Keurig Dr Pepper recorded a 5.1% growth in net sales to $2.87 billion during its third quarter, as its GAAP performance continue to reflect the impact of the merger between Keurig Green Mountain and Dr Pepper Snapple last year.
Compared to the prior year period, Keurig Dr Pepper’s operating income increased 68% to $580 million.
The Massachusetts-based beverage company benefited from the impact of an additional eight days of DPS operations in the current period, as well as a 0.3% impact from an additional shipping day.
Its coffee systems segment grew its net sales by 1.1%, driven by sales volume growth of its K-Cup pods and an 8% increase in brewer volume. This was partially offset by unfavourable pod sales mix.
Meanwhile, its beverage concentrates unit’s net sales were up by 13.6% in the quarter due to price realisation and volume mix growth. The strong volume performance was driven in part by its fountain food service business, as well as its core brands, such as Dr Pepper, Canada Dry, Sunkist and Big Red.
The organisation’s biggest segment, packaged beverages, saw an increase in net sales of 5.6%, primarily reflecting strong growth from its brands Core Hydration, Canada Dry, Dr Pepper, Motts, Sunkist. This was partially offset by changes in its Allied brand portfolio, as new addition Bai performed below its targets.
Finally, its Latin American beverages unit recorded a 11% increase in net sales, driven by the impact of the merged businesses, higher net price realisation, while it was affected by unfavourable currency translation and the exit of its Aguafiel bulk water business.
Keurig Dr Pepper chairman and CEO Bob Gamgort said: “KDP’s third quarter results continued to track well with the ambitious long-term targets we established nearly two years ago.
“Our underlying net sales growth in the quarter accelerated to 3.1%, with balanced contribution from volume/mix and pricing. Healthy underlying growth in all four segments, combined with margin expansion, enabled strong earnings growth, cash generation and continued debt reduction.”
The company expects an underlying net sales growth of 3% for the full year, which is at the high end of its long-term merger target of 2-3%, as well as achieving its merger synergy target of $200 million per year.
Earlier this year, the company entered an agreement to distribute McCafé packaged coffee in the US, and be the exclusive manufacturer of McCafé K-Cup pods. This will go into effect during the second half of 2020.
© FoodBev Media Ltd 2019