Why Keurig Dr Pepper is more than a pandemic play

Key Points
  • The coronavirus pandemic revived Keurig Dr Pepper's maturing coffee business as more consumers worked from home.
  • The trend is unlikely to reverse completely when the crisis subsides because of the purchases consumers already made of the coffee machines and because of more flexible working routines.
  • Keurig Dr Pepper shares hit a 52-week high in January, but the stock is still relatively cheap compared with its peers.
A Keurig Green Mountain machine
Daniel Acker | Bloomberg | Getty Images

Keurig Dr Pepper is no ordinary pandemic play.

The company's coffee business received a jolt when office workers started working from home, forming habits that will stick around even after staffers return to their cubicles. Keurig Dr Pepper also stands to gain from the return of demand to other parts of its business. And because of some ownership changes to the shares, it's now the largest company eligible to join the S&P 500, which could further drive up the stock's valuation.

"Coffee is one of the categories that is going to see benefits from the pandemic in the short, medium and long term," said Caleb Bryant, associate director of Mintel's food and drink division.