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What changed in Keurig Dr Pepper's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Keurig Dr Pepper's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+325 added−248 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-25)

Top changes in Keurig Dr Pepper's 2025 10-K

325 paragraphs added · 248 removed · 184 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe have cultivated relationships with leading beverage brands to create long-term partnerships that enable us and our partners to benefit equitably in future value creation, and where appropriate, we bring these partner brands into our owned portfolio through acquisitions. We continually evaluate making investments in companies that fill in whitespace in our portfolio. Generate fuel for growth.
Biggest changeWe continually evaluate organic and inorganic investments that allow us to more fully meet evolving consumer preferences. Where appropriate, we leverage and extend our existing brands. We also cultivate strong relationships with leading beverage brands that enable us to form long-term, capital-efficient partnerships. In certain cases, we may add complementary brands to our owned portfolio through acquisitions.
We manufacture and sell 100% of the K-Cup pods of our owned and licensed brands, including Green Mountain Coffee Roasters, The Original Donut Shop, and McCafé, to retailers, away from home channel participants, and end-use consumers. We manufacture K-Cup pods for our partner brands, who in turn sell them to retailers and consumers.
We manufacture and sell 100% of the K-Cup pods of our owned and licensed brands, including Green Mountain Coffee Roasters, McCafé, and The Original Donut Shop, to retailers, away from home channel participants, and end-use consumers. We manufacture K-Cup pods for our partner brands, who in turn sell them to retailers and consumers.
Key beverage brands include Peñafiel, Clamato, Squirt, Canada Dry, Dr Pepper, Mott’s, and Crush. • Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products to partners and retailers, as well as directly to consumer through our website at www.keurig.ca.
Key beverage brands include Peñafiel, Clamato, Canada Dry, Squirt, Dr Pepper, Mott's, Schweppes, and Crush. • Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products to partners and retailers, as well as directly to consumer through our website at www.keurig.ca.
Various countries, states, provinces, and other authorities have enacted eco-taxes, extended producer responsibility laws, deposit or reuse/refill mandates, fees on certain products or packaging, restrictions or bans on the use of certain types of packaging, including single-use plastics, and regulations on PFAS, and other chemicals of concern.
Various countries, states, provinces, and other authorities have enacted eco-taxes, extended producer responsibility laws, water-use restrictions, deposit or reuse/refill mandates, fees on certain products or packaging, restrictions or bans on the use of certain types of packaging, including single-use plastics, and regulations on PFAS, and other chemicals of concern.
Our Culture Together with our employees, we created a set of core values that define how we work together and are the cornerstone of KDP's culture. We embrace a challenger mindset, which, together with our strategy and core values, are the unifying force for our team and guide our actions, each and every day.
Our Culture Together with our employees, we created a set of core values that define how we work together and are the cornerstone of our culture. We embrace a challenger mindset, which, together with our strategy and core values, are the unifying force for our team and guide our actions, each and every day.
Certain other brands, such as Snapple, Bai, and Core, are licensed for distribution in various territories to bottlers and a number of smaller distributors such as beer wholesalers, wine and spirit distributors, independent distributors, and retail brokers.
Certain other brands, such as Snapple and Core, are licensed for distribution in various territories to bottlers and a number of smaller distributors such as beer wholesalers, wine and spirit distributors, independent distributors, and retail brokers.
We actively manage transportation of our products using our fleet (owned and leased) of approximately 7,100 vehicles in the U.S. and 2,200 in Mexico, as well as third party logistics providers. With our Keurig.com website, we have a leading direct-to-consumer e-commerce platform which provides us insights and expertise in the e-commerce channel.
We actively manage transportation of our products using our fleet (owned and leased) of approximately 8,100 vehicles in the U.S. and 2,200 in Mexico, as well as third-party logistics providers. With our Keurig.com website, we have a leading direct-to-consumer e-commerce platform which provides us insights and expertise in the e-commerce channel.
Generally, we are able to sell these partner brands to our away from home channel participants and directly to consumers through our website at www.keurig.com. We also participate in private label manufacturing arrangements. 2 Table of Contents Our U.S. Coffee segment manufactures K-Cup pods using freshly roasted and ground coffee as well as tea, cocoa, and other products.
Generally, we are able to sell these partner brands to our away from home channel participants and directly to consumers through our website at www.keurig.com. We also participate in private label manufacturing arrangements. Our U.S. Coffee segment manufactures K-Cup pods using freshly roasted and ground coffee as well as tea, cocoa, and other products.
KDP has a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Mott's, A&W, Peñafiel, Snapple, 7UP, Green Mountain Coffee Roasters, GHOST, Clamato, Core Hydration, and The Original Donut Shop, as well as the Keurig brewing system.
We have a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Mott's, A&W, Peñafiel, GHOST, 7UP, Snapple, Green Mountain Coffee Roasters, Clamato, The Original Donut Shop, and Core Hydration, as well as the Keurig brewing system.
Operating and Reportable Segments As of December 31, 2024, our operating structure consists of three operating and reportable segments: U.S. Refreshment Beverages, U.S. Coffee, and International. Segment financial data, including financial information about foreign and domestic operations, is included in Note 8 of the Notes to our Consolidated Financial Statements. U.S. Refreshment Beverages Our U.S.
Operating and Reportable Segments As of December 31, 2025, our operating structure consists of three operating and reportable segments: U.S. Refreshment Beverages, U.S. Coffee, and International. Segment financial data, including financial information about foreign and domestic operations, is included in Note 9 of the Notes to our Consolidated Financial Statements. U.S. Refreshment Beverages Our U.S.
Refreshment Beverages segment is a brand owner, manufacturer, and distributor of LRBs in the U.S. In this segment, we manufacture and distribute beverage concentrates, syrups, and finished beverages of our brands to third-party bottlers, distributors, retailers, and, ultimately, the end consumer.
Refreshment Beverages segment is a brand owner, manufacturer, and distributor of LRBs in the U.S. In this segment, we manufacture and distribute beverage concentrates, syrups, finished beverages, and other consumables to third-party bottlers, distributors, retailers, and, ultimately, the end consumer.
Employee Health and Safety KDP uses a wide variety of strategies and programs to support the health and safety of our employees. Our Environmental Health & Safety team considers all aspects of what our employees may encounter and works to minimize risk. Key to these efforts are data and preventive actions.
Employee Health and Safety We use a wide variety of strategies and programs to support the health and safety of our employees. Our Environmental Health & Safety team considers all aspects of what our employees may encounter and works to minimize risk. Key to these efforts are data and preventive actions.
KDP measures Lost Time Incident Rate, a reliable indication of Total Recordable Injuries Rate severity, and uses a risk reduction process that thoroughly analyzes injuries and near misses. OUR IMPACT As a leading beverage company, we have the opportunity and responsibility to make a positive impact for people, communities, and planet.
We measure Lost Time Incident Rate, a reliable indication of Total Recordable Injuries Rate severity, and use a risk reduction process that thoroughly analyzes injuries and near misses. OUR IMPACT As a leading beverage company, we have the opportunity and responsibility to make a positive impact for people, communities, and planet.
We have strategically-located distribution capabilities, which enable us to better align our operations with our customers and our sales channels, to ensure our products are available to meet consumer demand, to reduce transportation costs, and to have greater control over the timing and coordination of new product launches.
In our DSD network, we have strategically located distribution capabilities that enable us to better align our operations with our customers and sales channels, ensure our products are available to meet consumer demand, reduce transportation costs, and have greater control over the timing and coordination of new product launches.
Our primary competitors include Coca-Cola, PepsiCo, Starbucks Corporation, The J.M. Smucker Company, The Kraft Heinz Company, and Nestlé S.A. Although these companies offer competing brands in categories we participate in, many are also our partners or customers, as they purchase beverage concentrates or K-Cup pods directly from us.
Our primary competitors include Coca-Cola, PepsiCo, Starbucks Corporation, The J.M. Smucker Company, The Kraft Heinz Company, and Nestlé S.A. Although these companies offer competing brands in categories we participate in, many are also our partners or customers, as they purchase products directly from us.
In Canada, we have approximately 1,400 employees, with approximately 400 covered by union collective bargaining agreements. We also have approximately 300 employees in Europe and Asia. Our collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years.
In Canada, we have approximately 1,400 employees, with approximately 400 covered by union collective bargaining agreements. We also have approximately 300 employees outside of North America. Our collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years.
Certain cities and municipalities within the U.S. have passed various taxes on the distribution of sugar-sweetened and diet beverages, which are at different stages of enactment. We expect that legislation or regulations like those described above will continue to be proposed in the future at local, state and federal levels, both in the U.S. and elsewhere.
Certain countries, as well as cities and municipalities within the U.S., have passed various taxes on the distribution of sugar-sweetened and diet beverages. We expect that legislation or regulations like those described above will continue to be proposed in the future at local, state and federal levels, both in the U.S. and elsewhere.
We regularly launch new brewers with new features and benefits, technological advances, sustainable attributes, and changes in aesthetics to provide a variety of options to suit individual consumer preferences. We also continuously innovate and renovate our portfolio of K-Cup pods and beverages to provide an expansive array of flavors. Effective December 31, 2024, we acquired a controlling interest in GHOST.
We regularly launch new brewers with new features and benefits, technological advances, sustainable attributes, and changes in aesthetics to provide a variety of options to suit individual consumer preferences. We also continuously innovate and renovate our portfolio of K-Cup pods and beverages to provide an expansive array of flavors.
Key brands in this segment include Dr Pepper, Canada Dry, Mott’s, A&W, 7UP, Snapple, Sunkist soda, Squirt, C4 Energy, Hawaiian Punch, Electrolit, Core Hydration, Bai, Evian, Clamato, Yoo-Hoo, Vita Coco, and Big Red. U.S. Coffee Our U.S.
Key brands in this segment include Dr Pepper, Canada Dry, Mott's, A&W, GHOST, 7UP, Snapple, Squirt, Electrolit, Sunkist soda, C4 Energy, Hawaiian Punch, Bloom, Vita Coco, Core Hydration, Bai, Evian, Clamato, Yoo-Hoo, Big Red, and RC Cola. 2 Table of Contents U.S. Coffee Our U.S.
We lead with deep consumer insights that inform our brand positioning and surface opportunities to address unmet needs. We have a robust innovation program, which is designed to meet consumers' changing flavor and beverage preferences and to grow our share of beverage occasions. Amplify our route-to-market advantage.
We lead with deep consumer insights that inform our brand positioning and surface opportunities to address unmet needs. We have a robust innovation program, which is designed to meet consumers' changing flavor and beverage preferences and to grow our share of beverage occasions. Shape our now and next beverage portfolio.
As of December 31, 2024, our portfolio of partner brands included, but was not limited to, C4 energy drinks, Electrolit instant hydration beverages, evian water, Vita Coco coconut water, Polar Beverages seltzer water, La Colombe shelf-stable RTD coffee, Black Rifle Coffee Company energy drinks, and Peet's RTD coffee. SEASONALITY The beverage market is subject to some seasonal variations.
As of December 31, 2025, our portfolio of partner brands included C4 energy drinks, Electrolit instant hydration beverages, Vita Coco coconut water, Bloom energy drinks and prebiotic sodas, evian water, Polar Beverages seltzer water, La Colombe shelf-stable RTD coffee, and Black Rifle Coffee Company energy drinks. SEASONALITY The beverage market is subject to some seasonal variations.
Key K-Cup pod brands include McCafé, Tim Hortons, and Van Houtte, as well as other partner and private label brands. Product Innovation and New Partnerships We are focused on a robust innovation pipeline within our portfolio of products to build household penetration of our business.
Key K-Cup pod brands include McCafé, Tim Hortons, and Van Houtte, as well as other partner and private label brands. Product Innovation and New Partnerships We are focused on a robust innovation pipeline within our portfolio of products to expand our consumer base and grow market share.
We have some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers. We have a portfolio of more than 125 owned, licensed, and partner brands, as well as powerful distribution capabilities.
Our beverage brands are some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers. We offer more than 125 owned, licensed, and partner brands, supported by powerful distribution capabilities.
Net sales to Walmart are included in all reportable segments. Bottlers and Distributors In the U.S. and Canada, we generally grant manufacturing and distribution licenses for our carbonated soft drinks to bottlers for specific geographic areas that are typically exclusive and long-term. These bottlers may be affiliated with Coca-Cola or with PepsiCo, or they may be independent.
Bottlers and Distributors In the U.S. and Canada, we generally grant manufacturing and distribution licenses for our CSDs to bottlers for specific geographic areas that are typically exclusive and long-term. These bottlers may be affiliated with Coca-Cola or with PepsiCo, or they may be independent.
HUMAN CAPITAL RESOURCES Our Employees We have approximately 29,400 employees, primarily located in North America. In the U.S., we have approximately 22,400 employees, of which approximately 5,100 employees are covered by union collective bargaining agreements. In Mexico, we have approximately 5,300 employees, of which approximately 4,000 are covered by union collective bargaining agreements.
HUMAN CAPITAL RESOURCES Our Employees We have approximately 30,600 employees, primarily located in North America. In the U.S., we have approximately 23,200 employees, of which approximately 5,700 employees are covered by union collective bargaining agreements. In Mexico, we have approximately 5,700 employees, of which approximately 4,200 are covered by union collective bargaining agreements.
Retailers purchase finished beverages, K-Cup pods, appliances, and accessories directly from us. Our portfolio of strong brands, operational scale and experience in the beverage industry has enabled us to maintain strong relationships with major retailers throughout the U.S., Canada, and Mexico. Our largest retailer, Walmart, represented approximately 16% of our consolidated net sales in 2024.
Our portfolio of strong brands, operational scale, and experience in the beverage industry has enabled us to maintain strong relationships with major retailers throughout the U.S., Canada, and Mexico. Our largest retailer, Walmart, represented approximately 16% of our consolidated net sales in 2025. Net sales to Walmart are included in all reportable segments.
We distribute our brewers using third-party distributors, retail partners and directly to consumers through our website at www.keurig.com. International Our International segment includes: • Sales in Canada, Mexico, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
International Our International segment includes: • Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
We began distributing under both of these agreements during the fourth quarter of 2024. 3 Table of Contents CUSTOMERS We primarily serve the following types of customers: Retailers Retailers include supermarkets, hypermarkets, mass merchandisers, club stores, e-commerce retailers, office superstores, vending machines, fountains, grocery and drug stores, convenience stores, and other small outlets.
CUSTOMERS We primarily serve the following types of customers: Retailers Retailers include supermarkets, hypermarkets, mass merchandisers, club stores, e-commerce retailers, office superstores, vending machines, fountains, grocery and drug stores, convenience stores, and other small outlets. Retailers purchase finished beverages, K-Cup pods, appliances, and accessories directly from us.
