KDP licenses a range of brands under its K-Cup portfolio, including Dunkin’, Lavazza and Starbucks | Photo credit: Lisa Chi/Shutterstock
The US Securities and Exchange Commission (SEC) has fined Keurig Dr Pepper (KDP) $1.5m over inaccurate claims regarding the recyclability of its K-Cup single-use coffee capsules.
The case hinged on a claim in KDP’s 2019-2020 annual report filed with the SEC, which stated recycling facilities had ‘validated that [K-Cup Pods] can be effectively recycled’.
However, KDP did not disclose that two of the country’s largest recycling companies had expressed ‘significant concerns’ regarding the commercial feasibility of curbside recycling of K-Cup capsules and consequently did not accept them for recycling.
Texas-based KDP has agreed to a cease-and-desist order, which states it must adhere to rules on the accuracy of disclosures in annual reports. It will pay the civil penalty while neither admitting nor denying the US federal government agency’s findings.
K-Cup capsules are made of polypropylene #5 plastic, which is not accepted by some recycling facilities due to the time and cost involved with separating it from other plastics processed at different temperatures.
KDP notes on its website that although polypropylene is widely accepted in curbside recycling across North America, not all recycling facilities will accept K-Cup Pods.
“Public companies must ensure that the reports they file with the SEC are complete and accurate. When a company speaks to an issue in its annual report, they are required to provide information necessary for investors to get the full picture on that issue so that investors can make educated investment decisions,” said John T. Dugan, Associate Director of the SEC’s Boston Regional Office.
In similar misstep by the coffee and beverages giant, Keurig Canada previously settled a $10m class-action in 2018 over misleading recycling claims, before paying a CA $3m ($2.4m) penalty after Canada’s Competition Bureau concluded K-Cup recycling claims were ‘misleading’.
In December 2020, the coffee and soft beverages group announced that 100% of its K-Cup Pods were recyclable, after converting more than 100 manufacturing lines to produce new recyclable format capsules made from polypropylene #5 plastic.
JAB Holding-backed KDP licenses a broad range of coffee brands under its K-Cup portfolio, including Caribou Coffee, Dunkin’, Intelligentsia Coffee, Lavazza, Krispy Kreme, La Colombe, Starbucks and Tim Hortons.
