The U.S. Securities and Exchange Commission (SEC) announced this morning that it has charged Keurig Dr Pepper (KDP) with making inaccurate statements about the recyclability of K-Cups after finding that two of the largest recycling companies in the country had “significant concerns” that those tiny plastic pods could not be efficiently processed.
The heart of the SEC’s claim stems from KDP’s annual reports for 2019 and 2020, where the company claimed it had “validate[d] that [K-Cup pods] can be effectively recycled,” but failed to disclose that major recycling companies voiced concerns to the company “regarding the commercial feasibility of curbside recycling” for the pods and refused to accept them for processing.
To be clear, the SEC is slapping KDP with a fine for inaccurate filings – not for anything related to sustainability issues – and KDP has agreed to pay a $1.5 million civil penalty to settle the charge (for context, the company reported $14.8 billion in net sales last year).
But the allegation once again raises the sustainability question for the company’s signature coffee and tea format. If nothing else, it recalls comments from one K-Cup creator, John Sylvan, back in 2015 where he claims to regret his invention and laments the environmental waste it has created.
Last month, a consumer poll of 1,231 American voters by Data for Progress and the Center for Climate Integrity found that a majority want the plastics and fossil fuels industries held responsible for misleading the public on what products are actually recyclable. About 70% would support a lawsuit against these industries for deceiving consumers.
“Regardless of your politics, no one is really OK with a corporation lying to consumers,” Davis Allen, a CCI researcher, said in a statement.
In 2023, KDP reported that coffee pod revenue fell 3.6% as shipments declined 5.1%. Citing Circana data, the company said that U.S. retail dollar consumption of its official K-Cups were down 4.5%, although sales fared better in untracked channels. Brewer sales also fell 10.3% from 2022 to 2023.
Even as it leans more into putting forward premium coffee brands into its pods – most recently adding Black Rifle Coffee to the mix – the company’s K-Cup sales have continued to decline this year, down 2.1% to $1 billion for Q2 2024. In comparison, KDP’s U.S. liquid beverage sales were up 3.3% to $2.4 billion in the same period, and the business has begun expanding its energy drink offerings partnering with, well, Black Rifle to manage the DSD rollout of its new RTD energy line in Q4.