We focus on critical transformational investments that drive continuous productivity and network optimization. We also maintain an emphasis on lean overheads in order to drive increasing operating leverage and fund our investments in our growth opportunities. Dynamically allocate capital.
We continually invest in digital tools and capabilities as part of our route-to-market strategy, and as one element of a holistic digital transformation across KDP. Generate fuel for growth. We focus on critical transformational investments that drive continuous productivity and network optimization. We also maintain emphasis on lean overheads to drive operating leverage and fund investments in our growth opportunities.
Information on any of our websites is not incorporated by reference in this document or any of our other filings with the SEC. MARKET AND INDUSTRY DATA The market and industry data in this Annual Report on Form 10-K is from Circana, an independent industry source, and is based on retail dollar sales and sales volumes in 2024.
Information on any of our websites is not incorporated by reference in this document or any of our other filings with the SEC. 8 Table of Contents
Our highly efficient business model, focused on an optimized capital structure, gives us optionality to invest internally and pursue investments, partnerships, acquisitions, or other opportunities to continue to drive growth and create value. 1 Table of Contents OUR PRODUCTS AND OPERATING STRUCTURE We are a leading integrated brand owner, manufacturer, and distributor of beverages in the U.S., Canada, Mexico, and the Caribbean.
Our highly efficient business model, focused on an optimized capital structure, gives us optionality to invest internally and pursue investments, partnerships, acquisitions, or other opportunities to continue to drive growth and create value, while remaining committed to a strong balance sheet with investment grade ratings. 1 Table of Contents PROPOSED JDE PEET'S ACQUISITION AND SUBSEQUENT SEPARATION On August 24, 2025, we entered into an agreement to acquire JDE Peet's, a global pure-play coffee company with a portfolio of leading brands including Jacobs, L'OR, and Peet's.
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We have been able to translate those insights and experiences to our LRB business as the number of fulfillment options that are better suited economically for beverages has evolved, leading to growth in the e-commerce channel.
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This flexible approach allows us to optimally address whitespace growth opportunities in our portfolio. Amplify our route-to-market advantage.
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We continually invest in digital tools and capabilities as part of our route-to-market strategy, and as one element of a holistic digital transformation across KDP. Shape our now and next beverage portfolio.
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The JDE Peet's Acquisition is expected to occur early in the second quarter of 2026 and is subject to the satisfaction or waiver of the closing conditions, including the acceptance of the offer by the shareholders of JDE Peet's. We’ve also entered into a series of transactions to fund the JDE Peet's Acquisition.
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Founded in 2016, GHOST is a lifestyle sports nutrition business with a portfolio anchored by GHOST Energy, a leading ready-to-drink energy brand. We initially purchased a 60% stake in GHOST, and we also entered into an agreement which requires us to buy the remaining 40% of GHOST in 2028.
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Refer to Note 3 of the Notes to our Consolidated Financial Statements for additional information on the JDE Peet's Acquisition and related transactions. On August 25, 2025, we announced our intention to separate our beverage and coffee portfolios into two independent, publicly traded companies, which will allow for more tailored growth strategies, operating models, and approaches to capital allocation.
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During 2024, we launched our Keurig K-Brew+Chill brewer that features Quick Chill Technology which delivers iced beverages at temperatures below 60 degrees straight from the brewer, as well as the ability to brew hot beverages. In addition, we announced our multi-year innovation agenda with the Keurig Alta brewer and K-Rounds plastic- and aluminum-free pods.
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The Separation is expected to occur subsequent to the closure of the JDE Peet's Acquisition. OUR PRODUCTS AND OPERATING STRUCTURE We are a leading integrated brand owner, manufacturer, and distributor of beverages in the U.S., Canada, Mexico, the Caribbean, and other international markets.
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We debuted Canada Dry Fruit Splash, which partners classic ginger ale with cherry flavors and a splash of real fruit juice, as well as a limited edition offering of Dr Pepper Creamy Coconut. We launched Mott’s Active, a hydrating juice beverage for kids with naturally sourced electrolytes, no added sugar, and no artificial flavors, in Blastin’ Berry and Watermelon Burst.
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We distribute our brewers using third-party distributors and retail partners, as well as directly to consumers through our website at www.keurig.com.
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We entered into new partnerships with The Brooklyn Roasting Company, Kahawa 1893, Killah Coffee, and Punk Bunny Coffee, among others, to provide their signature coffee blends in K-Cup pod format. We expanded our partnership with Black Rifle Coffee Company to include a sales and distribution agreement for Black Rifle Energy.
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In 2025, we released new flavor innovations, including Dr Pepper Blackberry and 7UP Tropical. Additionally, through our partnership with Bloom, we entered the prebiotic CSD market during the year with the distribution of Bloom Pop. 3 Table of Contents We launched our Keurig K-Mini Mate brewer, with a compact design that saves space without compromising on coffee quality.
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We also entered into an agreement with Nutrabolt to distribute Bloom RTD energy beverages.
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Additionally, we released the Keurig K-Crema brewer, which allows users to brew crema-topped coffees from traditional K-Cup pods. We have also continued to progress in the development of our Keurig Alta brewer and K-Rounds plastic- and aluminum-free pods. We began in-home consumer beta testing during the year and expect to launch these products in late 2026.
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Although we believe that this independent source is reliable, we have not verified the accuracy or completeness of this data or any assumptions underlying such data. Circana is a market information provider, primarily serving consumer packaged goods manufacturers and retailers.
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In the fourth quarter of 2025, we debuted the first-ever coffee line under the Keurig brand, the Keurig Coffee Collective. This collection showcases the new Refined Grind manufacturing technique, which grinds premium beans to a high density and allows for more coffee in each K-Cup pod.
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We use Circana data as our primary management tool to track market performance because it has broad and deep data coverage, is based on consumer transactions at retailers, and is reported to us weekly. Circana data provides measurement and analysis of marketplace trends such as market share, retail pricing, promotional activity, and distribution across various channels, retailers, and geographies.
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Measured categories provided to us by Circana include K-Cup pods, carbonated soft drinks, RTD teas and coffee, single serve and multi-serve juice and juice drinks, sports drinks, energy drinks, still waters, carbonated waters, and non-alcoholic mixers. Circana also provides data on other food items such as apple sauce.
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Circana data we present in this report is compiled from scanner transactions in key retail channels, including grocery stores, mass merchandisers (including Walmart), club stores (excluding Costco), drug chains, convenience stores, and gas stations.
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However, this data does not include the fountain or vending channels, or small independent retail outlets, which together represent a meaningful portion of the U.S. beverage market. This data does not include certain customers and e-commerce sales which represents a significant portion of our U.S. Coffee segment.
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Our market share data for our brewers is also based on information provided by Circana. The data presented for our brewers is based upon Circana’s Consumer Tracking Service for Coffeemakers in the U.S. and represents the twelve month period ended December 31, 2024. 8 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOther laws and regulations that may impact our business relate to competition and antitrust, the environment, relations with distributors and retailers, employment, privacy, health, and trade practices. Our expanding international business will also expose us to economic factors, regulatory requirements, increasing competition, and other risks associated with doing business in foreign countries, including import or export restrictions and tariffs.
Biggest changeOur expanding international business will also expose us to economic factors, regulatory requirements, increasing competition, and other risks associated with doing business in foreign countries, including import or export restrictions and tariffs. Our international business is also subject to U.S. laws, regulations, and policies, including anti-corruption and export laws and regulations.
Our corporate image and reputation has in the past been, and could in the future be, adversely impacted by a variety of factors, including: any failure by us or our business partners to achieve goals or maintain high standards relating to ethical and business practices, including with respect to human rights, child labor laws, workplace conditions, employee health and safety, the nutrition profile of our products, packaging, water use and impact on the environment; any failure to address health or other concerns about our products, products we distribute or particular ingredients in our products, including concerns regarding whether certain of our products contribute to obesity or an increase in public health costs; our research and development efforts; any product quality or safety issues, including the recall of any of our products; any failure to comply with laws and regulations; consumer perception of our advertising campaigns, sponsorship arrangements, marketing programs, use of social media and our response to political and social issues or catastrophic events; or any failure to effectively respond to negative or inaccurate comments about us on social media or otherwise regarding any of the foregoing.
Our corporate image and reputation has in the past been, and could in the future be, adversely impacted by a variety of factors, including: any failure by us or our business partners to achieve goals or maintain high standards relating to ethical and business practices, including with respect to human rights, child labor laws, workplace conditions, employee health and safety, the nutrition profile of our products, packaging, water use, and impact on the environment; any failure to address health or other concerns about our products, products we distribute, or particular ingredients in our products, including concerns regarding whether certain of our products contribute to obesity or an increase in public health costs; our research and development efforts; any product quality or safety issues, including the recall of any of our products; any failure to comply with laws and regulations; and consumer perception of our advertising campaigns, sponsorship arrangements, marketing programs, use of social media, and our response to political and social issues or catastrophic events or any failure to effectively respond to negative or inaccurate comments about us on social media or otherwise regarding any of the foregoing.
Our quality management protocols, which are designed to ensure product quality and safety, may not be sufficiently robust to fully manage the expanded range of product offerings introduced through new investments, licensing or distribution agreements, which may increase our costs or subject us to negative publicity.
Our quality management protocols, which are designed to ensure product quality and safety, may not be sufficiently robust to fully manage the expanded range of product offerings introduced through new investments or licensing or distribution agreements, which may increase our costs or subject us to negative publicity.
In addition, adverse public opinion, third-party studies, or other allegations, whether or not valid, regarding the perceived or potential negative health effects of processing or ingredients in our beverage products, such as concerns about the caloric intake associated with soft drinks or the use of synthetic colors, nutritive and non-nutritive sweeteners or other additives in our beverages, or chemicals of concern or other substances in our ingredients or materials, may contribute to actual or threatened legal action against us, negative consumer perception of our products, new or increased taxes on our products, or additional government regulation, including new or changing restrictions on the inclusion of our products in benefit programs, such as the U.S. supplemental nutrition assistance program known as SNAP, any of which could result in decreased demand for our products or reformulations of existing products to remove such ingredients or substances, which may be costly and reduce their appeal.
In addition, adverse public opinion, third-party studies, or other allegations, whether or not valid, regarding the perceived or potential negative health effects of processing or ingredients in our beverage products, such as concerns about the caloric intake associated with soft drinks or the use of synthetic colors, nutritive and non-nutritive sweeteners or other additives in our beverages, or chemicals of concern or other substances in our ingredients or materials, may contribute to actual or threatened legal action against us, negative consumer perception of our products, new or increased taxes on our products, or additional government regulation, including new or increased restrictions on the inclusion of our products in benefit programs, such as the U.S. supplemental nutrition assistance program known as SNAP, any of which could result in decreased demand for our products or reformulations of existing products to remove such ingredients or substances, which may be costly and reduce their appeal.
Disruptions in financial and credit markets could also have a negative effect on our ability to raise capital through the issuance of unsecured commercial paper or senior notes. In addition, declines in the securities and credit markets could affect our pension and PRMB assets and obligations, which in turn could increase our funding requirements.
Disruptions in financial and credit markets could also have a negative effect on our ability to raise capital, including through the issuance of unsecured commercial paper or senior notes. In addition, declines in the securities and credit markets could affect our pension and PRMB assets and obligations, which in turn could increase our funding requirements.
Some of our productivity initiatives may result in unintended consequences, such as business disruptions, distraction of management and employees, reduced morale and productivity, inability to obtain expected savings to reinvest into the business, an inability to attract or retain employees, negative publicity and disruption of the internal control structures of the affected business operations.
Some of our productivity initiatives may result in unintended consequences, such as business disruptions, distraction of management and employees, reduced morale and productivity, inability to obtain expected savings to reinvest into the business, inability to attract or retain employees, negative publicity, and disruption of the internal control structures of the affected business operations.
The raw materials and other supplies, including agricultural commodities (such as coffee, apples, and corn), fuel and packaging materials, transportation, and other supply chain inputs that we use for the manufacturing, production, and distribution of our products are subject to price volatility and fluctuations in availability caused by many factors, which include changes in supply and demand; supplier capacity constraints; inflation; weather conditions (including the effects of climate change); wildfires and other natural disasters; disease or pests; agricultural uncertainty; cost increases in farm inputs; health epidemics, pandemics, or other contagious outbreaks; labor shortages, strikes, or work stoppages; changes in or the enactment of new laws and regulations; governmental actions or controls (including import/export restrictions, such as new, increased, or retaliatory tariffs, sanctions, quotas, or trade barriers); port congestion or delays; transport capacity constraints; cybersecurity incidents or other disruptions; political uncertainties; acts of terrorism; governmental instability; speculation in global trading of commodities, such as coffee; or fluctuations in foreign currency exchange rates.
The raw materials and other supplies, including agricultural commodities (such as coffee, apples, and corn), fuel and packaging materials, transportation, and other supply chain inputs that we use for the manufacturing, production, and distribution of our products are subject to price volatility and fluctuations in availability caused by many factors, including: changes in supply and demand; supplier capacity constraints; inflation; weather conditions (including the effects of climate change); natural disasters; disease or pests; agricultural uncertainty; cost increases in farm inputs; health epidemics, pandemics, or other contagious outbreaks; labor shortages, strikes, or work stoppages; changes in or the enactment of new laws and regulations; governmental actions or controls (including import/export restrictions, such as new, increased, or retaliatory tariffs, sanctions, quotas, or trade barriers); port congestion or delays; transport capacity constraints; cybersecurity incidents or other disruptions; political uncertainties; acts of terrorism; governmental instability; speculation in global trading of commodities, such as coffee; or fluctuations in foreign currency exchange rates.
Any or all of these events may lead to a loss of consumer confidence and trust, could damage the reputation of our brands and may cause consumers to choose other products and could negatively affect our business and financial performance. Damage to our reputation or brand image can adversely affect our business.
Any or all of these events may lead to a loss of consumer confidence and trust, could damage the reputation of our brands, and may cause consumers to choose other products, which could negatively affect our business and financial performance. Damage to our reputation or brand image can adversely affect our business.
We have experienced delays related to the production equipment contained within our manufacturing facilities, including delays in receiving the equipment or in operating the equipment according to specifications outlined by the manufacturer, which have led to increased costs, and we may continue to experience such delays and cost increases. 12 Table of Contents We depend on key information systems, and our use of information technology exposes us to business disruptions that could adversely affect us.
We have experienced delays related to the production equipment contained within our manufacturing facilities, including delays in receiving the equipment or in operating the equipment according to specifications outlined by the manufacturer, which have led to increased costs, and we may continue to experience such delays and cost increases. 14 Table of Contents We depend on key information systems, and our use of information technology exposes us to business disruptions that could adversely affect us.
In addition, the rapid growth of e-commerce may create additional consumer price deflation by, among other things, facilitating comparison shopping, and could potentially threaten the value of some of our legacy route-to-market strategies and thus negatively affect revenues. If we are unable to effectively compete, our business and our financial results would be negatively affected.
