to the opportunity where what we're looking to do is do it, as I said, in a capital-disciplined way and one where we've really got the returns and the long-term sustainability in mind. Anthony, talk about growth versus partner brands in the algal.

Look, over the last few years, both our own brands and our partner brands have contributed to top-line growth, and it's been relatively balanced over the last few years. And as we look ahead, we expect both to contribute to top-line growth going forward. Certainly our own brands in carbonated soft drinks led by Dr. Pepper, Ghost Energy, some of our still beverage icon brands as well. And then our partner brands, C4 and Bloom. Tim talked about Electrolite, Vatacoco are all growth brands for us. We're also likely to enter new categories or segments that Tim talked about in terms of our model. So in terms of the algorithm, the mid-single-digit top-line growth, we expect both to contribute. and with healthy profitability, they support the HSD-EPS algorithm as well.

As we approach the separation, we've definitely been getting more questions about the economics of partner brands versus own brands, so maybe we can talk about that a little bit more. And are there minimum economic or strategic conditions a brand needs to meet before it deserves space in your DSD system?

Yeah, I can take that one. You know, we certainly expect our partner brands to contribute meaningfully to top and bottom line growth. So there are both strategic and economic thresholds that these brands need to meet. From a strategic point of view, the categories in which they compete need to be growing and have growth potential. The brands need to resonate with consumers. They need to have a right to win. It needs to be a transaction that leverages KDP's capabilities. So it's a win-win for the partner and for KDP. On the economic side, there's a few things that we look at. You know, on a standalone basis, the sales potential has to be there. The distribution margin has to be attractive. And then there's several additional benefits. There's operating leverage. If we put more volume through our system, we can leverage our fixed costs across, you know, more cases. There is what we call a halo effect. And, you know, again, when you put more volume in our system, right, we can have greater frequency in stores. We can have larger drop sizes, right? This improves that customer relationship as well. And the third benefit that we look for is potential minority stake investments that, you know, Tim talked about. And you put that all together, and it's a healthy economic contribution. In fact, when you look back historically, you know, since 2021, the mix of partner brands has increased, yet at the same time, our operating margin in U.S. refreshment beverage has increased by almost 100 basis points since, you know, 2021. And we would expect this dynamic to continue going forward and to support the MSD-HSD algorithm.

Okay, great. And when I think about sort of flexibility and the rationales of split, one of them is to give more flexibility to BevCo. You've talked about investing differently in this as a standalone business. Stance on DSD is really clear. Where would you say, though, you're still most, the BevCo piece is most subscale, and sort of what are the next logical opportunities to improve the route to market model? And, you know, Anthony, you were speaking to volume through the system. So, you know, how much of it is that volume to the system versus changes in territories, operating model, or like digital tools and retailer level execution?

Good. Let me start with why DSD matters, why it's so critical, and then get to your question on what we're doing to invest and to optimize our system. You know, fundamentally in CPG, there's a basic growth model that says you need to make your brands mentally available and physically available. And I believe in that basic premise. We are a brand-led company. We are here to build our brands, and both through mental and physical availability, that's how we'll achieve success. Physical availability is absolutely critical in beverage, right? You want that beverage at every channel, at every outlet, whenever that consumer has a need or demand space for a beverage. And so DSD is the critical and scarce asset to capitalize on that growth opportunity. You would know that at what will be BevCo, we are one of only three national providers of coast-to-coast DSD. DSD. We cover with our own system 80% of the U.S. population and the balance through great partners. DSD gives distribution depth, breadth. It gives cooler space that's critical. It gives multiple points of interruption. It allows for superior merchandising and really influence at that local store level. DSD is also very local. It is not a, you know, national, again, one size fits all. So for us, to your question, it is about what's most important for me is access to and influence over the winning local DSD operation. When we look at any given territory, any given geography, we think about a few factors. One is scale. What is the scale required to run an efficient and effective DSD? Scale is the biggest friend to a DSD operation. There's a big fixed cost associated, and so you need that scale. The second is the operator's growth orientation, and importantly, their focus on our brands. So if it's my team, I know we're going to get the focus because it's KDP, but if it's a third party, are they going to give the focus to a Dr. Pepper can or dry, et cetera, that it deserves, that our consumers deserve. The third is obviously economics, deciding whether I want to invest in that locally and the capital required for that. Will I get a return versus through a third party, and then it's a margin game. And the final consideration, Lauren, would be contractual rights, because you would know as a long-term beverage student, you know, the labyrinth or mosaic of the contracts of refreshment of average distribution is quite a thing. And so you need to, and we will always respect the contractual rights that we have that have come before us. When you look at those four factors I've just outlined, I would tell you it, in the majority of cases, favors our own ownership of KDP. And that's why you've seen us continue to invest. And to your question, I'd say we invest in three areas. Number one is adding additional scale. And that's through the organic growth of our own brands like Dr. Pepper, Canada Dry, 7up, whatever, as well as these new partnerships. The halo effect that Anthony just mentioned, adding the Electrolite, the La Cologne, the C4, et cetera, adds scale and helps that virtuous cycle grow. Second is new territories. You've seen us be opportunistic on new territory opportunities, and we will continue to be. We look at everyone when it comes available. We've done 25 plus since KDP has come to fruition the last eight years. I've done three or four in my tenure as well. Khalil, Arizona would be one recent example. And then the third area of investment is around tools, digital tools in particular, obviously handheld system, order order taking, order fulfillment, and selling tools so that our men and women are really focused on value add. In the end, our DSD philosophy is not just ownership for ownership sake. It is about investing in the strength of the local winning system at attractive returns for our shareholders.

