Keurig Dr Pepper to promote “value” of US coffee amid declining sales
Keurig Dr Pepper (KDP) is making moves to promote the “value” of its US coffee products in response to declining sales. In the first quarter of this year, KDP saw a 2.1% decrease in net sales for its US coffee division, following a 9.9% decline in the previous quarter. To address this, the company is focusing on affordability to increase household penetration in the US market.
CEO Tim Cofer highlighted the company’s increased marketing investment and its strategy to reinforce value in its pod business while also targeting the premium side of the market. Cofer noted that consumers at higher income levels are driving sales growth, while lower- and mid-income consumers are facing more pressure. In response, KDP plans to launch new marketing campaigns focused on a value message in the second quarter of this year.
Additionally, KDP is looking to expand its product offerings in the away-from-home coffee segment by introducing ice and cold beverages. The company will launch its ‘Brew + Chill’ brewer later this year, which will produce and chill hot coffee similar to on-premise offerings.
Overall, KDP reported first-quarter net sales of $3.47bn, with a net income of $454m. Sales from its US Refreshment division, which includes soft-drink brands like Dr Pepper and Snapple, rose 9.1% to $8.8bn. The company’s International division also saw an increase in sales by 15% to $1.9bn.
Analysts are optimistic about KDP’s coffee margin recovery story and see the recent results as a positive step forward for the US Coffee sales outlook. Despite potential pressure from green coffee costs later in the year, analysts believe that it will not significantly impact the margin recovery story unfolding at KDP.
In conclusion, KDP’s focus on promoting the value of its US coffee products and expanding its offerings in the away-from-home coffee segment shows the company’s commitment to driving sales growth and adapting to changing consumer preferences. With a strong marketing strategy and new product launches on the horizon, KDP is poised to bounce back from declining sales and continue its success in the market.
