Keurig Dr Pepper has named Russ Torres as chief executive of the coffee company it intends to separate, recruiting the president and chief operating officer of Kimberly-Clark to run a business that does not formally exist yet.
Torres joins Keurig Dr Pepper at the start of November to lead its coffee operating unit and to integrate the company's coffee operations with those of JDE Peet's, and he will take a seat on the board of the separated company when the split completes, which the company is targeting for early next year. The business has been referred to in filings as Global Coffee Co.
A large company operator, not a coffee specialist
Torres has spent about thirty years in consumer packaged goods. He was elevated to president and chief operating officer of Kimberly-Clark in the spring of last year, having run its North American business from the previous autumn and before that led Kimberly-Clark North America as group president. Earlier he was president of Kimberly-Clark Professional. Before Kimberly-Clark he held senior roles at Newell Brands, at Bain and Company, and at Mondelez International when it was still Kraft Foods. He holds a master's in business administration from the Kellogg school at Northwestern and a bachelor's degree in physics from Dartmouth.
Kimberly-Clark announced his departure for an external chief executive role at the start of this month, saying he would remain until November, where he had also been heading its integration management office.
That last detail is the one that explains the hire. Keurig Dr Pepper is not looking for a coffee marketer. It is looking for someone who has just spent a period running a large integration, because the first task of the new coffee company is to merge two coffee businesses of different geographies, channel structures and brand architectures and to do it while the entity is being carved out of its parent. Integration experience is the scarcer skill and it is the one the company has bought.
What the separated business has to prove
The strategic case for the split is that coffee and cold drinks have diverged. Keurig's single serve system is a razor and blade model whose economics depend on brewer households and pod attachment rates, and in North America that installed base has matured. JDE Peet's brings scale in European retail coffee and in out of home, which is a volume business with thinner margins and different competitive dynamics. Running both inside a company whose other half sells carbonated soft drinks has become harder to justify to investors who want to own one or the other.
The risks are equally clear. Green coffee prices have been volatile and have moved against roasters, private label has taken share in European retail coffee, and the single serve pod category faces continuing pressure on packaging and recyclability. A separated coffee company carries all of that without the cash generation of the beverage side to absorb it.
Torres therefore takes on a business whose first year will be judged on integration delivery rather than on growth, which is a narrower and more measurable brief than most incoming chief executives get.
About Keurig Dr Pepper
Keurig Dr Pepper is a North American beverage company formed by the merger of Keurig Green Mountain and Dr Pepper Snapple, with brands including Keurig, Dr Pepper, Canada Dry, Snapple and Green Mountain Coffee Roasters. It is listed on Nasdaq.
