Keurig Dr Pepper (KDP) has been cleared to cut ties with distributor and bottler Reyes Coca-Cola, after a Texas judge ruled last week that the soda giant has a right to not renew a long term agreement with the company.
Reyes Coca-Cola, a subsidiary of food and beverage distributor Reyes Holdings, owns facilities in California and Nevada and held the rights to produce and distribute KDP’s flagship Dr Pepper brand across 10 states in the Western U.S.
After KDP acquired Arizona-based Kalil Bottling last year, the company decided to transition to an owned DSD distribution model utilizing its own facilities, opting not to renew its contract with Reyes, which expires on October 27, 2025.
Reyes, however, insisted it had a right to force a renewal under California franchise laws, which dictates that such agreements can only be ended due to poor performance, and claimed that KDP needed to show proper cause for ending the agreement.
The answer now is that KDP is free to do as it pleases and the contract will expire, as planned, this fall.
“We are carefully evaluating all of our options, including the possibility of an appeal,” a Reyes Coca-Cola Bottling spokesperson told Bloomberg in a statement.
“We look forward to bringing this distribution of the Dr. Pepper trademark into Keurig Dr Pepper’s DSD system this fall, further building scale in our routes to market,” KDP said in its own statement.
The ruling benefits KDP’s efforts for higher independence as it builds out its own bottling operations and transitions away from reliance on facilities owned by rivals Coke and PepsCo.
Since the 2018 merger between Keurig Green Mountain and Dr Pepper Snapple Group, KDP has consistently aimed to remain a relevant and competitive third player in the RTD beverage sector and distribution has been a key component of that strategy.
In 2021, the company announced it was adjusting its sales team to focus on specialization within DSD and said it would look to buy back distribution rights from independent distributors in regions that overlapped with its DSD footprint.
These changes are happening concurrently with increased spending on M&A and brand partnership activity as KDP has expanded its RTD portfolio with next gen beverages, in particular energy drinks like Ghost, C4, Bloom and Black Rifle, with distribution deals serving as a key strategic pillar.
Perhaps more significantly, the move gives KDP fuller control over its flagship Dr Pepper products, which has seen sales surge in recent years, surpassing Pepsi as the number two soda brand in the U.S. last year.
U.S. retail dollar sales of KDP’s soft drinks portfolio were up 7% in the 52-week period ending May 31, 2025, according to NielsenIQ. Comparatively, Coke’s soda products grew 4.9% and PepsiCo’s sodas were up just 1.4% in the same period. On a two-year stack basis, KDP’s sodas grew 11.5%, compared to Coke’s 10.4% and PepsiCo’s 3.4%.
The brand has also been quick to respond to new trends and has embraced LTOs and other innovations. For instance, as Fortune noted last month, Dr Pepper has capitalized on the Dirty Soda trend – which began as a popular alternative to alcohol and hot drinks within Mormon communities and has since expanded nationwide – rolling out its Dr Pepper Creamy Coconut flavor nationwide last year and following with additional flavors like Dr Pepper Blackberry.