Keurig Dr Pepper stands by payment terms after backlash from trade bodies

Keurig Dr Pepper’s response comes after VoxComm and its member organizations issued a “red alert” urging PR firms to forgo an agency search in the U.S.

VoxComm issued a statement about the red alert on Tuesday. (Photo credit: Getty Images).

PLANO, TX: Global consumer products giant Keurig Dr Pepper is standing by its 360-day payment terms with business partners, following backlash from PR and advertising trade organizations.  

Vicki Draughn, VP of corporate communications for Keurig Dr Pepper, said in an emailed statement, “We have a history of mutually beneficial partnerships with a multitude of agencies, from large multi-national ones to small, niche-focused shops, and we will continue to meet the needs of Keurig Dr Pepper and our agencies.”

In Keurig Dr Pepper’s 10Q financial filing, it specifies that the company’s payment terms with suppliers range from 10 to 360 days “as part of our ongoing efforts to improve our cash flow and related liquidity.”

Keurig Dr Pepper’s response comes after VoxComm and its member organizations issued a “red alert” urging PR firms to forgo an agency search in the U.S., where part of the requirements is for agencies tendering to accept 360-day payment terms. 

Those that cannot are being offered the option of financing, at their own cost, through Atlanta-based Prime Revenue. Keurig Dr Pepper’s brands include 7up, Canada Dry, Sunkist, Schweppes, Snapple and Dr Pepper. They also manage at-home coffee products for Cinnabon, Krispy Kreme, McDonalds and Newman’s Own Organics. 

VoxComm is made up of agency-only trade bodies from around the world, including the Institute of Canadian Agencies (ICA) in Canada, the 4A’s and PR Council in the U.S., The Institute of Practitioners in Advertising in the U.K., European Association of Communications Agencies in Europe and others. VoxComm describes itself as a global voice for agencies, championing the value that firms bring to their clients as “turbo boosters” for growth. 

Scott Knox, director of VoxComm and president and CEO of the ICA, explained that the PR Council told him about Keurig Dr Pepper’s RFP and asked him to reach out to the company. It’s goal was to get them to review that process to understand why it wouldn't be in their best interest or the diversity of the agencies that might get involved in the review. 

“I held a meeting with Keurig Dr Pepper, and it was unsuccessful in the sense that their line was they didn't see a problem with the process or with the ask and felt they were going to continue,” said Knox. “That’s why I issued the red alert.”

Knox said he could not disclose which agencies pitched for the Keurig Dr Pepper work, but he noted that some backed out before and after the red alert was issued. 

“I find it staggering why a brand would want to do this,” said Knox. “What is the value or the purpose of expecting a partner business to be able to accept to not be paid for 12 months of work that they do?”

Knox added that Keurig Dr Pepper claims it supports diversity, equity and inclusion efforts on its website, but its payment terms make it difficult for diverse-owned businesses to compete in such RFPs. 

“It is absurd to have such a thing in play,” said Knox. “I would say to the company’s shareholders and the people in charge of their brands: Who is benefitting from this?”

VoxComm issued a statement about the red alert on Tuesday. It included statements from its member organizations. 

“It’s an unfair business practice that damages the agency-client relationship, harms agencies’ ability to hire and retain the best talent and puts smaller firms, especially minority-owned agencies that often don’t have access to capital, at risk for survival,” said PR Council president Kim Sample.

“If, as they should, the company expects excellence and innovation to drive the growth of their brands, starting a partnership in this way with any agency is counterintuitive,” added Marla Kaplowitz president and CEO of the 4A’s.

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