McDonald's and Keurig Dr Pepper Are Making Coffee More Sustainable and Profitable


Sustainability is becoming a major concern for global industries. As the effects of man-made climate change grow in the impact they are having on our day to day lives, people all over the world are finding new ways to make their business more environmentally friendly.

The food and beverage industry arguably has more work to do in this regard than other business sectors. It has the twin issues of producing a lot of packaging waste — which must be recycled or disposed of responsibly — and it has to make sure that it is sourcing its products from sustainable producers who treat workers fairly and are, in turn, treated fairly.

Of course, all this must also be balanced with continuing to provide customers with the levels of convenience, experience, and service they demand, something which has lead McDonald's and Keurig Dr Pepper to join forces on coffee.





McDonald's

Keurig Dr Pepper has been a long-standing force in the tea and coffee business. However, McDonald's has been gaining a strong reputation for serving decent coffee at a fair price and has been drawing many customers away from more specialist coffee brands such as Starbucks and Costa.



Now, these two food and beverage giants have joined forces and announced a long-term master licensing and distribution agreement for McCafe packaged coffee in the US. McDonald's has been working with Kraft Heinz to bring its high-demand coffee products to market since 2014, but now feels like the time has come for a change.

"We are prioritizing making McCafe a go-to coffee brand for our customers, and we are confident this move will strengthen the impact of the McCafe brand in retail," said McDonald's USA Vice President of Menu Innovation, Linda VanGosen. "We would like to thank our current partner Kraft Heinz for a successful partnership in McCafe packaged coffee. We are looking forward to the next chapter and working with Keurig Dr Pepper, a leader in innovation and marketing of single-serve coffee pods."

The three brands will work together during a transition period during the second half of 2020 to ensure there is little to no disruption to supply chains and that McDonald's customers can still access the coffee products they've come to love.

The growing dominance of McDonald's in the coffee space is what attracted Keurig Dr Pepper to the partnership in the first place.

"McCafe is emerging as one of the power brands at retail, and we are pleased to welcome the brand as a new member of our licensed brand family," said Chief Commercial Officer at Keurig Dr Pepper, Derek Hopkins. "We look forward to innovating with McCafe for our leading Keurig brewing system and bringing our sourcing, roasting, distribution and marketing expertise to further drive growth and expansion of the brand in homes throughout the U.S."

Peter Eck, General Manager of Coffee for Kraft Heinz added, "We are incredibly proud of our successful partnership with McDonald's and the growth we have seen in McCafe packaged coffee since the launch into retail in 2014. Kraft Heinz will support the transition for McCafe, and we remain fully committed to the coffee category as a whole. We are actively exploring all options to grow, innovate and win in coffee with our own brands, as well as with our other licensed brands."

Sustainability

One of the biggest concerns for McDonald's and Keurig Dr Pepper going into this fresh partnership is the sustainability of its coffee. With most of the world's coffee being grown and produced in developing countries, big brands need to make sure farmers and producers get a good deal. Alongside these concerns runs the issue of waste — a particular worry when it comes to single-use coffee pods — and McDonald's and Keurig Dr Pepper are eager to promote sustainability in this area.

"Both McDonald's and Keurig Dr Pepper are taking meaningful steps to ensure that coffee is grown and traded in ways that support coffee farmers, their communities and their land," McDonald's said a press release. "McDonald's and KDP share a commitment to sustainably sourcing 100% of coffee by 2020, and both are members of the Sustainable Coffee Challenge, a group of global stakeholders aiming to make coffee the world's first sustainable commodity."

Keurig Dr Pepper has also committed to responsibly source all its coffee brewers and work to make all its single-use pods recyclable in the US by the end of 2020, and work with all partners to create sustainable supply chains at every step.

Final Thoughts

Balancing sustainability and business is not always the easiest task. However, with McDonald's and Keurig Dr Pepper committed to producing excellent coffee, for a reasonable price, from ethical sources, it looks like they may just achieve it.


Sustainable sourcing is set to be a hot topic at Digital Food and Beverage 2020, being held in July at the Hilton Austin, TX.

Download the agenda today for more information and insights.



WBR Insights is the custom research division of Worldwide Business Research (WBR). Our mission is to help inform and educate key stakeholders with research-based whitepapers, webinars, digital summits, and other thought-leadership assets while achieving our clients' strategic goals.



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