SEC Charges Keurig Dr Pepper with Making Inaccurate Statements Regarding K-Cup Beverage Pod Recyclability

ADMINISTRATIVE PROCEEDING
File No. 3-22100

September 10, 2024 — The Securities and Exchange Commission today charged Keurig Dr Pepper Inc. with making inaccurate statements regarding the recyclability of its K-Cup single use beverage pods. The statements were made in two annual reports filed with the SEC where Keurig referenced positive results of recyclability testing while failing to disclose that major recycling companies had provided negative feedback on that testing. To settle the SEC’s charges, Keurig agreed to pay a $1.5 million civil penalty.

According to the SEC’s order, in annual reports for fiscal years 2019 and 2020, Keurig stated that its testing with recycling facilities “validate[d] that [K-Cup pods] can be effectively recycled” and did not disclose that Keurig had received significant negative feedback from two large recycling companies. According to the SEC’s order, these two recycling companies, which are among the nation’s largest, had expressed significant concerns to Keurig regarding the commercial feasibility of curbside recycling of K-Cup pods at that time and indicated that they did not presently intend to accept them for recycling. In fiscal year 2019, sales of K-Cup pods comprised a significant percentage of net sales of Keurig’s coffee systems business segment, and research earlier conducted by a Keurig subsidiary indicated that, for certain consumers, environmental concerns were a significant factor, among others, considered when deciding whether to purchase a Keurig brewing system.

The SEC’s order finds that Keurig’s statements in its 2019 and 2020 annual reports that its testing had validated that K-Cup pods could be “effectively recycled” were incomplete and inaccurate because they did not also disclose the negative feedback received from the recycling companies involved in the testing. The SEC’s order finds that Keurig violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1 thereunder.  Without admitting or denying the findings in the order, Keurig agreed to a cease-and-desist order and to pay a civil penalty of $1.5 million.

The SEC’s investigation was conducted by Michael Franck, Cassandra H. Arriaza, Susan Cooke, and Michele T. Perillo of the Boston Regional