In addition, the continued growth of e-commerce may create additional consumer price deflation by, among other things, facilitating comparison shopping, and could potentially threaten the value of some of our legacy route-to-market strategies and thus negatively affect revenues. If we are unable to effectively compete, our business and our financial results would be negatively affected.
We also regularly enter into strategic relationships for the manufacture and/or distribution of beverage products from partner brand owners, including in emerging or fast-growing segments in which we may not currently have a brand presence. If our partner brands terminate their agreements with us, it could negatively affect our revenues and results of operations.
We also regularly enter into strategic relationships for the manufacturing and/or distribution of beverage products from partner brand owners, including in emerging or fast-growing segments in which we may not currently have a brand presence. If our partner brands terminate their agreements with us, it could negatively affect our revenues and results of operations.
The length of our payment terms has been reduced in recent periods and will continue to be reduced, including as a result of a supplier being replaced, renegotiation of a supplier’s contract during the procurement process, through efforts to increase the overall pool of potential suppliers for selection, or in order to receive favorable pricing or other terms during commercial negotiations.
The length of our payment terms has been reduced in recent periods and may continue to be reduced, including as a result of a supplier being replaced, renegotiation of a supplier's contract during the procurement process, through efforts to increase the overall pool of potential suppliers for selection, or in order to receive favorable pricing or other terms during commercial negotiations.
If we are unable to meet the consumer where and when they desire their products or if we are unable to respond to changes in distribution channels, our financial results could be adversely impacted. 10 Table of Contents Concerns about the safety, quality, or health effects of our products could negatively affect our business.
If we are unable to meet the consumer where and when they desire their products or if we are unable to respond to changes in distribution channels, our financial results could be adversely impacted. 12 Table of Contents Concerns about the safety, quality, or health effects of our products could negatively affect our business.
Restrictions on business activities, which have been or may be imposed or expanded as a result of political and economic instability, deterioration of economic relations between countries, such as changes in or terminations of existing trade agreements, or the imposition of tariffs (including recent U.S. tariffs imposed or threatened to be imposed on Canada, Mexico, China, and other countries, and any retaliatory actions taken by such countries), or otherwise, could impact our profitability or otherwise have an adverse effect on our business.
Restrictions on business activities, which have been or may be imposed or expanded as a result of political and economic instability, deterioration of economic relations between countries, such as changes in or terminations of existing trade agreements, or the imposition of tariffs (including recent U.S. tariffs imposed or threatened to be imposed on Canada, Mexico, China, Brazil, and other countries, and any retaliatory actions taken by such countries), or otherwise, has and could continue to impact our profitability or otherwise have an adverse effect on our business.
Certain raw materials and supplies used directly or indirectly in the production of our products are sourced from countries experiencing civil unrest, political instability, or unfavorable economic conditions. Adverse weather conditions may affect the supply of agricultural commodities from which key ingredients for our products are derived.
Certain raw materials and supplies used in the production of our products are sourced from countries experiencing civil unrest, political instability, or unfavorable economic conditions. Adverse weather conditions may affect the supply of agricultural commodities from which key ingredients for our products are derived.
Changes in mobility, travel, and leisure activity patterns, the acceleration of e-commerce and other methods of purchasing products, inflation and economic uncertainty, and pandemics, epidemics or other disease outbreaks, among others, have impacted and could continue to impact consumer shopping behavior and demand for our products.
Changes in mobility, travel, and leisure activity patterns, the acceleration of e-commerce, inflation and economic uncertainty, and pandemics, epidemics, or other disease outbreaks, among others, have impacted and could continue to impact consumer shopping behavior and demand for our products.
Damage to our reputation or brand image could decrease demand for our products, thereby adversely affecting our business. 11 Table of Contents If we do not successfully manage our acquisitions of and investments in new businesses or brands, our operating results may adversely be affected.
Damage to our reputation or brand image could decrease demand for our products, thereby adversely affecting our business. 13 Table of Contents If we do not successfully manage our acquisitions of and investments in new businesses or brands, our operating results may adversely be affected.
Our ability to manage and improve the performance of acquired businesses or brands and our other investments and ventures will impact our financial performance. We may not achieve the strategic and financial objectives for such transactions. If we are unable to achieve such objectives, our consolidated results could be negatively affected.
Our ability to manage and improve the performance of acquired businesses or brands and our other investments and ventures will impact our financial performance. If we are unable to achieve the strategic and financial objectives for such transactions, our consolidated results could be negatively affected.
We have in the past recorded impairments, including during the year ended December 31, 2024, and could do so again as a result of changes in assumptions, estimates or circumstances, some of which are beyond our control.
We have in the past recorded impairments, including during the year ended December 31, 2025, and could do so again as a result of changes in assumptions, estimates or circumstances, some of which are beyond our control.
Any adverse publicity resulting from allegations made in litigation claims or legal proceedings may also adversely affect our reputation, which in turn could adversely affect our results of operations. 18 Table of Contents Increased concerns related to the use or disposal of plastics or other packaging materials can adversely affect our business and financial performance.
Any adverse publicity resulting from allegations made in litigation claims or legal proceedings may also adversely affect our reputation, which in turn could adversely affect our results of operations. Increased concerns related to the use or disposal of plastics or other packaging materials can adversely affect our business and financial performance.
The terms of existing, renewed or expanded agreements could also significantly increase our costs or negatively affect our ability to increase operational efficiency. Increases in our cost of employee benefits in the future could reduce our profitability. Our profitability is substantially affected by costs for employee health care, pension and other retirement programs and other benefits.
The terms of existing, renewed, or expanded agreements could also significantly increase our costs or negatively affect our ability to increase operational efficiency. 15 Table of Contents Increases in our cost of employee benefits in the future could reduce our profitability. Our profitability is substantially affected by costs for employee health care, pension and other retirement programs, and other benefits.
Although we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of a breach or disruption, such insurance coverage may be insufficient to cover all losses. Failure to comply with personal data protection and privacy laws can adversely affect our business.
Although we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of a breach or disruption, such insurance coverage may be insufficient to cover all losses. 21 Table of Contents Failure to comply with personal data protection and privacy laws can adversely affect our business.
Our facilities and operations may require substantial investment and upgrading, including investments in new technologies and digital transformation, and such investments may not achieve the intended financial benefits. We continue to incur significant costs to maintain or upgrade various technologies, facilities, and equipment or restructure our operations, including closing existing facilities or opening new ones.
Our facilities and operations may require substantial investment and upgrading, and such investments may not achieve the intended financial benefits. We continue to incur significant costs to maintain or upgrade various technologies, facilities, and equipment or restructure our operations, including closing existing facilities or opening new ones.
Failure to attract, retain, develop, and motivate a highly skilled and diverse workforce, including employees with specialized capabilities, can damage our business results and our reputation. 13 Table of Contents We may not be able to renew collective bargaining agreements on satisfactory terms, or we could experience union activity, including new unionization, labor disputes or work stoppages.
Failure to attract, retain, develop, and motivate a highly skilled and diverse workforce, including employees with specialized capabilities, can damage our business results and our reputation. We may not be able to renew collective bargaining agreements on satisfactory terms, or we could experience union activity, including new unionization, labor disputes, or work stoppages.
We have been, and in the future may be, a defendant in class action litigation, including litigation regarding employment practices, product labeling, including under California’s “Proposition 65,” public statements and disclosures under securities laws, antitrust, advertising, consumer protection, and wage and hour laws.
We have been, and in the future may be, a defendant in class action litigation, including litigation regarding employment practices, product labeling, including under California's "Proposition 65," public statements and disclosures under securities laws, antitrust, advertising, consumer protection, and wage and hour laws.
The results of audits or related disputes could have a material adverse effect on our financial statements for the period or periods for which the applicable final determinations are made and for periods for which the statute of limitations is open. 21 Table of Contents
The results of audits or related disputes could have a material adverse effect on our financial statements for the period or periods for which the applicable final determinations are made and for periods for which the statute of limitations is open.
We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and estimate, if possible, the amount of potential losses, and we establish a reserve as appropriate based upon assessments and estimates in accordance with our accounting policies.
We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and estimate, if possible, the amount of potential losses, and we establish an accrual as appropriate based upon assessments and estimates in accordance with our accounting policies.
They may devote more resources to other products, prioritize their own products, or take other actions detrimental to our brands. In most cases, they are able to terminate their bottling and distribution arrangements with us without cause.
They may devote more resources to other products, prioritize their own products, or take other actions detrimental to our brands. 16 Table of Contents In most cases, they are able to terminate their bottling and distribution arrangements with us without cause.
Reductions in our payment terms have negatively affected, and could continue to negatively affect, our liquidity and our ability to maintain our cash conversion cycle to maximize our working capital. Reduced payment terms have contributed to, and could continue to contribute to, our need to utilize various financing arrangements for short-term liquidity.
Reductions in our payment terms have negatively affected, and could continue to negatively affect, our liquidity and our ability to maximize our working capital. Reduced payment terms have contributed to, and could continue to contribute to, our need to utilize various financing arrangements for short-term liquidity.
Our users’ data and customer information may be improperly accessed, used or disclosed if we fail to adopt or adhere to adequate information security practices, or fail to comply with their respective online policies, or in the event of a breach of our networks, which could subject us to legal action, reputational harm, or otherwise negatively impact our business and financial performance.
Our users' data and customer information may be improperly accessed, used, or disclosed if we fail to adopt or adhere to adequate information security practices, or in the event of a breach of our networks, which could subject us to legal action, reputational harm, or otherwise negatively impact our business and financial performance.
As water becomes scarcer, the quality of the water deteriorates, including due to the effects of climate change, or requirements on water purification or filtration increase, we may experience increased production costs; manufacturing constraints; supply chain disruption; higher compliance costs; increased capital expenditures; the interruption or cessation of operations at, or relocation of, our facilities or the facilities of our business partners; challenges to efficiency gains due to higher water usage in compliance with more stringent water quality standards; failure to achieve our water efficiency and conservation goals; perception of our failure to act responsibly with respect to water use or to effectively respond to legal or regulatory requirements concerning water scarcity and quality; or damage to our reputation, any of which can adversely affect our business.
As water becomes scarcer, the quality of the water deteriorates, including due to the effects of climate change, or requirements on water purification or filtration increase, we may experience increased production costs; manufacturing constraints; supply chain disruption; higher compliance costs; increased capital expenditures; the interruption or cessation of operations at, or relocation of, our facilities or the facilities of our business partners; challenges to efficiency gains due to higher water usage in compliance with more stringent water quality standards; failure to achieve our water efficiency and conservation goals; perception of our failure to act responsibly with respect to water use or to effectively respond to legal or regulatory requirements concerning water scarcity and quality; or damage to our reputation, any of which can adversely affect our business. 22 Table of Contents Fluctuations in our effective tax rate may result in volatility in our financial results.
Climate change may increase the frequency or severity of natural disasters and other extreme weather conditions, which could pose physical risks to our facilities, impair our production capabilities, disrupt our supply chain, or impact demand for our products.
Climate change or related legislation could adversely affect our business. Climate change may increase the frequency or severity of natural disasters and other extreme weather conditions, which could pose physical risks to our facilities, impair our production capabilities, disrupt our supply chain, or impact demand for our products.
In addition, price decreases in commodities that we have effectively hedged could also increase our cost of goods sold for mark-to-market changes in the derivative instruments. 9 Table of Contents We operate in intensely competitive categories, and our potential inability to compete effectively could adversely impact our business.
In addition, price decreases in commodities that we have effectively hedged could also increase our cost of goods sold for mark-to-market changes in the derivative instruments. 11 Table of Contents We operate in highly competitive categories, and any inability to compete effectively could adversely impact our business.
A failure or perceived failure to meet our quality, health, or safety standards, particularly as we expand our product offerings through innovation, partnerships or acquisitions into new beverage categories, including product contamination or tampering, undeclared allergens or allegations of mislabeling, whether actual or perceived, could occur in our operations or those of our bottlers, manufacturers, distributors or suppliers.
A failure or perceived failure to meet our quality, health, or safety standards, particularly as we expand our product offerings through innovation, partnerships, or acquisitions into new beverage categories, including product contamination or tampering, undeclared allergens, or allegations of mislabeling, whether actual or perceived, has occurred, and may in the future occur, in our operations or those of our bottlers, manufacturers, distributors, or suppliers.
Additional acquisition risks include the diversion of management attention from our existing business, potential loss of key employees, suppliers, or customers from the acquired business, assumption of unforeseen risks and liabilities, and greater than anticipated operating costs of the acquired business. Any of these factors could adversely affect our financial results.
Additional acquisition risks which could adversely affect our financial results include the diversion of management attention from our existing business, potential loss of key employees, suppliers, or customers from the acquired business, assumption of unforeseen risks and liabilities, and greater than anticipated operating costs of the acquired business, among others.
Fluctuations in our effective tax rate may result in volatility in our financial results. We are subject to income taxes and non-income-based taxes in many U.S. and certain foreign jurisdictions. Tax legislation may be enacted, domestically or abroad, that impacts our effective tax rate.
We are subject to income taxes and non-income-based taxes in many U.S. and certain foreign jurisdictions. Tax legislation may be enacted, domestically or abroad, that impacts our effective tax rate.
In addition, our continuity of business applications and operations has been, and may in the future be, disrupted by other issues, including cybersecurity attacks (which may include social engineering, business email compromise, cyber extortion, denial of service, attempts to exploit vulnerabilities, hacking, website defacement, theft of passwords and other credentials, or unauthorized use of computing resources for digital currency mining); issues with or errors in systems’ maintenance or security; migration of applications to the cloud; power outages; hardware or software failures; telecommunication failures; natural disasters; terrorist attacks; unintentional or malicious actions of employees or contractors; and fires and other catastrophic occurrences and other cyber incidents. 19 Table of Contents Like most major corporations, we are regularly subject to cyberattacks and other cyber incidents, including the types of attacks and incidents described above.
In addition, our continuity of business applications and operations has been, and may in the future be, disrupted by other issues, including cybersecurity attacks (which may include social engineering, business email compromise, cyber extortion, denial of service, attempts to exploit vulnerabilities, hacking, website defacement, theft of passwords and other credentials, or unauthorized use of computing resources for digital currency mining); issues with or errors in systems' maintenance or security; migration of applications to the cloud; power outages; hardware or software failures; telecommunication failures; natural disasters; terrorist attacks; unintentional or malicious actions of employees or contractors; and fires and other catastrophic occurrences and other cyber incidents.
Our equity method investees also perform similar recoverability and impairment tests, and we record our share of impairment charges recorded by them, if any, adjusted, as appropriate, for the impact of items such as basis differences, deferred taxes and deferred gains.
