Keurig Dr Pepper Sales Surge 10% as Corporate Split Nears

Keurig Dr Pepper saw growth across its business segments in the fourth quarter as it advanced its plans to separate into two companies by the end of the year.

“We navigated a dynamic operating environment with agility while strengthening our foundation for the long term,” Keurig Dr Pepper CEO Tim Cofer said Tuesday during the company’s fourth quarter earnings call.

The beverage company saw its net sales for the quarter increase 10.5% to $4.5 billion, with its U.S. Refreshment Beverages segment up 11.5% to $2.7 billion, its U.S. Coffee segment up 3.9% to $1.2 billion and its International segment up 21% to $604 million, according to a Tuesday (Feb. 24) earnings release.

“On a segment basis, U.S. Refreshment Beverages was the standout performer, delivering double-digit net sales growth and high single-digit operating income growth,” Cofer said during the call. “International was resilient in the face of dynamic macro trends, growing on both a top- and bottom-line basis. As expected, U.S. Coffee trends were softer in aggregate but demonstrated underlying progress.”

The U.S. Coffee segment has been challenged by tariffs and the rising price of green coffee, according to a presentation released Tuesday.

Keurig Dr Pepper announced in August that it plans to separate into two independent companies, with one focused on refreshment beverages in the North American market and the other centered on coffee in a global market. The company announced at the same time that it is acquiring JDE Peet’s, the owner of the Peet’s brand.

Cofer said at the time in a press release that the separation would create two companies that are sharply focused, set to grow and poised to generate shareholder value.

Today, the Keurig Dr Pepper expects to separate by the end of the year, according to the presentation. The company is on track to close the acquisition of JDE Peet’s in early April, and it is putting together leadership, boards of directors and financing to enable the separation, per the presentation.

“Our precise separation timing will depend on a number of considerations, including market conditions, but we are progressing well against all elements within our control,” Cofer said during the call.

Cofer highlighted Keurig Dr Pepper’s “digitally-led approach to marketing” during the call, saying that it enabled the company to leverage data and technology to enable real-time insights, more precise segmentation and more effective marketing content.

Asked by an analyst about changes being made to SNAP benefits in some states, including Florida and Texas, Cofer said the changes could include restrictions on products that can be purchased with the benefits as well as the amount of benefits overall.

Cofer said that because SNAP recipients buy some products with the benefits and other products with their own money, they may simply reallocate their resources to continue buying the products they want. Changes in the amount of benefits, on the other hand, may lead to consumers making some trade-offs.

“You should expect us to respond as we learn more in a way that prioritizes delivering our plans and effectively serving our consumers, which can include offering other price pack architecture and affordability options,” Cofer said.