McDonald’s U.S. division is changing the company it uses to license and distribute its McCafe coffee in retail outlets, announcing a long-term agreement with Keurig Dr Pepper on Thursday.
The licensing and distribution agreement will end the Chicago-based fast-food giant’s deal with Kraft Heinz, an agreement that launched McCafe products in U.S. retail shops beginning in 2014.
Kraft Heinz is backed by 3G Capital, which financed the creation of Restaurant Brands International, owner of rival Burger King—though a McDonald’s representative said that was not the reason behind the change.
Under its new agreement, Keurig Dr Pepper (KDP) will continue to be the exclusive manufacturer of McCafe K-Cup pods in the U.S. But it will also take on responsibility for coffee sourcing, distribution and marketing of the McCafe brand in K-Cup pods and bagged and canned coffee formats in retail and e-commerce channels beginning in the second half of next year.
“We are prioritizing McCafe as a go-to coffee brand for our customers, and we are confident this move will strengthen the impact of the McCafe brand in retail,” said Linda Van Gosen, McDonald’s vice president of menu innovation, in a statement.
McDonald’s said that it, along with Kraft Heinz and KDP, will “work together to ensure a smooth transition in the second half of 2020.”
Derek Hopkins, chief commercial officer for Keurig Dr Pepper, called McCafe “one of the power brands at retail.”
Restaurant chains sell their products in retail to generate licensing income as well as bolster their brand name. McDonald’s has been using its retail channel to increase the visibility of its McCafe sub-brand, which focuses on coffee and other beverages and has played a major role in its morning business.
McDonald’s launched the McCafe brand in the U.S. in 2009.
McDonald’s said it and KDP are taking steps “to ensure that coffee is grown and traded in ways that support coffee farmers, their communities and their land.” The two companies both have vowed to sustainably source all of their coffee by next year.