Keurig Dr Pepper’s strong results driven by packaged beverages

Keurig Dr Pepper (KDP) has reported 4.4% growth in net sales to $2.61 billion during its first quarter, driven by strong performance by its packaged beverages unit.  

For its first quarter, KDP witnessed 5% volume growth with particularly solid performance by its packaged beverages segment which benefited from the impact of Covid-19.

Meanwhile, the global pandemic caused slowdowns in the fountain foodservice business in the firm’s beverage concentrates segment and the coffee systems’ away-from-home business.

The beverage giant saw its operating income decrease 6.4% to $466 million in the three months to 31 March, largely due to the unfavourable impact of items affecting comparability.

KDP’s biggest segment, packaged beverages, saw an increase in net sales of 9.1% to $1.22 billion thanks to volume growth of 8.7% driven by increased stockpiling. Brands that performed particularly well in the quarter include Evian, Dr Pepper, Motts, Canada Dry, Core, A Shoc, 7Up and Squirt.

Both its Latin America beverages and beverages concentrates divisions witnessed modest growth in net sales (0.9% and 0.7% respectively) due to higher net prize realisation offset by volume declines due to a shift away from on-premise business.

Compared to the same time last year, its beverages concentrates’ shipment volume declined 2.4%, reflecting the impact of Covid-19 on the fountain foodservice business. This was partially offset by growth in shipment volume for retail product.

Meanwhile, net sales in KDP’s coffee systems unit rose by 0.5% to $973 million thanks to 5.6% volume growth for its pods, offset by a significant decline in the away-from-home coffee business.

Chairman and CEO of KDP, Bob Gamgort, said: “We delivered Q1 performance in line with our long-term targets, building on the business strength demonstrated since our merger in mid-2018 and setting us up for a strong 2020. 

“However, we are now operating in a distinctly different environment that has required us to pivot significantly. The extraordinary steps we’ve taken to keep our teams safe and working, coupled with our broad portfolio and seven distinct routes to market, position us to continue to successfully navigate this unprecedented time. 

“Finally, while the timing of the macroeconomic recovery remains uncertain, we remain confident in our ability to deliver the guidance we reaffirmed today.”