Keurig Dr Pepper (KDP) reported today a 5.2% year-over-year net sales increase to $4.1 billion in Q4, driven by segment growth in U.S. refreshment beverages and international markets despite dragging from an ongoing decline in U.S. coffee sales.
For the full year, net sales climbed 3.6% to $15.4 billion. GAAP operating income decreased 18.8% to $2.6 billion, reflecting the “unfavorable” impact of items affecting comparability, including an upcoming accrual for $225 million in distribution termination payments related to the acquisition of GHOST.
“[In 2024], we gained market share through exciting innovation, marketing and activation across our CSD and coffee brands, drove win-win outcomes with partner brands [like] Electrolit and C4, and took bold action to expand our portfolio and route to market with the acquisition of GHOST and select territory expansions,” said Tim Cofer, CEO, in a prepared statement.
Quarterly sales for U.S. refreshment beverages were up a “very strong” 10.3% to $2.4 billion, fueled by 7.5% volume/mix growth and favorable net price realization of 2.8%. The volume/mix performance is attributable to strong base business momentum in CSDs and Electrolit.
Full-flavor Dr Pepper is now the number two CSD in the category, and the brand itself was the largest sales gainer in Q4, reflecting its “consumer appeal, unique positioning, and the benefits of [the company’s] commercial activities,” Cofer told shareholders during this morning’s earnings call. Additionally, the brand rolled out a new Blackberry flavor, marking the first time KDP is simultaneously introducing innovation across bottles, cans, fountain and frozen to maximize availability.
Canada Dry was also a top performer in the quarter, thanks to its Fruit Splash Cherry innovation. Meanwhile, 7UP gained market share with its Shirley Temple holiday LTO and refreshed brand design.
Elsewhere, Electrolit – whose long-term partnership with KDP began in 2023 – enjoyed “accelerating trends” after converting to KDP’s DSD system, per Cofer. In 2025, KDP will further transition the brand from Hispanic specialty to the mainstream sports hydration aisle. The company will also leverage Electrolit’s presence in multi-pack and zero-sugar offerings where it under indexes compared to category leaders.
KDP has also made significant progress in advancing its energy strategy, transitioning Black Rifle Energy and Bloom to its DSD distribution network, and closing its acquisition of GHOST. The company estimates its current share of the category is 6% versus 0% just three years ago. In 2025, it expects “well over $1 billion” in retail sales from its energy brands.
“With a formidable, distinctive, and complementary energy portfolio now in place, we are enhancing our operating structure and adding dedicated resources to ensure KDP’s success in this important high-growth category,” said Cofer.
Meanwhile, KDP’s dry coffee business weighed down overall quarterly growth, with net sales falling 2.4% to $1.1 billion. Volume/mix grew 0.7%, including a 1.1% increase in K-Cup pod shipments, more than offset by net price realization of 3.1%.
To capture incremental consumers and occasions, the company released its new K-Brew and Brew Chiller in Q4. Cofer told shareholders that moving forward, KDP will rebuild the segment with two main objectives: preserving profit dollars and its ability to reinvest despite escalating green coffee costs and stewarding the single-serve category through marketing and innovation.
“As the commodity price has continued to move higher, we are evaluating all available options to offset the incremental pressure,” said Cofer. “These levers include driving greater productivity and optimizing mix, and may require further pricing actions with some elasticity offset.”
For fiscal 2025, KDP forecasts net sales growth in a mid-single-digit range and adjusted diluted EPS growth in a high-single-digit range on a constant currency basis, including the anticipated contribution from GHOST.
“Though the operating backdrop is demanding, we are confident that our strategic progress and business momentum will translate into yet another set of compelling, on-algorithm results in 2025,” said Cofer.