The US beverage group is banking on premium coffee brand tie-ups lifting coffee revenues after the total segment posted a 3.7% first-quarter sales decline
Keurig Dr Pepper (KDP) has reported a challenging first quarter for its coffee brands, with overall sales volumes negatively impacted by price rises.
The US coffee and soft beverage group achieved 4.8% year-on-year sales growth in the three months ended 31 March 2025 to $3.6bn, with its US Refreshment Beverages division, which includes Dr Pepper, 7 UP and Schweppes, a standout performer.
However, its US coffee segment posted a 3.7% net sales decline and experienced profit pressure amid record green coffee cost inflation that prompted price rises for its value-focused range, which includes the Green Mountain, Café Escapes and Barista Prima brands.
“Given the magnitude of the pressure that we and the industry are facing, we implemented a price increase across our owned and licensed brands to start the year. These pricing actions appeared on the shelf earlier than many peers, resulting in short-term volume and mix tradeoffs,” CEO Tim Cofer said on an earnings call.
Cofer also told investors that the company would ‘evaluate all available levers’ to offset inflation over the following three quarters, including additional price rises, productivity savings, and a sharper focus on KDP’s highest-returning products and sales channels.
The latter could see Texas-based KDP invest further in premium coffee capsule partnerships, including its tie-ups with Lavazza, La Colombe and Kicking Horse Coffee, which it said outperformed the wider category during the first quarter.
KDP expanded its partnership with Italian coffee roaster Lavazza in February 2024 to include sales and distribution responsibilities for retail and e-commerce across North America. Lavazza K Cup pods achieved over 30% retail sales growth during the quarter, while KDP said distribution of La Colombe ready-to-drink (RTD) products also achieved notable volume growth.
Formed in 2018 following the $18.7bn merger of Keurig Green Mountain and Dr Pepper, KDP is part of JAB Holding Company’s extensive coffee investment portfolio, which also includes JDE Peet’s, Panera Brands, Pret A Manger, Espresso House and Krispy Kreme. KDP’s K-Cup portfolio includes partnerships with established coffee brands McCafé, Starbucks, Dunkin’, Peet’s Coffee and Tim Hortons.