Okay, great. I wanted to talk a little bit specifically about the BevCo portfolio. You mentioned Dr. Pepper Zero Sugar growing nearly 30% this last quarter, Creamy Coconut, LTO tracking ahead of its prior run. How do you think about the runway for the Dr. Pepper brand? And with so many compelling brands in your CSC portfolio, how do you think about driving success more broadly? What do you see as the highest return opportunities for incremental investment? And what determines which brands move to the front of the line?

Good. But let's definitely start with Dr. Pepper, our largest brand in the portfolio, $6 billion retail sales brand. You would know, Lauren, two summers ago, we passed another brand and are now the second largest brand in the CSD category. And that's a leadership position that's only strengthened in the last two years. We are the number one brand, Dr. Pepper, among teens today. That's a good indicator of future health, vitality of the brand. And, you know, we're a brand that very much invests in continuous recruitment and continuous to really fortify that share. In fact, year-to-date, Lauren, we're on track for share growth, and when we achieve it, it will be our 10th consecutive year of market share growth on brand Dr. Pepper. So when you say, okay, what's behind that? I'd point to a few things. One is very distinctive positioning. A brand needs great positioning. It needs to be distinctive. Dr. Pepper is, right? What is Dr. Pepper? It's not a cola. It's Dr. Pepper. It's a unique blend of 23 flavors. And not only does that come through the liquid itself, but it's the brand personality. We talk about we're a unique one of a kind brand. And I think for youth and a lot of our consumer cohorts, they identify with that because they're unique and one-of-a-kind, too, and that brand speaks to them. So a distinctive positioning. Really strong marketing, and marketing that we're investing to get even better, more precise and more personalized, but it's a hell of a platform. Right now, I don't know if there are college football fans here in the room in Boston, but college football is back. Dr. Pepper is one of our biggest platforms, college football. Fansville, ninth season, our strongest season yet. A lot of surprises coming if you're a football fan. Winning innovation, you mentioned. This year was Creamy Coconut, blockbuster success. Last year was Blackberry. We've done Strawberries and Cream. Zero sugar, big success. So winning innovation. And then finally, the last element of that success toolkit for me is the strength of sales execution at DSD, whether it's our own or our partner brand. So that's really the playbook that has worked on Dr. Pepper. To your question, then we now have the opportunity to extend that playbook to other brands, and we're doing that, and I would say we're in the early innings of that, which is why I'm bullish on continued growth potential on USRB. Let me give you two examples. First, Canada Dry. Canada Dry, billion-dollar-plus brand, far and away leader in ginger ale, distinctive positioning, all about the demand space of a relax and rejuvenate time, kind of kick your heels up after a tough, chaotic day with the kids at work, whatever. It's your time, time to relax with a refreshing Canada Dry ginger ale. Really anchor the brand there, understanding the occasion, the demand space, the consumer. Great marketing. We launched a campaign earlier this year we call Dry Time is My Time, right? It's your time to unplug and relax. That's seen great returns, significantly better than what we've seen before. Winning innovation, part of the playbook. We launched this fruit splash platform two years ago. Crisp, delicious taste of ginger with a splash of cherry juice, a splash of strawberry juice. finding that platform to be highly incremental to the base business, driving overall trademark sales, great sales execution. The other shout-out I'm going to give in our brand portfolio is 7up. And 7up, you know, if you think about, Lauren, 7up from when we were kids, the Uncola, right, the big, you know, lemon-lime brand. Our marketing group has really come up with a clever relaunch. It's our largest relaunch of 7up in at least 15 years. It just broke a couple of weeks ago. Actually, here at Barclays Boston, in the coolers out there, if you haven't tried it, we've got the new 7-Up formula I encourage you to try. But we're having a little fun, Lauren, and if you indulge me for 30 seconds, you know that that segment is lemon-lime soda. Well, the clever idea the marketing guys came up with is, why does lemon get all the love here? What is it about lemon, right? Lemon, you know, pastries, lemon cleaning products, lemon-lime soda. Why isn't it lime-lemon? And we've done a lot of work around lime over lemon. There's this whole campaign. You know who's keeping lemon on top? The Lemonati. But we are leading the resistance for a lime lemon soda. So we've got an all-new formula, lime over lemon. We've got a new visual ID. We've got a really clever marketing campaign. I think that's part of the success formula you're going to start to see employed across these brands. All told, got a lot of confidence that we can continue to grow not only Pepper, but many of our other brands as well.