GAAP to determine whether they are impaired and, if they are, we record appropriate impairment charges. Our equity method investees also perform similar recoverability and impairment tests, and we record our share of impairment charges recorded by them, if any, adjusted, as appropriate, for the impact of items such as basis differences, deferred taxes, and deferred gains.
If any of these third-party service providers or vendors do not perform effectively, or if we fail to adequately monitor their performance (including compliance with service level agreements or regulatory or legal requirements), we may experience business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation, a negative impact on employee morale or the loss of current or potential customers, all of which can adversely affect our business. 16 Table of Contents These third parties are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory and market risks of their own.
If any of these third-party service providers or vendors do not perform effectively, or if we fail to adequately monitor their performance (including compliance with service level agreements or regulatory or legal requirements), we may experience business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches, or otherwise incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation, a negative impact on employee morale, or the loss of current or potential customers, all of which can adversely affect our business.
We have ongoing programs to invest and upgrade our manufacturing, distribution and other facilities, including expansive investments in our manufacturing facility in Spartanburg, South Carolina. These investments require us to rely on third parties for the construction and renovation of our facilities and manufacturing of our production equipment.
We have ongoing programs to invest and upgrade our manufacturing, distribution, and other facilities. These investments require us to rely on third parties for the construction and renovation of our facilities and manufacturing of our production equipment.
In certain circumstances, our contracts with payment card processors and payment card networks (such as Visa, Mastercard, American Express, and Discover) generally require us to adhere to payment card network rules which could make us liable to payment card issuers and others if information in connection with payment cards and payment card transactions that we process is compromised, which liabilities could be substantial. 20 Table of Contents Climate change or related legislation could adversely affect our business.
In certain circumstances, our contracts with payment card processors and payment card networks (such as Visa, Mastercard, American Express, and Discover) generally require us to adhere to payment card network rules which could make us liable to payment card issuers and others if information in connection with payment cards and payment card transactions that we process is compromised, which liabilities could be substantial.
We have no operations in Russia, Ukraine, or the Middle East, but due to the impact of the ongoing conflicts in those regions on the global economy, we have experienced and may continue to experience supply chain constraints; inflation in input costs, logistics, manufacturing, and labor costs; volatility in fuel and commodity prices and fluctuations in foreign exchange rates and interest rates, any of which could adversely impact our results of operations. 17 Table of Contents U.S. and international laws and regulations could adversely affect our business.
We do not currently have operations in Russia, Ukraine, or the Middle East, but due to the impact of the ongoing conflicts in those regions on the global economy, we have experienced and may continue to experience supply chain constraints; inflation in input costs, logistics, manufacturing, and labor costs; volatility in fuel and commodity prices and fluctuations in foreign exchange rates and interest rates, any of which could adversely impact our results of operations.
We may need to increase support for our brands in certain territories to maintain our route to market and may not be able to pass price increases through to third-party bottlers and distributors. Deteriorating economic conditions could negatively impact the financial viability of third-party bottlers.
We may need to increase support for our brands in certain territories to maintain our route-to-market and may not be able to pass price increases through to third-party bottlers and distributors. Deteriorating economic conditions could negatively impact the financial viability of third-party bottlers. Changes in the retail landscape or in sales to any key customer can adversely affect our business.
The imposition or proposed imposition of bans or restrictions on the use of certain ingredients or substances in products, or of additional limitations on the marketing or sale of our products, has in the past and could continue to reduce overall consumption of our products, lead to negative publicity or leave consumers with the perception that our products do not meet their health and wellness needs, resulting in an adverse effect on our business and financial performance.
The imposition or proposed imposition of bans or restrictions on the use of certain ingredients or substances in products, or of additional limitations on the marketing or sale of our products, has in the past and could continue to reduce overall consumption of our products, lead to negative publicity or leave consumers with the perception that our products do not meet their health and wellness needs, resulting in an adverse effect on our business and financial performance. 20 Table of Contents Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions that could adversely affect us.
Changes in the retail landscape or in sales to any key customer can adversely affect our business. The retail industry is experiencing continued consolidation of ownership and purchasing power, resulting in large retailers or buying groups with increased purchasing power, which impacts our ability to compete.
The retail industry is experiencing continued consolidation of ownership and purchasing power, resulting in large retailers or buying groups with increased purchasing power, which impacts our ability to compete.
These issues could delay importation and increase the cost of products, delay the fulfillment of the brewers, beverage concentrates and syrups to our customers or require us to locate alternative manufacturers or order fulfillment companies to avoid disruption, which could adversely affect our product sales and operating results.
These issues could delay importation and increase the cost of products, delay the fulfillment of the brewers, beverage concentrates, and syrups to our customers, or require us to locate alternative manufacturers or order fulfillment companies to avoid disruption, which could adversely affect our product sales and operating results. 18 Table of Contents GENERAL RISK FACTORS Our financial results may be negatively impacted by unfavorable economic and geopolitical conditions.
For example, the Dr Pepper trademark and formula is owned by Coca-Cola in some countries outside North America. Adverse events affecting those third parties or their products could also negatively impact our brands.
For example, the Dr Pepper trademark and formula is owned by Coca-Cola in some countries outside North America. Adverse events affecting those third parties or their products could also negatively impact our brands. Failure to attract, retain, develop, and motivate a highly skilled and diverse workforce, or failure to effectively manage changes in our workforce, could significantly impact our operations.
Any sustained or significant disruption to the manufacturing or sourcing of raw materials could increase our costs and interrupt product supply, which could adversely impact our business.
Any sustained or significant disruption to the manufacturing or sourcing of raw materials could increase our costs and interrupt product supply, which could adversely impact our business. Additionally, if demand increases beyond our production capabilities, we may need to expand our capacity.
Volatility in coffee prices can impact our ability to enter into fixed-price purchase commitments, and we frequently enter into “price-to-be-fixed” supply contracts in which the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and therefore price, at which the base coffee commodity price component will be fixed has not yet been established.
We frequently enter into "price-to-be-fixed" supply contracts with defined quality, quantity, delivery, and other negotiated terms, but the date, and therefore price, at which the base coffee commodity price component will be fixed has not yet been established.
In addition, the entry into new markets or categories has resulted in and could continue to result in our business being subject to additional regulations resulting in higher compliance costs. Violations of laws or regulations could damage our reputation and/or result in criminal, civil, or administrative actions with substantial financial penalties and operational limitations.
In addition, the entry into new markets or categories has resulted in and could continue to result in our business being subject to additional regulations resulting in higher compliance costs.
If we are unable to complete such transactions or successfully integrate and develop acquired businesses, including the effective management of integration activities, we could fail to achieve the expected increases in revenues and operating results or the anticipated synergies and cost savings.
From time to time, we acquire or invest in businesses or brands, form joint ventures, and enter into licensing and distribution agreements. If we are unable to complete such transactions or successfully integrate and develop acquired businesses, we could fail to achieve the expected increases in revenues and operating results or the anticipated synergies and cost savings.
Any inability to resolve a significant dispute with any of our key customers, a change in the business condition (financial or otherwise) of any of our key customers, even if unrelated to us, a significant reduction in sales to any key customer, or the loss of any of our key customers may adversely affect our business. 15 Table of Contents Failure to maintain strategic relationships with brand owners and private label brands could adversely impact our future growth and business, potentially resulting in the termination of those agreements.
Any inability to resolve a significant dispute with any of our key customers, a change in the business condition (financial or otherwise) of any of our key customers, even if unrelated to us, a significant reduction in sales to any key customer, or the loss of any of our key customers may adversely affect our business.
We are subject to a variety of federal, state, and local laws and regulations in the U.S., Canada, Mexico, and other countries in which we conduct business. These laws and regulations apply to many aspects of our business, including the manufacture, safety, sourcing, labeling, storing, transportation, marketing, advertising, distribution, pricing, and sale of our products.
U.S. and international laws and regulations could adversely affect our business. We are subject to a variety of federal, state, and local laws and regulations in the U.S., Canada, Mexico, and other countries in which we conduct business.
Under many of our supply arrangements, the price we pay for raw materials fluctuates along with certain changes in underlying commodities costs. This could lead to higher and more variable inventory levels or higher raw material costs for us.
Many of our raw materials and supplies are purchased in the open market, and the prices we pay for such items are subject to fluctuation. Under many of our supply arrangements, the price we pay for raw materials fluctuates along with certain changes in underlying commodities costs.
As these equity method investments are managed independently, we may be impacted by their business decisions or other actions, as they may have different interests than we do. We recognize a portion of our investees’ financial results within our net income based upon our ownership interest, unless the investment agreement indicates an alternative allocation of earnings or losses.
We recognize a portion of our investees' financial results within our net income based upon our ownership interest, unless the investment agreement indicates an alternative allocation of earnings or losses. 17 Table of Contents We also assess our equity method investments as and when required by U.S.
These strategic initiatives have included investments in new technologies and optimization of certain processes and of our manufacturing footprint.
We pursue strategic initiatives that are transformative in nature and are expected to generate significant cost savings or productivity over time. These strategic initiatives have included investments in new technologies and optimization of certain processes and of our manufacturing footprint.
We regularly enter into strategic relationships for the manufacturing, distribution, and sale of K-Cup pods with partner customers, as well as with retailers for their private label brands. As independent companies, our strategic partners make their own business decisions which may not align with our interests.
Failure to maintain strategic relationships with brand owners and private label brands could adversely impact our future growth and business, potentially resulting in the termination of those agreements. We regularly enter into strategic relationships for the manufacturing, distribution, and sale of K-Cup pods with partner customers, as well as with retailers for their private label brands.
Substantial disruption at our manufacturing and distribution facilities could occur. A disruption at our manufacturing and distribution facilities could have a material adverse effect on our business, as could a disruption at the facilities of our bottlers, contract manufacturers or distributors.
Many of these factors could also cause a significant disruption at our manufacturing and distribution facilities or the facilities of our bottlers, contract manufacturers, or distributors, which could have a material adverse effect on our business. We have been affected by a number of these factors, led by inflationary pressures on input and other costs, which may continue.
In our coffee business, the quality of the coffee we seek tends to trade on a negotiated basis at a premium above the “C” price of coffee. This premium depends upon the supply and demand at the time of purchase, and the amount of the premium can vary significantly.
This premium depends upon the supply and demand at the time of purchase and can vary significantly. Volatility in coffee prices can impact our ability to enter into fixed-price purchase commitments.
As of December 31, 2024, we had $53,430 million of total assets, of which $20,053 million were goodwill and $23,634 million were other intangible assets. Intangible assets include both definite and indefinite-lived intangible assets in connection with brands, trade names, acquired technology, customer relationships, and contractual arrangements.
Intangible assets include both definite and indefinite lived intangible assets in connection with brands, trade names, acquired technology, customer relationships, contractual arrangements, and distribution rights.
Failure to realize benefits or successfully manage the potential negative consequences of our productivity initiatives can adversely affect our financial performance. We pursue strategic initiatives that are transformative in nature and are expected to generate significant cost savings, or productivity, over time.
Refer to the Risks Related to the JDE Peet's Acquisition section for risks specific to the JDE Peet's Acquisition. Failure to realize benefits or successfully manage the potential negative consequences of our productivity initiatives can adversely affect our financial performance.
Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.
Violations of laws or regulations could damage our reputation and/or result in criminal, civil, or administrative actions with substantial financial penalties and operational limitations. 19 Table of Contents Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.
Removed
ITEM 1A. RISK FACTORS RISKS RELATED TO OUR OPERATIONS Disruption of our manufacturing and distribution operations or supply chain, including increased commodity, raw material, packaging, energy, transportation, and other input costs may adversely affect our financial condition or results of operations.
Added
ITEM 1A. RISK FACTORS In addition to the other information set forth in this Annual Report, the following factors should be considered, which could materially affect our business, financial condition, and results of operations. The risks described below are not the only risks we face.
Removed
We have been affected by a number of these factors, led by inflationary pressures on input and other costs, which may continue. Many of our raw materials and supplies are purchased in the open market, and the prices we pay for such items are subject to fluctuation.
Added
Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse affect on our business, financial condition, or results of operations.
Removed
From time to time, we acquire or invest in businesses or brands, form joint ventures, and enter into licensing and distribution agreements.
Added
RISK FACTORS SUMMARY • Disruption of our manufacturing and distribution operations or supply chain, including increased input costs, may adversely affect our financial condition or results of operations. • We operate in highly competitive categories, and any inability to compete effectively could adversely impact our business. • We may not effectively respond to changing consumer preferences and shopping behavior, which could impact our financial results. • Concerns about the safety, quality, or health effects of our products could negatively affect our business. • Damage to our reputation or brand image can adversely affect our business. • If we do not successfully manage our acquisitions of and investments in new businesses or brands, our operating results may adversely be affected. • Failure to realize benefits or successfully manage the potential negative consequences of our productivity initiatives can adversely affect our financial performance. • Our facilities and operations may require substantial investment and upgrading, and such investments may not achieve the intended financial benefits. • We depend on key information systems, and our use of information technology exposes us to business disruptions that could adversely affect us. • Our intellectual property rights could be infringed or we could infringe the intellectual property rights of others, and adverse events regarding licensed intellectual property could harm our business. • Failure to attract, retain, develop, and motivate a highly skilled and diverse workforce, or failure to effectively manage changes in our workforce, could significantly impact our operations. • We may not be able to renew collective bargaining agreements on satisfactory terms, or we could experience union activity, including new unionization, labor disputes, or work stoppages. • Increases in our cost of employee benefits in the future could reduce our profitability. • We negotiate with our suppliers to optimize our terms and conditions, including payment terms, and reductions in our payment terms with our suppliers could adversely affect our liquidity. • An impairment of the value of our goodwill and other indefinite lived intangible assets could have a material adverse effect on our financial statements. • We depend on third-party bottling and distribution companies for a significant portion of our business. • Changes in the retail landscape or in sales to any key customer can adversely affect our business. • Failure to maintain strategic relationships with brand owners and private label brands could adversely impact our future growth and business, potentially resulting in the termination of those agreements. • Equity method investments are managed independently of us and may have different interests than we do.
Removed
In evaluating strategic transactions, we are required to make difficult judgments regarding the value of business strategies, opportunities, technologies and other assets, and the risks and cost of potential liabilities.
