The US coffee and soft beverages group has highlighted opportunities to boost e-commerce revenues through increased coffee pod subscriptions and wider iced and ready-to-drink distribution
KDP is aiming to expand its 'total coffee strategy' to include coffee pod subscriptions, cold brew and coffee pods | Photo credit: Zack Xavier
Keurig Dr Pepper (KDP) is to focus on its e-commerce channels and sales of iced and ready-to-drink (RTD) coffee products to boost flat third quarter revenues for its coffee segment.
The US coffee and soft beverages group posted a 3.2% year-on-year fall in US Coffee segment sales to $1.01bn in the three months ended 30 September 2023, with K-Pod revenues declining 5%.
However, despite a third consecutive quarter of declining year-on-year coffee revenues, KDP remains optimistic for a fourth quarter category rebound driven by increased at-home coffee consumption. Approximately 90 million US households consume coffee at home, with fewer than 40 million ‘actively using Keurig brewers’, according to KDP, which said this dynamic presents ‘a significant multi-year opportunity’ during an earnings call.
“E-commerce, which was growing prior to the pandemic, accelerated significantly during the pandemic, and it really has shown no signs of pulling back from that. When you look at individual segments, single-serve coffee is really an ideal segment for e-commerce. It’s lightweight, high value, long shelf life, not fragile to ship,” CEO Bob Gamgort said in an earnings call.
The group is also planning to expand its ‘total coffee strategy’ to encompass iced, cold brew and ready-to-drink (RTD) products, alongside acquiring and introducing ‘other forms of coffee within and beyond the K-Cup format’.
KDP will begin shipping La Colombe RTD and K-Cup products in the fourth quarter, after acquiring a 33% stake in the Pennsylvania-based specialty coffee roaster in July 2023.
The US coffee and soft beverages group’s total third quarter sales grew 5% to $3.81bn, with the group’s soft beverage segment achieving 6% revenue growth to $2.27bn and its international category seeing sales increase 21% to $523m.