Keurig Dr Pepper, the beverage company known for its popular soda brand Dr Pepper, reported its quarterly earnings and revenue that met analysts’ expectations. The company’s U.S. soda sales were fueled by higher prices, leading to a 3.5% increase in net sales to $3.92 billion. The volume of sales increased by 1.8%, while prices rose by 1.6% compared to the same period last year.
Keurig Dr Pepper’s U.S. refreshment beverages division, which includes popular brands like Snapple, Canada Dry, and Sunkist, reported sales growth of 3.3%. The prices for its drinks also saw a significant increase of 2.9%. Notably, the company’s limited-time beverage, Dr Pepper Creamy Coconut, was a huge success.
In an interesting development, Dr Pepper has surpassed Pepsi to become the second-most consumed soda in the U.S., trailing only Coca-Cola. This shift in rankings highlights the divergent performances of the beverage giants. PepsiCo’s price hikes have driven some consumers away, while Coca-Cola’s premium offerings and strong international demand have boosted its results.
While soda sales remain resilient, Keurig Dr Pepper executives noted that sales of still beverages and energy drinks are facing more pressure due to the “uneven” consumer environment. This suggests that consumers are becoming more conscious of their beverage choices and are opting for healthier alternatives.
In terms of coffee sales, Keurig Dr Pepper’s U.S. coffee division experienced a 2.1% decline in sales, primarily driven by a 2.9% decrease in pricing. However, the shipment of its K-Cup pods remained steady, thanks to its strong market share trends. To appeal to cost-conscious consumers, the company is emphasizing the affordability of drinking coffee at home compared to buying it from a coffee shop. It is also expanding into the cold coffee market with products like K-Cup cold brew pods, aiming to attract loyal Starbucks and Dunkin’ fans.
Interestingly, while cold drinks make up a significant portion of Starbucks’ sales, cold coffee represents less than 20% of at-home coffee occasions. This presents a growth opportunity for Keurig Dr Pepper, as it can tap into the demand for cold coffee in the at-home market.
Keurig Dr Pepper’s international division experienced a sales increase of 15.5% for the quarter, although it only contributes a small fraction to the company’s overall revenue.
Looking ahead, the company reiterated its full-year outlook of constant currency revenue growth in the mid-single-digit range and adjusted earnings per share growth in the high single digits. This suggests that Keurig Dr Pepper is confident in its ability to maintain its positive performance in the coming months.
Overall, Keurig Dr Pepper’s quarterly results showcase the company’s ability to adapt to changing consumer preferences and market dynamics. By capitalizing on higher soda prices, expanding into the cold coffee market, and maintaining a strong international presence, the company is positioning itself for continued success in the beverage industry.