Added
Their decisions could impact our financial performance. • The use of information technology by our third-party commercial partners and service providers exposes us to business disruptions or other negative impacts that could adversely affect us. • We rely on the performance of a limited number of suppliers and manufacturers for our brewers, and a limited number of order fulfillment companies for our brewers, beverage concentrates, and syrups. 9 Table of Contents • Our financial results may be negatively impacted by unfavorable economic and geopolitical conditions. • U.S. and international laws and regulations could adversely affect our business. • Litigation or legal proceedings could expose us to significant liabilities and damage our reputation. • Increased concerns related to the use or disposal of plastics or other packaging materials can adversely affect our business and financial performance. • Significant additional labeling or warning requirements or limitations on the marketing or sale of our products may inhibit sales of affected products. • Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions that could adversely affect us. • Failure to comply with personal data protection and privacy laws can adversely affect our business. • Climate change or related legislation could adversely affect our business. • Water scarcity and quality could adversely affect our business. • Fluctuations in our effective tax rate may result in volatility in our financial results. • We may not complete the proposed JDE Peet's Acquisition within the time frame we anticipate, or at all, which could adversely affect our business. • The market price of our common stock may decline as a result the JDE Peet's Acquisition. • We will incur significant direct and indirect costs as a result of the JDE Peet's Acquisition. • The JDE Peet's Acquisition will expose us to inherent risks in JDE Peet's' business and those geographies where JDE Peet's currently operates, which could adversely affect our business. • If our due diligence investigation of JDE Peet's was inadequate or if unexpected risks related to JDE Peet's and its business materialize, it could have a material adverse effect on our business. • We may not successfully integrate JDE Peet's into our business, or such integration may be more difficult, time-consuming, or costly than expected, which could adversely affect our business. • We will be subject to business uncertainties related to the JDE Peet's Acquisition. • We will incur and assume significant debt as a result of the JDE Peet's Acquisition, which could adversely affect our financial performance. • In connection with the JDE Peet's Acquisition, we expect to consummate the JV Investment, which could restrict our operational and corporate flexibility, impact our cash resources, and/or depress the market price of our common stock. • The issuance of Convertible Preferred Stock in connection with the JDE Peet's Acquisition may adversely affect the rights and market price of our common stock as well as our capital resources. • We may issue additional equity securities in the future to raise proceeds to fund the JDE Peet's Acquisition, which may result in further dilution to our existing shareholders. • The Separation may not be completed on the terms or timeline currently contemplated, if at all, and will involve significant time, expenses, and resources, which could adversely affect our business. • We may be unable to achieve some or all of the anticipated strategic and financial benefits from the Separation. • Following the Separation, we may not maintain a satisfactory credit rating, which could adversely affect the financial performance of our businesses. • Following the Separation, the price of our common stock may decline and may experience greater volatility. 10 Table of Contents RISKS RELATED TO OUR OPERATIONS Disruption of our manufacturing and distribution operations or supply chain, including increased input costs, may adversely affect our financial condition or results of operations.
Removed
Disruptions could occur for many reasons, including fire, natural disasters, weather, water scarcity, manufacturing problems, disease, widespread illness, strikes, labor shortages, transportation or supply interruption, contractual dispute, government regulation, cybersecurity attacks or terrorism. Moreover, if demand increases beyond our production capabilities, we would need to expand our capabilities internally or acquire additional capacity.
Added
This could lead to higher and more variable inventory levels or higher raw material costs for us. In our coffee business, the quality of the coffee we seek tends to trade on a negotiated basis at a premium above the "C" price of coffee.
Removed
Failure to attract, retain, develop and motivate a highly skilled and diverse workforce, or failure to effectively manage changes in our workforce such as labor shortages, employee turnover and increases in wages, could significantly impact our operations.
Added
An impairment of the value of our goodwill and other indefinite lived intangible assets could have a material adverse effect on our financial statements. As of December 31, 2025, we had $55 billion of total assets, of which approximately $20 billion were goodwill and approximately $24 billion were intangible assets.
Removed
We cannot guarantee that our share repurchase program will be fully consummated or that our share repurchase program will enhance long-term stockholder value. In October 2021, our Board authorized KDP to repurchase up to $4 billion of our outstanding common stock over a four-year period, beginning on January 1, 2022, potentially enabling us to return value to shareholders.
Added
As independent companies, our strategic partners make their own business decisions which may not align with our interests.
Removed
Our repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.
Added
As these equity method investments are managed independently, we may be impacted by their business decisions or other actions, as they may have different interests than we do.
Removed
Under the terms of our share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means (including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act) in accordance with federal securities laws.
Added
These third parties are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory, and market risks of their own.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor additional description of cybersecurity risks and potential related impacts on us, refer to the risk factors captioned “ Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions that could adversely affect us ” and “ The use of information technology by our third party commercial partners and service providers exposes us to business disruptions or other negative impacts that could adversely affect us ” in Item 1A, Risk Factors, in this Annual Report on Form 10-K. 22 Table of Contents
Biggest changeFor additional description of cybersecurity risks and potential related impacts on us, refer to the risk factors captioned "Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions that could adversely affect us" and "The use of information technology by our third-party commercial partners and service providers exposes us to business disruptions or other negative impacts that could adversely affect us" in Item 1A, Risk Factors, in this Annual Report on Form 10-K. 31 Table of Contents
ITEM 1C. CYBERSECURITY We, and our third-party service providers, use information technology to support our global business processes and activities, which exposes us to cybersecurity risks. KDP’s overall risk management system includes ongoing cybersecurity risk assessment and reporting, incident management, and a diligence and risk management process for third-party service providers.
ITEM 1C. CYBERSECURITY We, and our third-party service providers, use information technology to support our global business processes and activities, which exposes us to cybersecurity risks. Our overall risk management system includes ongoing cybersecurity risk assessment and reporting, incident management, and a diligence and risk management process for third-party service providers.
Our CISO has more than 26 years of experience in cybersecurity and information technology, including, prior to joining KDP in 2019, more than 11 years as a principal in Ernst & Young’s cybersecurity practice. Our CISO reports directly to our Chief Information Officer, who also has over 37 years of experience in information technology and cybersecurity.
Our CISO has more than 27 years of experience in cybersecurity and information technology, including, prior to joining KDP in 2019, more than 11 years as a principal in Ernst & Young's cybersecurity practice. Our CISO reports directly to our Chief Information Officer, who also has over 38 years of experience in information technology and cybersecurity.
Added
We also maintain cybersecurity insurance coverage that is intended to cover potential costs related to cybersecurity incidents and information systems failures, subject to customary limitations, exclusions, and deductibles.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe extent of utilization of such facilities varies based on seasonal demand for our products and the status of our investments to maintain or upgrade various technologies or equipment within such facilities. During the year ended December 31, 2024, we announced the planned closure of our Windsor, Virginia manufacturing facility, which is expected to take place in 2025.
Biggest changeThe extent of utilization of such facilities varies based on seasonal demand for our products and the status of our investments to maintain or upgrade various technologies or equipment within such facilities. We ceased operations at our Windsor, Virginia manufacturing facility during the year ended December 31, 2025.
ITEM 2. PROPERTIES We have two global corporate headquarters, located in Burlington, Massachusetts and Frisco, Texas, both of which are leased. The following table summarizes our principal manufacturing plants and principal warehouse and distribution facilities by geography and reportable segment as of December 31, 2024: U.S. Refreshment Beverages U.S.
ITEM 2. PROPERTIES We have two global corporate headquarters, located in Frisco, Texas and Burlington, Massachusetts, both of which are leased. The following table summarizes our principal manufacturing plants and principal warehouse and distribution facilities by geography and reportable segment as of December 31, 2025: U.S. Refreshment Beverages U.S.
Coffee International Total Owned Leased Owned Leased Owned Leased Owned Leased United States Production facilities 7 12 1 4 — — 8 16 Warehouse and distribution facilities 27 64 — 8 — — 27 72 Foreign Production facilities 1 — — — 3 2 4 2 Warehouse and distribution facilities — — — — 5 65 5 65 Total 35 76 1 12 8 67 44 155 We believe our facilities are well-maintained and adequate, that they are being appropriately utilized, and that they have sufficient capacity for their present intended purposes.
Coffee International Total Owned Leased Owned Leased Owned Leased Owned Leased United States Production facilities 7 12 — 5 — — 7 17 Warehouse and distribution facilities 26 66 — 7 — — 26 73 Foreign Production facilities 1 — — — 3 1 4 1 Warehouse and distribution facilities — — — — 5 65 5 65 Total 34 78 — 12 8 66 42 156 We believe our facilities are well-maintained and adequate, that they are being appropriately utilized, and that they have sufficient capacity for their present intended purposes.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe $4 billion authorization is effective for four years, beginning on January 1, 2022 and expiring on December 31, 2025, and does not require the purchase of any minimum number of shares. As of December 31, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program.
Biggest changeThe $4 billion authorization was effective for four years, from January 1, 2022 through December 31, 2025. We did not repurchase any shares during the fourth quarter of 2025.
KDP's Board has declared a regular quarterly cash dividend and expects to continue to pay such dividends on a quarterly basis. COMPARISON OF TOTAL STOCKHOLDER RETURN The following performance graph compares the cumulative total returns of KDP for a five-year period with the cumulative total returns of the S&P 500 Index and the S&P Food and Beverage Select Industry Index.
Our Board has declared a regular quarterly cash dividend and expects to continue to pay such dividends on a quarterly basis. COMPARISON OF TOTAL STOCKHOLDER RETURN The following performance graph compares the cumulative total returns of KDP for a five-year period with the cumulative total returns of the S&P 500 Index and the S&P Food and Beverage Select Industry Index.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on Nasdaq's Global Select Market under the ticker symbol "KDP". As of December 31, 2024, there wer e 7,692 stock holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on Nasdaq's Global Select Market under the ticker symbol "KDP". As of December 31, 2025, there wer e 7,159 stock holders of record of our common stock.
ISSUER REPURCHASES OF EQUITY SECURITIES On October 1, 2021, our Board authorized a share repurchase program of up to $4 billion of our outstanding common stock, potentially enabling us to return value to shareholders.
The graph assumes that $100 was invested on December 31, 2020, with dividends reinvested quarterly. Performance shown in the graph is not necessarily indicative of future performance. ISSUER REPURCHASES OF EQUITY SECURITIES On October 1, 2021, our Board authorized a share repurchase program of up to $4 billion of our outstanding common stock, enabling us to return value to shareholders.
Removed
The graph assumes that $100 was invested on December 31, 2019, with dividends reinvested quarterly. Performance shown in the graph is not necessarily indicative of future performance.
Removed
We did not repurchase any shares during the fourth quarter of 2024 .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeReferences in the financial tables to percentage changes that are not meaningful are denoted by "NM". 27 Table of Contents For the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023: Consolidated Operations The following table sets forth our consolidated results of operations for the years ended December 31, 2024 and 2023: For the Year Ended December 31, Dollar Percentage (in millions, except per share amounts) 2024 2023 Change Change Net sales $ 15,351 $ 14,814 $ 537 3.6 % Cost of sales 6,822 6,734 88 1.3 Gross profit 8,529 8,080 449 5.6 Selling, general, and administrative expenses 5,013 4,912 101 2.1 Impairment of goodwill 306 — 306 NM Impairment of other intangible assets 412 2 410 NM Other operating expense (income), net 207 (26) 233 NM Income from operations 2,591 3,192 (601) (18.8) Interest expense, net 735 496 239 48.2 Impairment of investments and note receivable 2 — 2 NM Other (income) expense, net (60) (61) 1 NM Income before provision for income taxes 1,914 2,757 (843) (30.6) Provision for income taxes 473 576 (103) (17.9) Net income $ 1,441 $ 2,181 $ (740) (33.9) % Earnings per common share: Basic $ 1.06 $ 1.56 $ (0.50) (32.1) % Diluted 1.05 1.55 (0.50) (32.3) % Gross margin 55.6 % 54.5 % 110 bps Operating margin 16.9 % 21.5 % (460) bps Effective tax rate 24.7 % 20.9 % 380 bps Sales Volume.
Biggest changeFor the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024: Consolidated Operations The following table sets forth our consolidated results of operations for the years ended December 31, 2025 and 2024: For the Year Ended December 31, Dollar Percentage (in millions, except per share amounts) 2025 2024 Change Change Net sales $ 16,603 $ 15,351 $ 1,252 8.2 % Cost of sales 7,604 6,822 782 11.5 % Gross profit 8,999 8,529 470 5.5 % Selling, general, and administrative expenses 5,351 5,013 338 6.7 % Impairment of goodwill — 306 (306) NM Impairment of intangible assets 78 412 (334) NM Other operating (income) expense, net (5) 207 (212) NM Income from operations 3,575 2,591 984 38.0 % Interest expense, net 754 735 19 2.6 % Other expense (income), net 134 (58) 192 NM Income before provision for income taxes 2,687 1,914 773 40.4 % Provision for income taxes 608 473 135 28.5 % Net income $ 2,079 $ 1,441 $ 638 44.3 % Earnings per common share: Basic $ 1.53 $ 1.06 $ 0.47 44.3 % Diluted 1.53 1.05 0.48 45.7 % Gross margin 54.2 % 55.6 % (140) bps Operating margin 21.5 % 16.9 % 460 bps Effective tax rate 22.6 % 24.7 % (210) bps Sales Volumes Percentage Change LRB 1.0 % K-Cup pods (3.9) % Appliances (18.0) % Net Sales Drivers Percentage Change Volume / mix (1) 4.8 % Net price realization 3.8 % FX (0.4) % Total 8.2 % (1) The acquisition of GHOST contributed 3.8 percentage points to our consolidated volume / mix growth for the year ended December 31, 2025. 36 Table of Contents Gross profit increased $470 million, or 5.5%, to $8,999 million for the year ended December 31, 2025 compared to $8,529 million in the prior year.
The following schedules present the summarized financial information for Keurig Dr Pepper Inc. (the “Parent”) and the Guarantors on a combined basis after intercompany eliminations; the Parent and the Guarantors' amounts due from and amounts due to Non-Guarantors are disclosed separately.
The following schedules present the summarized financial information for Keurig Dr Pepper Inc. (the "Parent") and the Guarantors on a combined basis after intercompany eliminations; the Parent and the Guarantors' amounts due from and amounts due to Non-Guarantors are disclosed separately.
These assumptions could be negatively impacted by various risks discussed in Item 1A, Risk Factors , in this Annual Report on Form 10-K. 36 Table of Contents Critical assumptions and estimates for quantitative analyses include revenue growth and profit performance over the next five year period, based on our strategic plan, as well as an appropriate discount rate and long-term growth rate, as applicable.
These assumptions could be negatively impacted by various risks discussed in Item 1A, Risk Factors , in this Annual Report on Form 10-K. 44 Table of Contents Critical assumptions and estimates for quantitative analyses include revenue growth and profit performance over the next five year period, based on our strategic plan, as well as an appropriate discount rate and long-term growth rate, as applicable.
Discussions of the periods prior to the year ended December 31, 2023 that are not included in this Annual Report on Form 10-K are found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 and the discussion therein for the year ended December 31, 2023 compared to the year ended December 31, 2022 is incorporated by reference into this Annual Report.
Discussions of the periods prior to the year ended December 31, 2024 that are not included in this Annual Report on Form 10-K are found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 and the discussion therein for the year ended December 31, 2024 compared to the year ended December 31, 2023 is incorporated by reference into this Annual Report.
