Staples Starter Pack

Research evidence excerpt

Staples Starter Pack

I N D U S T RY NO TE

M a y 1 3 , 2 0 2 6

Concentrate model The prior descriptions fit sales of finished goods, but beverage companies often sell concentrate to

is another story bottlers as well, which naturally has a very different COGS breakdown (though sales from bottlers

of finished goods would be similar). A concentrate model typically has much higher margins (think

asset light, no finished goods packaging, lower freight costs (i.e. not shipping heavy liquids long

distances). Distribution models can vary; KO primarily has a concentrate model but owns a small

(and shrinking) amount of its bottlers around the world, while PEP owns most of its bottling and

also distributes CELH in the US and Canada. KDP has a hybrid model, owning some of its bottling

but also using partner bottlers (including PEP and the Coca-Cola system).

DSD systems can Exhibit 2

evolve over time Illustrative DSD ‘map’ for our covered companies that use direct-store-delivery

with refranchising

Company reports, Piper Sandler & Co.

DSD is a competitive KDP’s hybrid system also includes distribution for partner brands like COCO, among others. CELH

advantage sells finished goods to direct retailers like COST and AMZN via warehouses but also sells to PEP

which then re-sells them to via its direct-store-delivery (DSD) network in local markets. DSD trucks

visit stores with high-velocity items (beverages (including beer) but also snacks and bakery). They

can restock fast-moving brands more quickly by bringing product weekly (or bi-weekly) from local

warehouses and primarily serve mass retailers, grocery stores, and convenience stores (c-stores).

Productivity is often Productivity savings are meant at a high level to mean new efficiencies that companies can find in