Okay, great. Let's shift gears to coffee. So starting with U.S. coffee business disappointed in the second quarter, how should we distinguish between issues that are cyclical, like elasticity to elevated pricing because of green coffee inflation and tariffs, or issues that are actually more strategic, like format competition or the rise of private label? in pods.

Yeah. So if you look at the most recent print in Q2, I think coffee in aggregate delivered a solid quarter, but you definitely see a diverging trends between legacy J.D. Pete's coffee and U.S. coffee. And since your question was U.S. coffee, let's go there. Q2 was a little weaker than we had anticipated. Our profit declined at a rate similar to what we saw in Q1.

Why?

The primary factor was cost, a highly unfavorable cost envelope. You would know that last year C price hit an all-time high. And we've also shared that, you know, given our inventory positions, our hedging forward buy strategies, there's quite a lag between C price when it hits the market and the P&L impact at about six to nine months. And so we saw peak unfavorable green coffee price pressure in the second quarter. Second, tariffs. Tariffs were quite a headwind for us in Q2 as well. In addition to that, there was volume mix pressure. And the volume mix pressure manifested in two ways. And I think it all comes back to a bit of a pressured consumer, particularly low and mid-income, who is exhibiting a bit more value-seeking behaviors in aggregate, but I would say in particular in coffee, given that coffee is a high dollar per unit ring in the grocery store and has experienced multiple years of inflationary impact. And so these two factors were one, we saw a bit of occasion leakage from our single serve U.S. coffee, you know, stronghold, into other more affordable formats, like instant coffee, like a big pot of black drip coffee. The other dynamic is you saw a little bit of growth of private label. And while we actually manufacture both private label and brand in our K-cup line, no doubt our share position is stronger in branded and our margin position is stronger. So you saw that unfavorable mix. When you hear all of that, Lauren, I do think to your question, we would say this is cyclical, not structural. This is a response to a highly inflationary environment that hit our P&L in the front half and that is temporarily impacting consumer behavior. I've been in coffee for decades in a past life as well, and you see that, especially on the tail end of an inflationary period. So what about going forward? In the back half, I expect a very different picture. Let's start with costs. I think the headwind you saw in Q1 and Q2 on green coffee costs, as well as tariff costs, turns far more favorable and begins to present itself as a tailwind. Second is you will see good brewer shipments in the back half, a good early indicator of the future. We will grow household penetration again this year of Keurig installed base, and you will see a far more favorable pod trend. Next, you're going to see early synergies floating through the U.S. Coffee P&L as U.S. Coffee and Legacy Pete's Coffee come together for one U.S. Coffee business. And then finally, Anthony said this on the earnings call, the Pete's K-Cup business will shift from a reporting segment standpoint from J.D. Pete's and U.S. Coffee. For all those reasons, we're anticipating a much improved back half on U.S. coffee relative to front half.