As of October 1, 2024, we performed a quantitative analysis for goodwill and certain of our indefinite lived brand assets, whereby we used an income approach, or in some cases a combination of income and market based approaches, to determine the fair value of our assets, as well as an overall consideration of market capitalization and enterprise value.
As of October 1, 2025, we performed a quantitative analysis for goodwill and certain of our indefinite lived brand assets, whereby we used an income approach, or in some cases a combination of income and market based approaches, to determine the fair value of our assets, as well as an overall consideration of market capitalization and enterprise value.
Our liability for uncertain tax positions contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various tax positions. 38 Table of Contents Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities.
Our liability for uncertain tax positions contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various tax positions. 46 Table of Contents Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities.
Capital expenditures, which includes both purchases of property, plant, and equipment and amounts included in accounts payable and accrued expenses, for the years ended December 31, 2024 and 2023, primarily related to investments in manufacturing capabilities, both in the U.S. and internationally.
Capital expenditures, which includes both purchases of property, plant, and equipment and amounts included in accounts payable and accrued expenses, primarily related to investments in manufacturing capabilities, both in the U.S. and internationally, for the years ended December 31, 2025 and 2024.
At any time, and from time to time, we may seek additional deleveraging, refinancing, or liquidity enhancing transactions, including entering into transactions to repurchase or redeem outstanding indebtedness or otherwise seek transactions to reduce interest expense, extend debt maturities, and improve our capital and liquidity structure .
From time to time, we may seek additional deleveraging, refinancing, or liquidity enhancing transactions, including entering into transactions to repurchase or redeem outstanding indebtedness or otherwise seek transactions to reduce interest expense, extend debt maturities, and improve our capital and liquidity structure .
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2024 and 2023 and year-over-year comparisons between the years ended December 31, 2024 and 2023.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2025 and 2024 and year-over-year comparisons between the years ended December 31, 2025 and 2024.
Refer to Note 5 of the Notes to our Consolidated Financial Statements for additional information about our impairment assessments. Revenue Recognition We recognize revenue when performance obligations under the terms of a contract with the customer are satisfied.
Refer to Note 6 of the Notes to our Consolidated Financial Statements for additional information about our impairment assessments. Revenue Recognition We recognize revenue when performance obligations under the terms of a contract with the customer are satisfied.
Income Taxes We establish income tax liabilities to remove some or all of the income tax benefit of any of our income tax positions based upon one of the following: • the tax position is not “more likely than not” to be sustained, • the tax position is “more likely than not” to be sustained, but for a lesser amount, or • the tax position is “more likely than not” to be sustained, but not in the financial period in which the tax position was originally taken.
Income Taxes We establish income tax liabilities to remove some or all of the income tax benefit of any of our income tax positions based upon one of the following: • the tax position is not "more likely than not" to be sustained, • the tax position is "more likely than not" to be sustained, but for a lesser amount, or • the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken.
To the extent that our operating cash flows are not sufficient to meet our liquidity needs, we may utilize cash on hand or amounts available under our financing arrangements, if necessary.
To the extent that our operating cash flows are not sufficient to meet our liquidity needs, we may utilize cash on hand or amounts available under our financing arrangements.
We dynamically adjust our cash deployment plans based on the specific opportunities available in a given period, but over time we allocate capital to balance each of these priorities. Regular Quarterly Dividends We have declared total dividends of $0.89 per share and $0.83 per share for the years ended December 31, 2024 and 2023, respectively.
We dynamically adjust our cash deployment plans based on the specific opportunities available in a given period, but over time we allocate capital to balance each of these priorities. Regular Quarterly Dividends We have declared total dividends of $0.92 per share and $0.89 per share for the years ended December 31, 2025 and 2024, respectively.
We continue to manage all aspects of our business, including, but not limited to, monitoring the financial health of our customers, suppliers, and other third-party relationships, implementing gross margin enhancement strategies through our productivity initiatives, and developing new opportunities for growth such as innovation and agreements with partners to distribute brands that are accretive to our portfolio.
We manage all aspects of our business, including monitoring the financial health of our customers, suppliers, and other third-party relationships, implementing gross margin enhancement strategies through our productivity initiatives, and developing new opportunities for growth such as innovation and agreements with partners to distribute brands that are accretive to our portfolio.
The following table provides the range of rates used in the analysis as of October 1, 2024: Rate Minimum Maximum Discount rates 7.0 % 9.5 % Long-term growth rates — % 3.5 % The following table shows the non-cash impairment charges that were recorded for goodwill and for indefinite lived brand assets for the years presented: Year Ended December 31, (in millions) 2024 2023 2022 Goodwill (1) $ 306 $ — $ — Indefinite lived brand assets (2) 412 — 472 (1) Goodwill attributed to the U.S.
The following table provides the range of rates used in the analysis as of October 1, 2025: Rate Minimum Maximum Discount rates 9.5 % 12.0 % Long-term growth rates 0.0 % 3.5 % The following table shows the non-cash impairment charges that were recorded for goodwill and for indefinite lived brand assets for the years presented: Year Ended December 31, (in millions) 2025 2024 2023 Goodwill (1) $ — $ 306 $ — Indefinite lived brand assets (2) 78 412 — (1) Goodwill attributed to the U.S.
Sources of Liquidity - Financing Refer to Note 3 of the Notes to our Consolidated Financial Statements for management's discussion of our financing arrangements.
Sources of Liquidity - Financing Refer to Note 5 of the Notes to our Consolidated Financial Statements for management's discussion of our financing arrangements.
Our reportable segments as of October 1, 2024 were: • U.S. Refreshment Beverages (reporting units: U.S. Beverage Concentrates, U.S. Warehouse Direct, and Direct Store Delivery) • U.S. Coffee (reporting unit: U.S.
Our reportable segments as of October 1, 2025 were: • U.S. Refreshment Beverages (reporting units: U.S. Beverage Concentrates, U.S. Warehouse Direct, Direct Store Delivery, and GHOST) • U.S. Coffee (reporting unit: U.S.
Refreshment Beverages segment reflects sales in the U.S. from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including the sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers. • The U.S.
Refreshment Beverages segment reflects sales in the U.S. from the manufacture and distribution of branded concentrates, syrups, finished beverages, and other consumables, including the sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers. • The U.S.
A 10% change in the accrual for our customer incentives, sales returns and marketing programs would have affected our income from operations by $52 million for the year ended December 31, 2024.
A 10% change in the accrual for our customer incentives, sales returns, and marketing programs would have affected our income from operations by $53 million for the year ended December 31, 2025.
In the event the fair value of an investment declines below our carrying value, management is required to determine if the decline in fair value is other than temporary. If management determines the decline is other than temporary, an impairment charge is recorded.
In the event the fair value of an investment declines below our carrying value, management is required to determine if the decline in fair value is other than temporary.
Impairment of goodwill reflected a non-cash impairment charge of $306 million within the U.S. Warehouse Direct reporting unit in the U.S. Refreshment Beverages segment. Refer to Note 5 of the Notes to our Consolidated Financial Statements for further information. Impairment of Other Intangible Assets.
Impairment of goodwill in the prior year reflected a non-cash impairment charge of $306 million within the U.S. Warehouse Direct reporting unit in the U.S. Refreshment Beverages segment. Refer to Note 6 of the Notes to our Consolidated Financial Statements for further information.
Coffee segment reflects sales in the U.S. from the manufacture and distribution of finished goods relating to our K-Cup pods, single serve brewers, and other coffee products to partners, retailers, and directly to consumers through our Keurig.com website. • The International segment reflects sales in international markets, including the following: ◦ Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers. ◦ Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products. 25 Table of Contents VOLUME In evaluating our performance, we use different volume measures for LRB and for K-Cup pods and appliances.
Coffee segment reflects sales in the U.S. from the manufacture and distribution of finished goods relating to our K-Cup pods, single serve brewers, and other coffee products to partners, retailers, and directly to consumers through our Keurig.com website. • The International segment reflects sales in international markets, including the following: ◦ Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers. ◦ Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products.
(2) Includes $1,997 million and $1,399 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of December 31, 2024 and December 31, 2023, respectively. 41 Table of Contents
(2) Includes $2,610 million and $1,997 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of December 31, 2025 and December 31, 2024, respectively. 48 Table of Contents
Sensitivity Analysis - Discount Rate For goodwill, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of the reporting units as of October 1, 2024, would result in additional non-cash impairment charges of $198 million to our U.S.
Sensitivity Analysis - Discount Rate For goodwill, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of the reporting units as of October 1, 2025, would not result in any impairment charges on any of our reporting units.
We believe that the following events, trends and uncertainties may also impact liquidity: • Our ability to either repay existing debt maturities through cash flow from operations or refinance through future issuances of senior unsecured notes; • Our ability to access and/or renew our committed financing arrangements ; • Our ability to issue unsecured uncommitted commercial paper notes on a private placement basis; • Future mergers, acquisitions, or debt or equity investments, which may include brand ownership companies, regional bottling companies, distributors, and/or distribution rights to further extend our geographic coverage; • Seasonality and other variability in our operating cash flows, which could impact short-term liquidity; • Our continued payment of regular quarterly dividends; • Future repurchases of our common stock or special dividends to drive total shareholder return; • Our continued capital expenditures; • Fluctuations in our tax obligations; and • A potential significant downgrade in our credit ratings, which could limit i) our ability to issue debt at terms that are favorable to us, or ii) a financial institution's willingness to participate in our accounts payable program and reduce the attractiveness of the accounts payable program to participating suppliers who may sell payment obligations from us to financial institutions, which could impact our accounts payable program. 35 Table of Contents CRITICAL ACCOUNTING ESTIMATES The process of preparing our consolidated financial statements in conformity with U.S.
Customer and consumer demand for our products may also be impacted by the risk factors discussed under "Risk Factors" in Part 1, Item 1A in this Annual Report on Form 10-K, as well as subsequent filings with the SEC, that could have a material effect on production, delivery, and consumption of our products, which could result in a reduction in our sales volume. 42 Table of Contents We believe that the following events, trends, and uncertainties may also impact liquidity: • Our ability to either repay existing debt maturities through cash flow from operations or refinance through future issuances of senior unsecured notes; • Our ability to access and/or renew our committed financing arrangements ; • Our ability to issue unsecured uncommitted commercial paper notes on a private placement basis; • Financing and other funding arrangements entered into in connection to the JDE Peet's Acquisition; • Future mergers, acquisitions, or debt or equity investments, which may include brand ownership companies, regional bottling companies, distributors, and/or distribution rights to further extend our geographic coverage; • Seasonality and other variability in our operating cash flows, which could impact short-term liquidity; • Our continued payment of regular quarterly dividends; • Future repurchases of our common stock or special dividends to drive total shareholder return; • Our continued capital expenditures; • Fluctuations in our tax obligations; and • A potential significant downgrade in our credit ratings, which could limit i) our ability to issue debt at terms that are favorable to us, or ii) a financial institution's willingness to participate in our accounts payable program and reduce the attractiveness of the accounts payable program to participating suppliers who may sell payment obligations from us to financial institutions, which could impact our accounts payable program. 43 Table of Contents CRITICAL ACCOUNTING ESTIMATES The process of preparing our consolidated financial statements in conformity with U.S.
For LRB, we measure our sales volume in 288 fluid ounce equivalent cases. • For beverage concentrates, we measure our sales volume as concentrate case sales for concentrates sold by us to our bottlers and distributors.
VOLUME In evaluating our performance, we use different volume measures for LRB and for K-Cup pods and appliances. For LRB, we measure our sales volume in 288 fluid ounce equivalent cases. • For beverage concentrates, we measure our sales volume as concentrate case sales for concentrates sold by us to our bottlers and distributors.
Other operating (expense) income, net reflected an unfavorable change of $233 million for the year ended December 31, 2024, primarily driven by the accrued $225 million termination fee associated with ABI. Refer to Note 4 of the Notes to our Consolidated Financial Statements for further information. Income from Operations.
Other operating (income) expense, net reflected a favorable change of $212 million for the year ended December 31, 2025, primarily driven by the favorable comparison of the $225 million termination fee associated with ABI incurred in the prior year. Refer to Note 4 of the Notes to our Consolidated Financial Statements for further information.
Refer to Item 1A, Risk Factors , as well as the Uncertainties and Trends Affecting Liquidity and Capital Resources section below, for more information about risks and uncertainties facing us.
EXECUTIVE SUMMARY Financial Overview As Reported, in millions (except Diluted EPS) Uncertainties and Trends Affecting Our Business Refer to Item 1A, Risk Factors , as well as the Uncertainties and Trends Affecting Liquidity and Capital Resources section below, for more information about risks and uncertainties facing us.
Investments in Variable Interest Entities We hold equity investments in entities that are considered VIEs, including Nutrabolt and Chobani. We would be required to consolidate a VIE for which we are determined to be the primary beneficiary.
If management determines the decline is other than temporary, an impairment charge is recorded. 47 Table of Contents Investments in Variable Interest Entities We hold equity investments in entities that are considered VIEs, including Nutrabolt and Chobani. We would be required to consolidate a VIE for which we are determined to be the primary beneficiary.
For the indefinite-lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of those assets as of October 1, 2024, would impact the amount of headroom over the carrying value of the following assets as follows (in millions): Selected Discount Rate Discount Rate Increase of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value Brands 0% (1) $ 280 $ 280 $ 1,730 $ 1,620 Less than 25% 2,580 2,900 1,130 1,290 25 - 50% 1,488 2,160 1,627 2,210 In excess of 50% 14,481 34,490 14,342 31,650 (1) Carrying value at the selected discount rate reflects the results of the annual impairment analysis recognized during the year ended December 31, 2024.
For the indefinite lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of those assets as of October 1, 2025, would impact the amount of headroom over the carrying value of those assets as follows: (in millions) Selected Discount Rate Discount Rate Increase of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value 0% (1) $ 1,110 $ 1,110 $ 2,560 $ 2,430 Less than 25% 2,847 3,110 1,397 1,540 25 - 50% 314 440 3,798 5,360 In excess of 50% 15,639 29,280 12,155 22,570 (1) Carrying value at the selected discount rate reflects the results of the annual impairment analysis recognized during the year ended December 31, 2025.
OVERVIEW KDP is a leading beverage company in North America that manufactures, markets, distributes and sells hot and cold beverages and single serve brewing systems. We have a broad portfolio of iconic beverage brands, including Keurig, Dr Pepper, Canada Dry, Mott's, A&W, Peñafiel, Snapple, 7UP, Green Mountain Coffee Roasters, GHOST, Clamato, Core Hydration, and The Original Donut Shop.
We have a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Mott's, A&W, Peñafiel, GHOST, 7UP, Snapple, Green Mountain Coffee Roasters, Clamato, The Original Donut Shop, and Core Hydration, as well as the Keurig brewing system.
