Packaged beverages and coffee systems drive further growth for KDP in Q3

Keurig Dr Pepper (KDP) has reported 5.2% growth in net sales to $3.02 billion for Q3, driven by continued strength in its packaged beverages and coffee systems segments.

In Q2, both of the beverage giant’s largest units saw overall net sales growth in spite of the impact of limited consumer mobility and the closure of office and hospitality locations due to Covid-19.

This trend continued in KDP’s third quarter with net sales for the coffee systems and packaged beverages units growing by 3.0% and 10.7% respectively.

The coffee systems segment saw double-digit dollar growth in K-Cup coffee pods for at-home consumption, which was partially offset by weakness in the office coffee channel. Brewer volume was also ‘exceptionally’ strong, increasing 34% in the quarter.

In packaged beverages, net sales growth was driven by market share gains across KDP’s portfolio, with particular strength in carbonated soft drinks, premium unflavoured water, juice and juice drinks, as well as apple sauce and mixers.

KDP saw its GAAP operating income increase 29.8% to $753 million for the quarter, reflecting factors including the growth in net sales and lower discretionary expenses such as marketing.

In Q3, both the company’s Latin America beverages and beverages concentrates divisions witnessed declines in net sales (10.1% and 2.2% respectively).

In beverages concentrates, the low-single-digit decline marked a significant improvement from the previous quarter, as some quick-serve and other fast-casual restaurants reopened. For Latin America beverages, the decline primarily reflected the unfavourable impact of foreign currency translation.

KDP chairman and CEO, Bob Gamgort, said: “Since the beginning of the pandemic, our broad beverage portfolio, unique route to market capabilities and resilient and dedicated team members have enabled KDP to successfully navigate through the challenging and volatile operating environment. 

“In Q3, we delivered another strong quarter, marked by accelerated growth in net sales, adjusted operating income and EPS, while continuing to post strong market share growth across our portfolio and reducing our management leverage ratio. 

“As a result, we’re confident in our ability to deliver 2020 at the high-end of our guidance, while reinvesting any upside performance in brand marketing and innovation.” 

KDP says that it expects constant currency net sales growth for the full year at the high end of its 3-4% guidance range.