‘Challenging’ coffee sales continue for Keurig Dr Pepper

BURLINGTON, MASS. — A continued drop in coffee sales clouded an otherwise excellent 2025 first quarter for Keurig Dr Pepper.

The company’s overall net sales increased by 4.8% compared with the first quarter last year, but coffee sales were down 3.7% due to uncertainty around tariffs and pricing volatility for the commodity, combined with consumer caution around spending. The company ended 2024 with a full-year 2.6% net sales decline in coffee.

“Q1 was a challenging quarter with a 3.7% net sales decline and profit pressure,” said Timothy Cofer, chief executive officer, Keurig Dr Pepper. “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 shelf earlier than many peers, resulting in short-term volume and mixed trade-offs in Q1.

“No doubt in this inflationary environment that we find ourselves here in ‘25 … we’ve got two main priorities on the coffee business this year. The first is mitigating green coffee inflation, including now tariff-related impacts. And the second is making sure we are playing the long game and we’re advancing long-term initiatives. That means cold, that means premium, and next-generation propositions.”

Brights spots in coffee

Cofer added that a few bright spots for coffee during the first quarter included a 30% increase in Lavazza brand K-Cup sales, and the continued upscaling of the company’s La Colombe ready-to-drink coffees. Also, Keurig Dr Pepper is focusing on the value of its premium coffee brands at home as a cost-effective alternative for consumers today.

“We’re emphasizing the relative value of our at-home coffee,” Cofer said. “Even on the premium end, you can have that incredible cup of Lavazza, La Colombe, Kicking Horse, Philz Coffee, all the quality, all the value, all the convenience at a fraction of the coffee shop alternative price point. So that is certainly something we will leverage in this inflationary environment.”

For the first quarter ended March 31, 2025, total net income for Keurig Dr Pepper was $517 million, equal to 38¢ per share on the common stock, an increase of 14% compared with $454 million, or 33¢ per share, during the first quarter of 2024. Net sales were $3.6 billion, an increase of 4.8% over $3.5 billion last year.

Breaking down the company’s business segments, net sales for US Coffee were $877 million, a decline from $911 million during the first quarter last year. Meanwhile, US Refreshment Beverages — which includes the company’s soft drinks and energy beverages — performed very well, with a net sales increase of 11% to $2.3 billion, compared with $2.1 billion last year.

The bottom-line boost for US Refreshment Beverages included a well-received launch of Dr Pepper Blackberry in February; the continued success of its C4 energy drinks; the integration of Ghost energy beverages after acquiring the brand last October, which added 2.9 percentage points to the company’s top line; and strong growth for Electrolit sports hydration, which will be supported by a new manufacturing facility currently under construction in Waco, Texas.

“Energy is one of the fastest growing categories within Liquid Refreshment Beverage,” Cofer said. “Year-to-date retail sales are in the high-single digits. We look at scanner data every week and we’ve seen robust growth in the last seven to eight weeks in a row, double digits. (Dr Pepper) is the No. 2 CSD (carbonated soft drink) brand by volume now for two straight years, and we are on track for our eighth consecutive year of market share growth. Through our strategy of bringing great flavors like Dr Pepper Blackberry into the portfolio, we think we can grow through closing distribution gaps, and we think we can also grow through the zero platform, which continues to grow at a double-digit rate.”

Keurig Dr Pepper’s recent acquisition of Ghost energy beverages added 2.9 percentage points to the company’s first-quarter top line.

Cofer added that the February launch of Dr Pepper Blackberry is “on par already with some of the strongest innovations over the last few years. We launched this one, new this year across formats and varieties, which means not only bottles and cans, but also in fountain and in frozen. We’re just eight weeks into the launch and we’ve achieved nearly 1 point of market share.”

Turning back to tariffs as they impact the entire company and not just coffee, Cofer said, “Now that tariffs are in the picture, it does introduce another dimension that we’ll need to think through. CSDs, like our other categories, are at least in part, reliant on some aspects of a global supply chain. As that develops, we’ll consider all potential mitigations, which could include additional pricing actions late in the year to protect our long-term ability to invest and keep this business as healthy as we’ve seen it in Q1.”

SNAP response

Regarding recent moves by eight states to apply or indicate applying for waivers from the US Department of Agriculture to exclude candy, soft drinks and processed foods from the Supplemental Nutrition Assistance Program (SNAP) — a federal food stamp program utilized by 40 million Americans — Cofer said beverage choice plays an equally important role in the grocery purchases of SNAP recipients and non-SNAP households.

“We certainly stand with our industry colleagues to advocate for consumers’ freedom of choice and treating SNAP recipients with the same dignity as anyone else, to give them the choice to buy the food and beverage brands that they’d like, and of course, providing transparency on our ingredients,” he said. “I think as a beverage industry, we’ve actually done a great deal — you might say more than anyone else — to reduce total caloric load in the US. Calories from beverages are actually down 40% since 2000. And 60% of the beverage portfolio in the industry and here at KDP are lower, no calorie and zero sugar. We’ll continue to work with the administration and our industry colleagues to advocate for consumers. And the last thing I’d say is to the extent there is any exposure here, KDP exposure would be similar to our peers.”