Keurig Dr Pepper: Executive Appointment Paves the Way for CEO Succession; No Change in Strategies

Narrow-moat Keurig Dr Pepper today unveiled its CEO succession plan, with the appointment of consumer packaged goods veteran Tim Cofer to the COO role effective in November and the arrangement for him to take the top job from current CEO Bob Gamgort in the second quarter of 2024. We believe Cofer’s CEO experience at publicly listed Central Garden & Pet, and his 25 years of executive roles at wide-moat Mondelez International and predecessor Kraft Foods overseeing business operations, distribution, and strategic integrations, have prepared him well to lead Keurig Dr Pepper in its quest to grow faster and solidify its competitive position in beverage and coffee. We don’t expect any material change in the firm’s growth roadmap or capital allocation priorities, as long-time executive Bob Gamgort will retain the executive chairman role. As such, we are maintaining our Standard Capital Allocation Rating and our $35 fair value estimate. Shares trade in a range we’d consider fairly valued.