Significant assumptions and estimates include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset, if applicable.
Significant assumptions and estimates include the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset, if applicable. Further, certain of our acquisitions may include other forms of consideration, including mandatorily redeemable liabilities and other earn-out arrangements.
WD reporting unit, but would not change our conclusion on any other reporting units. 37 Table of Contents For the indefinite-lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term revenue growth rate used to determine the fair value of those assets as of October 1, 2024, would impact the amount of headroom over the carrying value of the following assets as follows (in millions): Selected Long-Term Growth Rate Long-Term Growth Rate Decrease of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value Brands 0% (1) $ 280 $ 280 $ 1,730 $ 1,660 Less than 25% 2,580 2,900 1,130 1,310 25 - 50% 1,488 2,160 1,627 2,240 In excess of 50% 14,481 34,490 14,342 32,150 (1) Carrying value at the selected long-term growth rate reflects the results of the annual impairment analysis recognized during the year ended December 31, 2024.
Sensitivity Analysis - Long-Term Growth Rate For goodwill, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term growth rate used to determine the fair value of the reporting units as of October 1, 2025, would not result in any impairment charges on any of our reporting units. 45 Table of Contents For the indefinite lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term revenue growth rate used to determine the fair value of those assets as of October 1, 2025, would impact the amount of headroom over the carrying value of those assets as follows: (in millions) Selected Long-Term Growth Rate Long-Term Growth Rate Decrease of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value 0% (1) $ 1,110 $ 1,110 $ 2,560 $ 2,480 Less than 25% 2,847 3,110 1,397 1,550 25 - 50% 314 440 3,798 5,460 In excess of 50% 15,639 29,280 12,155 22,930 (1) Carrying value at the selected long-term growth rate reflects the results of the annual impairment analysis recognized during the year ended December 31, 2025.
A case sale represents a unit of measurement equal to 288 fluid ounces of packaged beverage sold by us. Case sales include both our owned brands and certain brands licensed to and/or distributed by us.
A case sale represents a unit of measurement equal to 288 fluid ounces of packaged beverage sold by us.
Interest Expense, Net. Interest expense, net increased $239 million, or 48.2%, to $735 million for the year ended December 31, 2024 compared to $496 million for the prior year, primarily driven by increased debt and higher financing costs (32 percentage points) and an unfavorable year-over-year change in unrealized mark-to-market activity (17 percentage points). Effective Tax Rate.
Interest expense, net increased $19 million, or 2.6%, to $754 million for the year ended December 31, 2025 compared to $735 million for the prior year, primarily driven by increased debt and higher financing costs (12 percentage points), which were mostly offset by a favorable year-over-year change in unrealized mark-to-market activity (10 percentage points).
KDP has some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers. We offer more than 125 owned, licensed, and partner brands, available nearly everywhere people shop and consume beverages through our sales and distribution network.
Our beverage brands are some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers. We offer more than 125 owned, licensed, and partner brands, supported by powerful distribution capabilities. SEGMENTS Our operating and reportable segments are as follows: • The U.S.
For our K-Cup pods and appliances, we measure our sales volume as the number of appliances and the number of individual K-Cup pods sold to our customers.
Case sales include both our owned brands and certain brands licensed to and/or distributed by us. 34 Table of Contents For our K-Cup pods and appliances, we measure our sales volume as the number of appliances and the number of individual K-Cup pods sold to our customers.
Net sales increased 6.8% to $2,053 million in the year ended December 31, 2024, compared to $1,922 million in the prior year period, reflecting volume/mix growth of 6.2% and higher net price realization of 3.0%, partially offset by unfavorable FX translation of 2.4%. Income from Operations.
Net sales increased 5.9% to $2,174 million in the year ended December 31, 2025, reflecting higher net price realization and volume / mix growth, partially offset by unfavorable FX translation.
WD reporting unit was impaired by the amount its carrying value exceeded its fair value. (2) Indefinite lived brand assets, led primarily by Snapple for the year ended December 31, 2024, and Bai for the year ended December 31, 2022, were impaired to bring the respective carrying value equal to its fair value.
WD reporting units was impaired during the year ended December 31, 2024. (2) Indefinite lived brand assets were impaired during the years ended December 31, 2025 and 2024 to bring the respective carrying values equal to their fair values.
If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements may be exposed to potential impairment of the intangible assets and goodwill, as discussed in Impairment Assessment of Goodwill and Other Indefinite Lived Intangible Assets above. 39 Table of Contents Impairment Assessment of Equity Method Investments Without Readily Determinable Fair Values Equity method investments are reviewed quarterly to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment.
Impairment Assessment of Equity Method Investments Without Readily Determinable Fair Values Equity method investments are reviewed quarterly to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment.
The effective tax rate increased 380 bps to 24.7% for the year ended December 31, 2024, compared to 20.9% in the prior year, primarily driven by the impact of our non-cash goodwill impairment charge (270 bps) and the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment (100 bps). Net Income.
The effective tax rate decreased 210 bps to 22.6% for the year ended December 31, 2025, compared to 24.7% in the prior year, primarily driven by the favorable comparison of the tax impact of our non-cash goodwill impairment charge in the prior year (230 bps).
Income from operations decreased $601 million, or 18.8%, to $2,591 million for the year ended December 31, 2024 compared to $3,192 million in the prior year, as our increase in gross profit (14 percentage points) was more than offset by the impacts of our non-cash impairment charges for goodwill and other intangible assets (22 percentage points) and the accrued termination fee associated with ABI (7 percentage points).
Income from operations increased $984 million, or 38.0%, to $3,575 million for the year ended December 31, 2025 compared to $2,591 million in the prior year, driven by the favorable comparison of our non-cash impairment charges for goodwill and intangible assets compared to the prior year, increased gross profit, and the favorable comparison to the termination fee associated with ABI incurred in the prior year.
Capital expenditures included in accounts payable and accrued expenses were $220 million and $276 million for the years ended December 31, 2024 and 2023, respectively, which primarily related to these investments.
Capital expenditures included in accounts payable and accrued expenses were $204 million and $220 million for the years ended December 31, 2025 and 2024, respectively, which primarily related to these investments. Repurchases of Common Stock Our Board authorized a four-year share repurchase program of up to $4 billion of our outstanding common stock, which ended on December 31, 2025.
Refer to Note 6 of the Notes to our Consolidated Financial Statements and Item 7A, Quantitative and Qualitative Disclosures About Market Risk for management's discussion of how we manage our exposure to commodity risk.
Refer to Note 7 of the Notes to our Consolidated Financial Statements and Item 7A, Quantitative and Qualitative Disclosures About Market Risk for management's discussion of how we manage our exposure to foreign exchange risk, interest rate risk, and commodity risk. 35 Table of Contents RESULTS OF OPERATIONS References in the financial tables to percentage changes that are not meaningful are denoted by "NM".
Our investments generally involve acquiring a minority interest in equity securities of a company, in certain cases with a protected path to ownership at our future option.
Our investments generally involve acquiring a minority interest in equity securities of a company, in certain cases with a protected path to ownership at our future option. JDE Peet's Acquisition We entered into various transactions in order to finance the JDE Peet's Acquisition, including the Bridge Credit Agreement and Delayed Draw Term Loan Agreement.
Investments in unconsolidated affiliates were $7 million and $316 million for the years ended December 31, 2024 and 2023, respectively. 34 Table of Contents Acquisitions of Businesses and Purchases of Intangible Assets We have invested in the expansion of our DSD network through transactions with strategic independent bottlers or third-party brand ownership companies to enhance competitive distribution scale.
Acquisitions of Businesses and Purchases of Intangible Assets From time to time, we acquire brand ownership companies to expand our portfolio. We also invest in the expansion of our DSD network through transactions with strategic independent bottlers or third-party brand ownership companies to enhance competitive distribution scale.
Any changes to the recorded fair value of the consideration are recognized in earnings in the period in which they occur.
As of the acquisition date, we record such consideration, as applicable, at the estimated fair value of the expected future payments associated with the obligation. Any changes to the recorded fair value of the consideration are recognized in earnings in the period in which they occur.
Refer to Note 19 of the Notes to our Consolidated Financial Statements for further information. UNCERTAINTIES AND TRENDS AFFECTING LIQUIDITY AND CAPITAL RESOURCES Disruptions in financial and credit markets, including those caused by global economic uncertainty and fluctuations in interest rates, may impact our ability to manage normal commercial relationships with our customers, suppliers, and creditors.
Uncertainties and Trends Affecting Liquidity and Capital Resources Disruptions in financial and credit markets, including those caused by inflation, global economic uncertainty or economic downturns, fluctuations in interest rates, or the imposition of new tariffs or changes to existing tariffs, trade wars, barriers or restrictions, or threats of such actions, and related uncertainty, may impact our ability to manage normal commercial relationships with our customers, suppliers, and creditors, and may also impact our ability to access liquidity through financial markets in a timely and cost-effective manner.
RESIDUAL VALUE GUARANTEES We have a number of leasing arrangements and one licensing arrangement with VIEs for which we are not the primary beneficiary. Each one of these arrangements contain an RVG. As of December 31, 2024, we have not recorded any liabilities as it is not probable that we will have to make any payments required under the RVGs.
Each one of these arrangements contain an RVG. As of December 31, 2025, we have not recorded any liabilities as it is not probable that we will have to make any payments required under the RVGs. Refer to Note 19 of the Notes to our Consolidated Financial Statements for further information.
Net sales decreased 2.6% to $3,967 million for the year ended December 31, 2024 compared to $4,071 million in the prior year period, driven by unfavorable net price realization of 3.6%, partially offset by volume/mix growth of 1.0%. Income from Operations.
Net sales increased 0.6% to $3,990 million for the year ended December 31, 2025, driven by higher net price realization, partially offset by unfavorable volume / mix.
Principal Uses of Capital Resources Our capital allocation priorities are investing to grow our business both organically and inorganically, continuing to strengthen our balance sheet, and returning cash to shareholders through regular quarterly dividends and opportunistic share repurchases.
A downgrade of one or both of our debt and commercial paper ratings could increase our interest expense and decrease the cash available to fund anticipated obligations. Principal Uses of Capital Resources Our capital allocation priorities are investing to grow our business both organically and inorganically, strengthening our balance sheet, and returning cash to shareholders through regular quarterly dividends.
Additionally, we have an uncommitted commercial paper program where we can issue unsecured commercial paper notes on a private placement basis. Based on our current and anticipated level of operations, we believe that our operating cash flows will be sufficient to meet our anticipated obligations for the next twelve months and thereafter for the foreseeable future.
Based on our current and anticipated level of operations, we believe that our operating cash flows will be sufficient to meet our anticipated obligations related to our normal course of business (excluding the impacts of the JDE Peet's Acquisition described below) for the next twelve months and thereafter for the foreseeable future.
As of December 31, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program. Capital Expenditures Purchases of property, plant, and equipment were $563 million and $425 million for the years ended December 31, 2024 and 2023, respectively.
Purchases of intangible assets were $17 million and $59 million for the years ended December 31, 2025 and 2024, respectively. Capital Expenditures Purchases of property, plant, and equipment were $486 million and $563 million for the years ended December 31, 2025 and 2024, respectively.
Impairment of intangible assets reflected non-cash impairment charges of $412 million for intangible brand assets, primarily led by Snapple. Refer to Note 5 of the Notes to our Consolidated Financial Statements for further information. Other operating expense (income), net.
Impairment of intangible assets decreased $334 million to $78 million, driven by the favorable comparison of non-cash impairment charges for intangible brand assets compared to the prior year. Refer to Note 6 of the Notes to our Consolidated Financial Statements for further information.
We also have an active shelf registration statement, filed with the SEC on August 19, 2022, which allows us to issue an indeterminate number or amount of common stock, preferred stock, debt securities, and warrants from time to time in one or more offerings at the direction of our Board. 33 Table of Contents Debt Ratings Our credit ratings are as follows: Rating Agency Long-Term Debt Rating Commercial Paper Rating Outlook Moody's Baa1 P-2 Stable S&P BBB A-2 Stable These debt and commercial paper ratings impact the interest we pay on our financing arrangements.
As of December 31, 2025, we were in compliance with all debt covenants, and we have no reason to believe that we will be unable to satisfy these covenants. 40 Table of Contents We also have an active shelf registration statement, filed with the SEC on August 15, 2025, which allows us to issue an indeterminate number or amount of common stock, preferred stock, debt securities, and warrants from time to time in one or more offerings at the direction of our Board.
This performance primarily reflected the gross profit impact of net sales growth (3 percentage points), a net benefit from changes in ingredients, materials, and productivity (2 percentage points), and earned equity from the achievement of milestones associated with certain distribution agreements (1 percentage point), partially offset by net increases in other manufacturing costs (1 percentage point).
This performance primarily reflected the gross profit impact of net sales growth (9 percentage points), partially offset by the net unfavorable impact from changes in ingredients, materials, and productivity, inclusive of tariffs (4 percentage points).
The following summarizes our cash activity for the years ended December 31, 2024, 2023, and 2022: Principal Sources of Capital Resources Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from our operations, and borrowing capacity currently available under our Revolving Credit Agreement and our Term Loan Agreement.
We do not expect restrictions or taxes on repatriation of cash held outside the U.S. to have a material effect on our overall business, liquidity, financial condition, or results of operations for the foreseeable future. 39 Table of Contents The following summarizes our cash activity for the years ended December 31, 2025, 2024, and 2023: Principal Sources of Capital Resources Our principal sources of liquidity are our cash and cash equivalents, cash generated from our operations, and borrowing capacity currently available under our 2025 Revolving Credit Agreement.
The consolidating schedules are provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and guarantor subsidiaries. 40 Table of Contents The summarized financial information for the Parent and Guarantors were as follows: (in millions) For the Year Ended December 31, 2024 Net sales $ 9,720 Gross profit 5,082 Income from operations 600 Net income attributable to KDP 1,441 December 31, (in millions) 2024 2023 Current assets $ 2,373 $ 1,957 Non-current assets 49,827 48,029 Total assets (1) $ 52,200 $ 49,986 Current liabilities $ 6,101 $ 6,749 Non-current liabilities 20,984 16,689 Total liabilities (2) $ 27,085 $ 23,438 (1) Includes $115 million and $56 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of December 31, 2024 and December 31, 2023, respectively.
The summarized financial information for the Parent and Guarantors were as follows: (in millions) For the Year Ended December 31, 2025 Net sales $ 10,515 Gross profit 5,339 Income from operations 1,523 Net income 2,094 December 31, (in millions) 2025 2024 Current assets $ 2,964 $ 2,373 Non-current assets 51,756 49,827 Total assets (1) $ 54,720 $ 52,200 Current liabilities $ 6,926 $ 6,101 Non-current liabilities 21,390 20,984 Total liabilities (2) $ 28,316 $ 27,085 (1) Includes $8 million and $115 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of December 31, 2025 and December 31, 2024, respectively.