Okay, great. And when we think about coffee more broadly, the combined entity, what should investors look for over the next year to believe this is becoming a stronger coffee platform rather than just a larger one? And what do you think is the timeline to realize some of the revenue synergies for the broader coffee business that you've talked about?

Yeah. Look, ultimately, I expect the strength of this new platform to be evident in the results that we produce. And I'm going to start with the category here again. Global Coffee is a $400 billion TAM. It is a consistent growth category. In fact, if you look over the last four decades, you would see roundabout a 2% volume CAGR and a value or sales CAGR even stronger. It is a ubiquitous habit, a wonderful habit. I can't imagine starting the day without coffee every day. And, in fact, here in North America, it's the number two most consumed beverage behind water, mostly tap water. And globally, it's the number three, which also presents a growth opportunity. It's behind water, tea, and then coffee. And when you see a lot of the emerging world in global coffee, you see a step-by-step shift from tea culture to coffee culture among youth, another tailwind in addition to premiumization. So we know what it takes to win in this category. Scale matters in global coffee. Brands matter in coffee. and a set of capabilities oriented around consumer orientation. The platform we're building, this new global coffee co, is built for purpose to capitalize on that attractive category and really fortify those advantages. We will have leadership positions, number one or number two, in 35 markets around the world. We will have the scale in supply chain and coffee procurement. I've already mentioned number one buyer of the coffee bean globally. We will have $4 billion brands and a host of $100 to $500 million brands, kind of taste-of-the-nation brands around the world. And we will have the breadth of the portfolio playing in every format, every major geography, channel, at home, away from home, to really fortify that look. as it relates the combination benefits that you mentioned at the end of your question there's definitely growth or revenue opportunities and there's cost let me quickly hit on on growth and revenue and i'll ask anthony hit on cost i'd point to three or four key areas right out of the gate the first is peat's peat's here in this country it's a great brand billion dollar plus brand, California origin provenance brand, really one of the pioneers, even before another brand you might know from Seattle, that pioneered coffee here in the U.S. in the early days. And there is an opportunity to extend that brand nationally on the back of the Keurig national footprint and the great partnerships and scale we have with our retailers. Second is the opportunity to take legacy Keurig brands, think Green Mountain, think Donut Shop, licensed brands like McCafe and extend those brands across all formats because, you know, heretofore, Legacy Keurig, we basically played in one swim lane, K-Cup single serve. We now have the set of capabilities to play in every across our brands. The third revenue opportunity I'd speak to is around our systems or our brewers. One of the spikes of excellence of Legacy Keurig is, we know brewers. We do our own brewers in-house, right? We lead that innovation and we do it in a profitable way. There's a lot we can bring to the J.D. Pete side as it relates brewers in that area. And then the last one I just shout out here on stage, it's timely, is Alta, right? Alta, you know, Lauren, is that new system. We're on track to launch that in a targeted way here in time for holiday 26 great new system uh brews every cup of coffee you look for high pressure espresso cappuccino latte etc long drip black cup cup of coffee and do it in a very sustainable way plastic free aluminum free we'll launch that here but now courtesy of this combination we can consider taking that uh on the road beyond the u.s you want to touch on cost synergy? Sure.

We're targeting $400 million in cost synergies over a three-year period post acquisition. They come from three buckets. The first is IT and SG&A. We'll look to optimize the organizational structure. We'll look to consolidate IT systems and vendors. We'll look to increase the use of digital tools, including AI. The second area is procurement. Obviously, we have significant green coffee buying scale that will leverage. We see efficiencies in other areas like packaging and media. Tim mentioned brewers will look to consolidate our brewery design as well. And the third area is supply chain. There's significant opportunities to consolidate manufacturing and distribution, particularly in North America across Peets and Keurig. And that activity is already happening. In support of these individual work streams, there are dedicated teams across KDP, JDP, you know, third-party experts as well that are all contributing. You know, there are specific accountabilities and timetables, and there's a management review process supporting, you know, the whole thing. So we're very confident in the delivery of the synergies. We started to see some in Q2. This will step up in the back half and improve into 27 and 28. And synergy attainment is an important part of the HSD EPS algorithm for a future of Coffee Co. Okay, great.

We're going to have to end there, and we're going to go to breakout. But please join me in thanking KDP and also for the cooler of beverages all week.