Keurig Fuels Sales Growth In Q4

Keurig Dr Pepper reported strong results for the fourth quarter and full year ended December 31, 2019, noting that its coffee systems division, which includes pod and brewer sales, helped fuel the company’s performance.

For the fourth quarter, the company’s coffee systems division reported net sales increased 4% to $1.21 billion, compared to $1.16 billion in the year-ago period, reflecting higher volume/mix of 7.6%, partially offset by lower net price realization of 3.5% and unfavorable foreign currency translation of 0.1%. The volume/mix increase of 7.6% reflected strong pod volume growth of 10.3% and brewer volume growth of 0.9%, the latter of which reflected earlier shipment timing in advance of the holiday season to meet retailer needs.

In its coffee systems division, the company reported net sales in 2019 totaled $4.23 billion, compared to $4.11 billion in the prior year. Compared to adjusted pro forma net sales of $4.12 billion in 2018, net sales for 2019 increased 2.8%, reflecting strong volume/mix growth of 6.1%, partially offset by lower net price realization of 2.9% and unfavorable foreign currency translation of 0.4%.

The volume/mix growth of 6.1% reflected strong pod volume growth of 9% and brewer volume growth of 8.2%.  The pod volume growth was driven by continued expansion of U.S. households regularly using a Keurig brewer which, in 2019, grew approximately 7% to 30 million households. Partially offsetting the strong volume growth of both pods and brewers was unfavorable pod sales mix.

Keurig Dr Pepper chairman and CEO, Bob Gamgort, stated, “We delivered strong performance for 2019, with underlying net sales growth in all four segments and EPS growth above our merger target range.  In-market performance was healthy across our portfolio, as innovation, marketing and in-store execution drove share growth in key segments.  Free cash flow continued to be robust, enabling us to rapidly delever.  As we look toward 2020, we are increasing our investment behind growth drivers, leading to our expectation that revenue will accelerate above our merger targets, while still delivering double-digit EPS growth. We continue to expect that we will generate our merger target synergies of $600 million and three-year EPS growth within our target range of 15% to 17%.”