Keurig Dr Pepper (KDP) has reported 1.8% growth in net sales to $2.86 billion for Q2, driven by strong performance from its packaged beverages and coffee systems segments.
In Q2, KDP saw negative impacts from limited consumer mobility and the closure of office and hospitality locations due to the coronavirus pandemic, across all segments of its business.
In spite of this, the beverage giant’s coffee systems and packaged beverages units still witnessed overall net sales growth due to strength in other channels and in at-home consumption.
KDP saw its GAAP operating income decrease 4.4% to $561 million for the quarter, including the unfavourable impact of items affecting comparability.
Among these were coronavirus-related operating costs, which amounted to $75 million in the quarter, of which $63 million were recognised as items affecting comparability.
KDP’s biggest segment, packaged beverages, saw an increase in net sales of 6.2% to $1.39 billion, reflecting strength in CSDs, juice and juice drinks, and mixers. The performance of these categories was only partially offset by lower net sales of premium water, as limited consumer mobility weakened convenience and gas channels.
In Q2, both the company’s Latin America beverages and beverages concentrates divisions witnessed double-digit declines in net sales (14.9% and 16.5% respectively).
In Latin America, this was largely due to the unfavourable impact of foreign currency translation. Meanwhile, the shipment volume of KDP’s beverages concentrates declined 10.5% year-over-year, primarily reflecting the impact of the pandemic on the fountain foodservice business.
Net sales in KDP’s coffee systems unit rose by 5.4% to $1.04 billion. Here, significant growth in brewers and K-Cup coffee pods for at-home consumption more than offset a significant drop-off in the office coffee and hospitality businesses.
KDP also reaffirmed its full-year 2020 guidance, including a forecast of constant currency net sales growth in the range of 3- 4%.
“Our second quarter results demonstrated the ability of our broad beverage portfolio, unique routes to market and culture of execution to deliver growth in the most challenging of environments,” said Keurig Dr Pepper Chairman and CEO, Bob Gamgort.
“I am proud of and grateful for our 26,000 employees who have stepped up in the face of adversity to deliver for our customers, consumers and communities, while supporting each other during this uncertain time.
“Despite the expectation for significant volatility ahead, we remain confident in both our business model and organisation to continue to execute well to deliver on the guidance we reaffirmed today.”
© FoodBev Media Ltd 2020
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