NEW YORK — In a significant shift within the beverage industry, Keurig Dr Pepper announced plans to separate into two distinct companies following its acquisition of Peet’s Coffee for $18 billion. This decision marks a pivotal moment less than ten years after the two brands merged, signaling a strategic move to enhance operational focus.

The company will divide itself into a coffee-focused entity and a separate division handling cold beverages, such as Dr Pepper, Snapple, and energy drinks. Keurig Dr Pepper’s shares saw a 7% decline in early trading following the announcement of this split.

Timothy Cofer, CEO of Keurig Dr Pepper, emphasized the advantages of the separation, stating that each business will operate more effectively by concentrating on specific markets. “Each stand-alone entity will lead its industry with sharpened strategies,” he said during a conference call with investors.

The acquisition of Peet’s, which is part of JDE Peet’s based in Amsterdam, will expand Keurig’s footprint beyond North America, where it is known for its single-serve coffee machines. In addition to Peet’s, JDE Peet’s owns a number of prominent coffee brands, including L’OR and Jacobs. Cofer projected that the newly formed coffee division could generate approximately $16 billion in annual sales.

The merger is anticipated to enhance competitiveness against larger coffee contenders like Nestlé and Starbucks. Cofer highlighted the robust growth rate of coffee consumption on a global scale, underscoring its ubiquitous nature.

Despite optimistic projections for the coffee segment, sales of traditional soft drinks have been declining as health-conscious consumers seek alternatives. The beverage division, expected to generate about $11 billion in annual sales in the U.S. and Mexico, aims to pivot towards rapidly growing sectors, including energy drinks.

In terms of financial strategy, the merger is projected to yield cost savings of around $400 million over the next three years, with a completion target set for the first half of 2026. As part of the restructuring, Cofer will take the helm of the cold beverage business in Frisco, Texas, while Sudhanshu Priyadarshi, the current CFO, will lead the coffee business from Burlington, Massachusetts.

This strategic realignment comes amid a broader trend in the food and beverage sector, where companies are adjusting to evolving consumer preferences. Recent market activity includes Kellogg Co.’s split into two entities and Mars’ acquisition of Kellanova, highlighting the dynamic landscape of the industry.