Keurig Dr Pepper meets Q2 earnings expectations as U.S. soda sales surge, shares rise 5%

Keurig Dr Pepper met earnings and revenue expectations with higher U.S. soda sales, driving a 5% stock increase. 

Keurig Dr Pepper released its quarterly earnings and revenue, in line with analysts' forecasts. The company's U.S. soda sales were driven by increased prices, leading to a 5% surge in its stock value. It reported an adjusted earnings per share of 45 cents and a revenue of $3.92 billion. The U.S. refreshment beverages division, including brands like Snapple and Canada Dry, experienced a 3.3% sales growth, with a notable 2.9% price increase. Moreover, its Dr Pepper Creamy Coconut drink achieved significant success as a limited-time offering. In the U.S., Dr Pepper surpassed Pepsi to become the second-most consumed soda, after Coca-Cola. While the soda sales remained strong, the company expressed concerns about the challenging consumer environment impacting the sales of still beverages and energy drinks. In contrast, the U.S. coffee division's sales decreased by 2.1% to $1 billion, attributed to a 2.9% price decline. The company's international division reported a 15.5% sales increase, although it contributes to less than one-sixth of Keurig Dr Pepper's revenue. Keurig Dr Pepper reaffirmed its previous full-year outlook of mid-single-digit constant currency revenue growth and high single-digit adjusted earnings per share growth.

Financial Performance

The company's second-quarter net income stood at $515 million, showing a growth from the previous year. Excluding items, Keurig Dr Pepper reported an earnings per share of 45 cents, while its net sales witnessed a 3.5% rise to reach $3.92 billion. The 1.8% increase in volume, along with a 1.6% rise in prices compared to the previous year, contributed to its strong performance in the U.S. market.

Market Trends and Strategy

Notably, the company's strategy to emphasize the affordability of at-home coffee consumption compared to coffee shop purchases is aimed at attracting cost-conscious consumers. Additionally, its foray into cold coffee with K-Cup cold brew pods and other new products reflects an effort to capture a greater share of the market, particularly among loyal Starbucks and Dunkin' customers. Despite the strong presence of cold drinks in Starbucks' sales, Keurig Dr Pepper sees potential in expanding the at-home consumption of cold coffee.

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