The US coffee and soft beverages giant says supply chain disruption in the latter half of 2021 adversely impacted coffee system sales as out-of-home consumption improves but remains below pre-Covid levels
KDP says it has made progress shoring up its coffee production and supply chain | Photo credit: via Shutterstock
Sales of coffee pods slowed during Keurig Dr Pepper’s (KDP) first quarter following supply chain disruption in late 2021 and early 2022, inflationary pressures, and the slower recovery of its out-of-home channel.
Reporting its first quarter results ended 31 March 2022, KDP said total revenues increased 6.1% to $3.1bn, compared to $2.9bn for the same period in 2021.
However, while KDP posted ‘exceptionally strong growth’ in packaged beverages, beverage concentrates and its Latin America beverages segment, its coffee systems segment experienced a 4.2% decline in revenues to $1.1bn compared to the same period in 2021.
While retail sales of KDP-manufactured single-serve pods increased 3.6%, consumption declined by 8.2% amid higher pricing.
Performance in away-from-home pods continued to improve versus year-ago, but remained below pre-Covid levels, with KDP citing the slow return of workers to offices as a factor behind the sluggish recovery.
Inflationary pressures also continued to impact margins, KDP said, with the company raising prices across most categories. Nevertheless, the JAB Holding-backed company said it had made ‘significant progress’ on increasing coffee production and rebuilding inventories.
“We delivered another quarter of strong revenue growth, reflecting the power of our brand portfolio and the quality of our execution at retail. Margins were impacted by accelerating inflation, which outpaced the timing of pricing actions, and the previously discussed coffee supply chain disruption. We made significant progress during the quarter on increasing coffee production and rebuilding inventories, and we implemented additional pricing actions across most categories,” said KDP CEO and Chairman, Bob Gamgort.
Keurig Dr Pepper was formed in 2018
after JAB Holding Company acquired US soft drinks manufacturer and distributor, Dr Pepper Snapple, and merged it with its Keurig Green Mountain coffee business in a deal worth $18.7bn.
It controls a portfolio of more than 125 owned, licensed, partner and allied brands, including prominent US coffee chains, Krispy Kream, Panera Bread, Cinnabon, Caribou Coffee, Tully’s Coffee and Gloria Jeans Coffee. KDP’s retail coffee brands include Green Mountain Coffee Roasters, Van Houte and Diedrich Coffee.