Keurig Dr Pepper affiliated entity to buy $20M in Vita Coco stock as part of IPO

Dive Brief:

• An entity affiliated with Keurig Dr Pepper plans to purchase $20 million in shares of Vita Coco at the company’s IPO price from an existing shareholder, Verlinvest Beverages, as part of a private placement, according to an updated S-1 filing with the Securities and Exchange Commission.
• Vita Coco, which is expected to go public next week, said in the filing it would offer 11.5 million shares at between $18 to $21. At $19.50, the mid-point of that range, the Keurig Dr Pepper entity would own more than one million shares.
• Keurig Dr Pepper and Vita Coco have worked closely together, with the soda, tea, water and coffee giant serving as Vita Coco’s largest distributor customer.

Dive Insight:

Vita Coco is moving a step closer toward its IPO, and its presence as a public company could soon have a close partner taking a stake as part of the journey.

The company, whose portfolio includes its namesake coconut drink as well as plant-based energy brand Runa, purified water Ever & Ever packaged in aluminum bottles, and protein-infused water Pwr Lift, is reportedly seeking a valuation of $1.17 billion at a $21 IPO price.

Vita Coco, which has been working with Keurig Dr Pepper for years, is heavily dependent on the beverage giant. According to the SEC filing, Keurig Dr Pepper accounted for 19% of Vita Coco’s total net sales in 2020.

The updated S-1 filing did not identify the investor except to note that it was “an entity affiliated with Keurig Dr Pepper.” An investment by this entity could be a valuable vote of confidence for Vita Coco as its shares begin trading on the NASDAQ.

With the history between the two companies, Keurig Dr Pepper is undoubtedly familiar with Vita Coco and how its brands are performing in the U.S. marketplace. It’s unlikely that if the group with ties to Keurig Dr Pepper had doubts about Vita Coco’s future, or believed the IPO was overvaluing the company, it would opt to buy the shares from an existing shareholder. If it wanted to invest, it could wait until later.

Even though Keurig Dr Pepper has long been known for its home coffee platform and sodas like its namesake soft drink and 7UP, it has been turning to acquisitions to build up its beverage portfolio. In recent years, it purchased the majority of Bai Brands it didn’t already own for $1.7 billion and premium water brand Core Nutrition for $525 million. 

Keurig Dr Pepper has benefited financially by distributing Vita Coco’s brands amid an upswing in demand for better-for-you beverages. While little is known about the investor’s ties to Keurig Dr Pepper, it’s possible the beverage giant could ultimately decide to purchase Vita Coco if it continues to see strong sales in the company’s brands and remains optimistic about its future.

Vita Coco had net sales of $334 million for the 12 months ending June 30, a 17% increase from the same period a year earlier, the SEC filing showed. The New York-based company also posted net income of $33 million in 2020 compared to $9 million in 2019. 

Keurig Dr Pepper CEO Bob Gamgort told Bloomberg recently that his company, formed in a 2018 merger, is looking at deals worth up to $20 billion. Keurig Dr Pepper is seeking “move-the-needle but not bet-the-company type deals” in categories such as energy and alcoholic drinks, Gamgort told the wire service.