BURLINGTON, MASS. — Coffee brewer shipments fell 15% in the third quarter ended Sept. 30 for Keurig Dr Pepper, but executives were quick to give reasons for the decline in an Oct. 27 earnings call.
Brewer shipment performance in the quarter was consistent with the company’s long-term target of adding 2 million new households into the Keurig system every year, according to Burlington-based Keurig Dr Pepper. Three million were added in 2020 and again in 2021 during the COVID-19 pandemic.
Brewer shipments were up 16% when compared to levels before COVID-19, said George Lagoudakis, interim chief financial officer.
Increased consumer mobility in the summer, higher retail prices for the brewers and a decrease in advertising investments were headwinds in the quarter, said Ozan Dokmecioglu, chief executive officer.
“However, with the (advertising) investments coming back, and with life going back to more normal like the school season kicking in and also people starting to go back more to the offices, we started to see improvement in the consumption,” he said. “For example, when you look to the market data in September versus July and August, you would see an improvement.”
Companywide, third-quarter net income of $180 million, equal to 13¢ per share on the common stock, was down from $530 million, or 37¢ per share, in the previous year’s third quarter. Net sales increased 11% to $3.62 billion from $3.25 billion.
Within coffee systems, net sales increased 4.7% to $1.21 billion from $1.16 billion, primarily driven by pricing actions. Volume/mix dropped 2.6% as the brewer shipment decline more than offset pod shipment growth of 3.5%. Green coffee costs reached the highest level of the year due to the company’s hedges. Operating income decreased 19% to $295 million from $365 million.
In packaged beverages, net sales increased 14% to $1.76 billion from $1.55 billion in the previous year’s third quarter. Carbonated soft drinks, Snapple, Mott’s, Core Hydration, Hawaiian Punch, Evian and Polar seltzers led the increase. Volume/mix was even with the previous year’s third quarter.
In beverage concentrates, net sales increased 17% to $459 million from $392 million, driven by high net price realization of 17% and favorable volume/mix of 0.7%. Volume increases in Dr Pepper and Crush largely were offset by decreases in Schweppes and A&W.
In Latin America beverages, net sales increased 27% to $198 million from $156 million behind net price realization of 17% and increased volume/mix of 12%.
Over the first nine months of the fiscal year, companywide net income was $983 million, or 69¢ per share on the common stock, which compared with $1.30 billion, or 92¢ per share, in the same time of the previous year. Nine-month net sales increased to $10.25 billion from $9.29 billion.