BURLINGTON, MASS. — Sales growth for Keurig Dr Pepper Inc. in the first quarter ended March 31 came from three of its four business segments: Packaged Beverages, Beverage Concentrates and Latin America beverages. An expected sales decline in Coffee Systems brought on by supply chain challenges kept the company from going four-for-four, but executives said Coffee Systems inventory is improving.
Net income attributable to the company in the quarter was $585 million, equal to 41¢ per share on the common stock, up 80% from $325 million, or 23¢ per share, in the previous year’s first quarter. Net sales increased 6% to $3.08 billion from $2.9 billion.
Keurig Dr Pepper raised its net sales growth guidance for 2022 to high-single-digit percentages from the previous mid-single-digit range.
“As we look forward, we believe our cold beverage portfolio will continue to perform well throughout the balance of the year, and we are confident that our coffee production output and inventory levels will have fully recovered by the end of Q2,” said Robert J. Gamgort, chief executive officer, in an April 28 earnings call.
Coffee Systems net sales declined 4.3% to $1.09 billion from $1.14 billion as the company prioritized production to rebuild inventory following a supply chain disruption in the fourth quarter of 2021 and the first quarter of 2022.
“As we continue to work on coffee recovery and rebuild our finished goods inventory in the second quarter, we expect pod shipments to remain below consumption,” Mr. Gamgort said. “That trend is expected to reverse in the second half of the year with shipments outpacing consumption as improved internal inventory positions will enable us to refill customer and partner inventories and return to driving our owned and licensed brands through marketing and promotion programs. This will result in a much-improved top- and bottom-line performance for coffee systems in the second half of this year.”
Net sales in Packaged Beverages increased 13% to $1.48 billion from $1.31 billion, which reflected higher net price realization of 8% and higher volume/mix of 4.9%. Strong performances came from Canada Dry, Dr Pepper, 7UP, A&W, Sunkist and Squirt carbonated soft drinks as well as in CORE Hydration, Polar seltzers, Hawaiian Punch and Vita Coco.
In Beverage Concentrates, sales increased 10% to $359 million from $328 million due to higher net price realization of 8% and favorable volume/mix of 1.9%. Boosting volume/mix were higher fountain foodservice shipments driven by increased mobility in the restaurant and hospitality channels.
In Latin America Beverages, net sales jumped 17% to $146 million from $125 million behind net price realization of 10% and increased volume/mix of 8%.
Companywide, inflation approached 15% in the first quarter, which company executives expect will be the year’s toughest quarter because of the dynamics between inflation and pricing, Mr. Gamgort said.“With the first quarter now behind us, we continue to believe it will prove to be the toughest this year,” he said.