SG&A expenses increased $101 million, or 2.1%, to $5,013 million for the year ended December 31, 2024 compared to $4,912 million in the prior year, led by increases in transportation and warehousing expenses (2 percentage points) and people costs (1 percentage point), partially offset by reduced costs associated with productivity projects (1 percentage point). 28 Table of Contents Impairment of Goodwill.
SG&A expenses increased $338 million, or 6.7%, to $5,351 million for the year ended December 31, 2025 compared to $5,013 million in the prior year, primarily driven by increased transportation and warehousing expenses (4 percentage points), costs associated with the JDE Peet's Acquisition and Separation (2 percentage points), and higher labor costs (2 percentage points).
From time to time, we additionally acquire brand ownership companies to expand our portfolio. These transactions could be accounted for either as an acquisition of a business or as an asset acquisition, if the majority of the transaction price represents the acquisition of a single intangible asset. During the year ended December 31, 2024, we completed several acquisitions.
These transactions could be accounted for either as an acquisition of a business or, if the majority of the transaction price represents the acquisition of a single intangible asset, as an asset acquisition. In the second quarter of 2025, we completed the Dyla acquisition. Refer to Note 4 of the Notes to our Consolidated Financial Statements for additional information.
Investments in Unconsolidated Affiliates From time to time, we invest in beverage startup companies or in brand ownership companies to grow our presence in certain product categories, or enter into various licensing and distribution agreements to expand our product portfolio.
Repurchases and retirements of common stock, including payments on our share excise tax obligation, were $9 million and $1,110 million during the years ended December 31, 2025 and 2024, respectively. 41 Table of Contents Equity Method Investments From time to time, we invest in beverage startup companies or in brand ownership companies to grow our presence in certain product categories, or enter into various licensing and distribution agreements to expand our product portfolio.
Sources of Liquidity - Operations Net cash provided by operating activities increased $890 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, driven by the favorable comparison in working capital versus the prior year period. 32 Table of Contents Cash Conversion Cycle Our cash conversion cycle is defined as DIO and DSO less DPO.
Sources of Liquidity - Operations Net cash provided by operating activities decreased $228 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was driven by the unfavorable comparison in working capital, partially offset by a higher net income adjusted for non-cash items in the current period.
GAAP: For the Year Ended December 31, (in millions) 2024 2023 Net sales U.S. Refreshment Beverages $ 9,331 $ 8,821 U.S. Coffee 3,967 4,071 International 2,053 1,922 Total net sales $ 15,351 $ 14,814 For the Year Ended December 31, (in millions) 2024 2023 Income from Operations U.S. Refreshment Beverages $ 1,878 $ 2,483 U.S.
Refreshment Beverages $ 10,439 $ 9,331 11.9 % U.S. Coffee 3,990 3,967 0.6 % International 2,174 2,053 5.9 % Total net sales $ 16,603 $ 15,351 8.2 % Income from operations U.S. Refreshment Beverages $ 2,939 $ 1,878 56.5 % U.S.
Sales volumes for the year ended December 31, 2024 increased approximately 1.0% compared to the prior year period. Growth in carbonated soft drinks and the contributions from partnerships, such as Electrolit and C4, was partially offset by softness in our still beverages portfolio. Net Sales.
Refreshment Beverages Sales volume increased 0.7% for the year ended December 31, 2025, led by growth in our energy portfolio, including the acquisition of GHOST, and in carbonated soft drinks. These benefits were partially offset by softness in our still beverages portfolio.
Net sales increased 5.8% to $9,331 million in the year ended December 31, 2024, compared to $8,821 million in the prior year period, driven by favorable net price realization of 3.1% and volume/mix growth of 2.7%. Income from Operations.
Net sales increased 11.9% to $10,439 million for the year ended December 31, 2025, led by volume / mix growth, including a benefit from the acquisition of GHOST, as well as higher net price realization. Income from operations increased 56.5% to $2,939 million for the year ended December 31, 2025.
Results of Operations by Segment The following tables set forth net sales and income from operations for our reportable segments for the years ended December 31, 2024 and 2023, as well as the other amounts necessary to reconcile our total segment results to our consolidated results presented in accordance with U.S.
Diluted EPS increased 45.7% to $1.53 per diluted share as compared to $1.05 in the prior year. 37 Table of Contents Results of Operations by Segment The following tables provide certain results of operations for our reportable segments for the years ended December 31, 2025 and 2024: For the Year Ended December 31, Percentage Change (in millions) 2025 2024 Net sales U.S.
Other drivers include the benefit to gross profit of net sales growth (13 percentage points), a net benefit from changes in ingredients, materials, and productivity (3 percentage points), and earned equity from the achievement of milestones associated with certain distribution agreements (3 percentage points), partially offset by increased transportation and warehousing expenses (3 percentage points). U.S.
Income from operations increased 0.2% to $546 million for the year ended December 31, 2025, reflecting the benefit from the gross profit impact of net sales growth (17 percentage points), which was mostly offset by a net unfavorable impact from changes in ingredients, materials, and productivity (10 percentage points) and increased transportation and warehousing expenses (7 percentage points).
Income from operations decreased $79 million, or 6.8%, to $1,079 million for the year ended December 31, 2024, compared to $1,158 million in the prior year period, driven by the gross profit impact of the net sales decrease (11 percentage points), partially offset by a net benefit from changes in ingredients, materials, and productivity (3 percentage points). 30 Table of Contents International The following table provides selected information about our International segment’s results: For the Year Ended December 31, Dollar Percentage (in millions) 2024 2023 Change Change Net sales $ 2,053 $ 1,922 $ 131 6.8 % Income from operations 545 475 70 14.7 % Operating margin 26.5 % 24.7 % 180 bps Sales Volume.
Income from operations decreased 10.8% to $962 million for the year ended December 31, 2025, driven by a net unfavorable change in ingredients, materials, and productivity, inclusive of tariffs (22 percentage points), partially offset by the benefit of net sales growth (11 percentage points). International LRB sales volume increased 2.3%. Appliance volumes decreased 1.7%, and K-Cup pod volumes increased 2.0%.
Income from operations decreased $605 million, or 24.4%, to $1,878 million for the year ended December 31, 2024 compared to $2,483 million for the prior year period. This decrease was primarily driven by the non-cash goodwill and intangible impairment charges (29 percentage points) and the accrued termination fee associated with ABI (9 percentage points).
This performance was led by the favorable comparison of our non-cash impairment charges for goodwill and intangible assets compared to the prior year (34 percentage points), the gross profit impact of net sales growth (32 percentage points), and the favorable comparison of the termination fee associated with ABI incurred in the prior year (12 percentage points).
Removed
KDP operates as an integrated brand owner, manufacturer, and distributor. We believe our integrated business model strengthens our route-to-market and provides opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our manufacturing and distribution businesses through both our DSD system and our WD system.
Added
OVERVIEW KDP is a leading beverage company in North America that manufactures, markets, distributes, and sells hot and cold beverages and single serve brewing systems.
Removed
We market and sell our products to retailers, including supermarkets, mass merchandisers, club stores, pure-play e-commerce retailers, and office superstores; to restaurants, hotel chains, office product and coffee distributors, and partner brand owners; and directly to consumers through our website.
Added
These benefits were partially offset by increased SG&A expenses.
Removed
Our integrated business model enables us to be more flexible and responsive to the changing needs of our large retail customers and allows us to more fully leverage our scale and reduce costs by creating greater geographic manufacturing and distribution coverage. SEGMENTS Our operating and reportable segments are as follows: • The U.S.
Added
Other expense (income), net reflected an unfavorable change of $192 million for the year ended December 31, 2025, primarily driven by an increase of $214 million in our mandatory redemption liability for GHOST.
Removed
EXECUTIVE SUMMARY Financial Overview As Reported, in millions (except Diluted EPS) 26 Table of Contents Key Events During and Subsequent to the Fourth Quarter of 2024 On October 23, 2024, we entered into a definitive agreement with GHOST, and certain other parties named therein, to acquire a controlling interest in GHOST.
Added
Net income increased $638 million, or 44.3%, to $2,079 million for the year ended December 31, 2025, primarily driven by increased income from operations, partially offset by the increase in our mandatory redemption liability for GHOST.
Removed
Founded in 2016, GHOST is a lifestyle sports nutrition business with a portfolio anchored by GHOST Energy, a leading ready-to-drink energy brand. Under the terms of the agreement, we initially purchased a 60% stake in GHOST for aggregate consideration of approximately $1 billion on December 31, 2024.
Added
Coffee 962 1,079 (10.8) % International 546 545 0.2 % Unallocated corporate costs (872) (911) (4.3) % Total income from operations $ 3,575 $ 2,591 38.0 % Operating margin U.S. Refreshment Beverages 28.2 % 20.1 % 810 bps U.S. Coffee 24.1 % 27.2 % (310) bps International 25.1 % 26.5 % (140) bps Sales Volumes LRB K-Cup Pods Appliances U.S.
Removed
We also entered into an agreement requiring us to purchase the remaining equity interests in GHOST in 2028. The initial payment was funded primarily by proceeds drawn from the Term Loan Agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThese derivative instruments are generally based on SOFR and a credit spread. As of December 31, 2024, all of our outstanding forward starting swaps, with a total notional value of $1,700 million, are expected to begin such payments or receipts in 2025.
Biggest changeThese derivative instruments are generally based on SOFR and a credit spread. As of December 31, 2025, we had derivative contracts outstanding with aggregate notional value of $3.8 billion, $1.5 billion of which relate to planned future issuances of long-term debt, and maturing at various dates through November 2046.
Our principal commodities risks relate to our purchases of coffee beans, PET, aluminum, diesel fuel, corn (for high fructose corn syrup), apple juice concentrate, sucrose, and natural gas (for use in processing and packaging). We utilize commodities derivative instruments and supplier pricing agreements to hedge the risk of movements in commodity prices for limited time periods for certain commodities.
Our principal commodities risks relate to our purchases of coffee beans, PET, Polypropylene, aluminum, diesel fuel, corn (for high fructose corn syrup), apple juice concentrate, sucrose, and natural gas (for use in processing and packaging). We utilize commodities derivative instruments and supplier pricing agreements to hedge the risk of movements in commodity prices for limited time periods for certain commodities.
Refer to Note 6 of the Notes to our Consolidated Financial Statements for further information about our derivative instruments. FOREIGN EXCHANGE RISK The majority of our net sales, expenses, and capital purchases are transacted in U.S. dollars. However, we have exposure with respect to foreign exchange rate fluctuations.
Refer to Note 7 of the Notes to our Consolidated Financial Statements for further information about our derivative instruments. FOREIGN EXCHANGE RISK The majority of our net sales, expenses, and capital purchases are transacted in U.S. dollars. However, we have exposure with respect to foreign exchange rate fluctuations.
We estimate that the potential impact to our interest rate expense associated with variable rate interest payments resulting from a hypothetical interest rate change of 1%, based on amounts outstanding as of December 31, 2024, would be an increase or decrease of approximately $47 million.
We estimate that the potential impact to our interest rate expense associated with variable rate interest payments resulting from a hypothetical interest rate change of 1%, based on amounts outstanding as of December 31, 2025, would be an increase or decrease of approximately $69 million.
As of December 31, 2024, a 10% change (up or down) in commodity prices is estimated to increase or decrease the fair value of these derivative instruments by approximately $51 million. Any increase or decrease in the value of the commodities derivatives instruments would have an approximately offsetting change in the underlying hedged risk. 42 Table of Contents
As of December 31, 2025, a 10% change (up or down) in commodity prices is estimated to increase or decrease the fair value of these derivative instruments by approximately $60 million. Any change in the value of the commodities derivatives instruments would have an approximately offsetting change in the underlying hedged risk. 49 Table of Contents
As of December 31, 2024, the face value of our fixed-rate debt, excluding lease obligations, was $12,743 million, and our variable-rate debt was $2,956 million, inclusive of commercial paper. From time to time, we also enter into interest rate contracts that effectively result in variable-rate interest payments or receipts.
As of December 31, 2025, the face value of our fixed-rate debt, excluding lease obligations, was $13,214 million, and our variable-rate debt was $3,060 million, inclusive of commercial paper. From time to time, we also enter into interest rate contracts that effectively result in variable-rate interest payments or receipts.
The fair value of foreign currency derivatives that do not qualify for hedge accounting resulted in a net unrealized gain of $10 million as of December 31, 2024, and the impact of a 10% weakening in the U.S. dollar is estimated to decrease the fair value by approximately $38 million.
The fair value of foreign currency derivatives that do not qualify for hedge accounting resulted in a net unrealized loss of $40 million as of December 31, 2025, and the impact of a 10% weakening in the U.S. dollar is estimated to increase the fair value by approximately $1,248 million.
Our primary exposure to foreign exchange rates is the Canadian dollar, the Mexican peso, and the Euro against the U.S. dollar. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in earnings as incurred.
Our primary exposure to foreign exchange rates is the Canadian dollar, the Mexican peso, and the Euro against the U.S. dollar, including significant anticipated Euro-denominated cash outflows resulting from the intended JDE Peet's Acquisition. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in earnings as incurred.
As of December 31, 2024, we had derivative contracts outstanding with a notional value of $515 million maturing at various dates through July 2026. The fair market value of these contracts as of December 31, 2024 was a net liability of $51 million.
As of December 31, 2025, we had derivative contracts outstanding with a notional value of $595 million maturing at various dates through January 2028. The fair market value of these contracts as of December 31, 2025 was a net asset of $18 million.
The fair value of foreign currency derivatives that qualify for hedge accounting resulted in a net unrealized gain of $41 million as of December 31, 2024, and the impact of a 10% weakening in the U.S. dollar is estimated to decrease the fair value by approximately $50 million.
These contracts mature at various dates through June 2027. The fair value of foreign currency derivatives that qualify for hedge accounting resulted in a net unrealized loss of $13 million as of December 31, 2025, and the impact of a 10% weakening in the U.S. dollar is estimated to decrease the fair value by approximately $68 million.
Our estimate of the annual impact to interest expense reflects our assumption that SOFR will not fall below 0%. COMMODITY RISK We are subject to market risks with respect to commodities because our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate.
COMMODITY RISK We are subject to market risks with respect to commodities because our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate.
We use derivative instruments such as foreign exchange forward contracts to manage a portion of our exposure to changes in foreign exchange rates. As of December 31, 2024, we had derivative contracts outstanding with notional values of $976 million maturing at various dates through September 2026.
We use derivative instruments such as foreign exchange forward contracts to manage a portion of our exposure to changes in foreign exchange rates. As of December 31, 2025, we had derivative contracts outstanding with notional values of $13,033 million, including approximately $11,810 million of forward contracts associated with the planned JDE Peet's Acquisition.

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