BURLINGTON, MASS.— Keurig Dr Pepper is facing bifurcated business conditions. In US Refreshment Beverages, the company’s largest business unit, conditions are good and its outlook is positive. In US Coffee, the company’s second largest business unit, the unit has been challenged in the latter half of this fiscal year and management is guiding “subdued” performance in fiscal 2025.

“US Refreshment Beverages net sales grew a very strong 10% (during the fourth quarter), led by a volume mix increase in the high single digits,” said Timothy Cofer, chief executive officer, during a Feb. 25 conference call to discuss fiscal 2024 results. “Carbonated soft drink momentum was particularly strong in Q4. The category remains healthy, and we benefited from compelling innovation and brand activity, as well as offerings that appeal to value-conscious consumers.”

For the year, the US Refreshment Beverages business had sales of $9.3 billion, an increase of 6% over the previous year when sales were $8.8 billion.

Cofer said Dr Pepper is now the No. 2 carbonated soft drink (CSD) in the category and that the brand was the “largest share gainer” during the fourth quarter.

“In 2025, we expect robust CSD growth to continue supported by engaging full funnel marketing activations and a promising CSD innovation lineup designed to extend our flavor leadership.”

New products scheduled for launch include Dr Pepper Blackberry and 7Up Tropical.

The company’s partnership with Grupo PiSA’s Electrolit brand also is gaining momentum.

Electrolit is one of the fastest-growing brands in the sports hydration category, and Keurig Dr Pepper sees significant runway for future expansion, Cofer said.

“In 2025, we will focus on strengthening Electrolit's distribution, including further transitioning the brand from Hispanic specialty to the mainstream sports hydration aisle,” Cofer said. “We will also leverage our DSD (direct-store distribution) muscle to build Electrolit's presence in multipack and zero sugar offerings, where the brand meaningfully under indexes versus the category leaders.”

The sharp rise in green coffee prices is putting pressure on Keurig Dr Pepper.

Keurig Dr Pepper’s full-year US Coffee business unit sales were $4 billion in 2024, down 2.6% when compared with the previous year‘s sales of $4.1 billion.

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“In response to this inflation, we announced pricing in Q4 that began to take effect in January, and saw many competitors take similar steps,” Cofer said. “However, the commodity price has continued to move even higher since then and we are evaluating all available options to offset the incremental pressure. These levers include driving greater productivity, optimizing mix and may also require further pricing actions with some elasticity offset.”

Full-year US Coffee sales were $4 billion, down 2.6% when compared with previous year sales of $4.1 billion.

Keurig Dr Pepper’s International business had sales of $2.1 billion during the year, up 7% compared with the year before when they were $1.9 billion. Volume mix contributed 6.2% to the business unit’s performance while net price realization contributed 3%.

For the year ended Dec. 31, 2024 Keurig Dr Pepper earned $1.44 billion, equal to $1.06 per share on the common stock, down from 2023 when the company earned $2.2 billion, or $1.56 per share.

Annual sales were $15.4 billion, up from $14.8 billion in 2023.

The company attributed the decline in net income to $718 million in goodwill and other impairment charges and an accrual of $225 million in distribution termination agreements related to the acquisition of the Ghost business.

For fiscal 2025, Keurig Dr Pepper is guiding mid-single-digit sales growth and high-single-digit earnings per share growth.

“Our outlook assumes good momentum in our US Refreshment Beverages and International segments and an incremental contribution from the Ghost acquisition,” said Sudhanshu Priyadarshi, chief financial officer. “The plan also recognizes that US Coffee is likely to remain more subdued in a dynamic commodity environment even with higher pricing.”