Keurig Dr Pepper (KDP) reported a 5.1% increase in net sales to $3.81 billion during the Q3, according to an earnings statement released this morning highlighted by the news of its distribution agreement with sports drink brand Electrolit.
On a constant currency basis, net sales were up 4.1% during the quarter, fueled by net price realization of 5.5% which was partially offset by a lower volume/mix of 1.4%. The company reaffirmed full year guidance for constant currency net sales growth of 5%-6% for 2023.
“KDP continues to pair strong execution and financial delivery with building the foundation for the Company’s next phase of growth,” Gamgort said in a statement. “Today we announced our expansion into sports hydration through a new and exciting partnership with Grupo PiSA for Electrolit. Over the past 12 months, we have established new growth platforms in sports hydration, energy and RTD coffee by partnering with compelling brands and leveraging our unique distribution assets across both cold and hot beverages to attract strong partnerships.”
Net sales for U.S. beverages was up 5.9% to $2.27 billion, with C4 Energy helping to lift overall sales. The Dr Pepper and Squirt brands drove dollar share gains in the CSD category while Polar, Vita Coco and Mott’s all expanded share as well.
International net sales for KDP grew 20.8% in Q3 to $523 million, with “very strong” performance in Mexico and Canada in particular.
However, the company’s dry coffee business was a drag on the quarter, falling -3.2% to $1.01 billion, and K-Cup pod revenue dropped -4.8% as shipments declined -8.1%. While single-serve coffee showed “gradual” improvement, “an unfavorable comparison to trade inventory builds in the year-ago period and the continued impact of exiting certain low-margin private label contracts” has continued to weigh on the segment.
During the call, Gamgort discussed KDP’s rebuilding strategy on the coffee segment, noting that club and ecommerce sales continue to grow and suggested the category is now on a positive trajectory. While KDP continues to grow its share in single-serve coffee, he cautioned “the challenge is in total at-home coffee.”