KDP Using AI to Fuel Expansion Strategy, with Sales Boosted During Pandemic

Keurig Dr Pepper is pursuing AI to fuel an expansion strategy as it commits to Google Cloud and enjoys a market share increase from coffee-drinkers. (Credit: Getty Images) 

By AI Trends Staff 

Keurig Dr. Pepper (KDP), experiencing dramatic volume increases as people drink more coffee at home during the pandemic, is pursuing AI to help fuel its expansion strategy.  

Keurig Green Mountain acquired the Dr Pepper Snapple group in 2018, in an $18.7 million deal. The rationale from Keurig CEO Bob Gamgort was to combine hot and cold beverages to create a platform for higher growth.  

“The business and Wall Street appeared in cold and hot as two entirely different sectors,” Gamgort stated in an article in Fortune. KDP is now rated the seventh-largest food and drink business in the US, with $11.1 billion in earnings last year.  

KDP in early March formed “related panels” that 10,000 home brewers could connect to digitally, to browse pictures of each K-Cup pod to see changes in titles and mixes. Along with this data being viewed by consumers sheltering in place during the pandemic, “Coffee intake has been through the roof, Gamgort stated. He anticipated that customers would look to stockpile supplies so they would shop where they could buy major quantities, in the megastores. He positioned to meet the demand by increasing production of cans, including from Mexico which had cut back beer production after the government deemed beer unessential.  

Its moves have resulted in increased market share. In the 20-week period ended July 26, KDP garnered 34.1% of the $1.4 billion increase in revenue for all U.S. carbonated soft drinks, according to Consumer Edge, quoted in Fortune That boosted its overall market share from 22.7% to 24.0%. “KDP has done the best job of any beverage company in navigating the crisis,” stated Consumer Edge analyst Brett Cooper.   

Move to Google Cloud and AI   

At the same time, KDP is overhauling its compute infrastructure. In July, the company announced it was making a multi-year commitment to Google Cloud to house its “data footprint,” according to an account in CIODive.  

By the end of 2020, KDP plans to shift to virtual machines running on Google Cloud, retiring two data centers with more than 1,000 servers. The migration represents most but not all the company’s data footprint.  

The move is critical to KDP’s “merger integration and modernization efforts,” stated John Gigerich, SVP and CIO for Keurig Dr Pepper, in a statement.  

Carrie Tharp, VP of Retail & Consumer at Google Cloud.

Several consumer product good brands are working to “expedite their digital transformations to really understand their data, deepen relationships with consumers and ultimately drive their business forward,” Carrie Tharp, VP of Retail & Consumer, Google Cloud told CIO Dive in an email. Similar to retailers and direct-to-consumer brands, CPG companies want data from direct customer interaction. 

Also in a play for more personalization, The Procter & Gamble Company is using Google’s data analytics and AI technology, Google announced earlier this month. The company is working to integrate consumer, brand, and media data for deeper insights.  

“We’re always looking to ensure a great consumer experience across all our categories, from healthcare to beauty products and much more,” stated Vittorio Cretella, CIO, Procter & Gamble, in the statement. “As a leader in analytics and AI, Google Cloud is a strategic partner helping us offer our consumers superior products and services that provide value in a secure and transparent way.” 

Google Cloud’s Live Migration Services Tapped to Move KDP’s Servers 

John Gigerich, SVP and CIO for Keurig Dr Pepper

Meanwhile at KDP, CIO Gigerich stated in an account from aiTechPark, “Google Cloud is a true partner that gives us the stability and flexibility to support critical business applications needed to drive innovation and ensure business continuity.”  

He added, “The migration to Google Cloud has been seamless and was a key project in our merger integration and modernization efforts as Keurig Dr Pepper. We look forward to exploring additional partnership opportunities with Google in the future.”  

KDP used Google Cloud’s Live Migration service, which enables enterprises to move virtual servers from one physical machine to another with what is hoped to be a minimum of disruption. For applications like SAP, where even a few minutes of downtime can cost tens of thousands of dollars in lost revenue. 

“Data is the fuel to help companies transform their businesses, and those that leverage the cloud will thrive in this new era of retail,” stated Carrie Tharp, VP of Retail & Consumer at Google Cloud. “We’re thrilled to partner with Keurig Dr Pepper, and we look forward to helping the company reach the next level in its digital transformation journey.” 

The contract with Keurig Dr Pepper will be implemented in conjunction with Google Cloud services partner HCL America. 

Elsewhere in AI news at KDP, the company is moving to insert more intelligence into its recycling efforts. The company has committed to making all its K-cup pods recyclable by the end of 2020, starting with changing the material used in the container to polypropylene, a plastic sought for recycling, according to an account in Vox. 

Keurig is also working with AMP Robotics to bring AI to the sorting process at recycling facilities. (See AI Trends for account of AI in recycling.) 

Read the source articles in Fortune, in CIODive, from aiTechPark and in Vox. 

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