Sales of Keurig Dr. Pepper coffee rise by 9%.
The new CEO of Keurig Dr. Pepper is optimistic about the second half of the fiscal year due to a recovery in the coffee supply and a new coffee maker for premium pods.
During the second quarter that concluded on June 30, Coffee Systems’ net sales rose by around 9% to $1.20 billion from $1.10 billion. Retail dollar consumption of Keurig Dr. Pepper single-serve pods up 3.8% in channels monitored by Chicago-based market research company IRI.
During an earnings call on July 28, Ozan Dokmecioglu, the chief financial officer at the time, stated, “I’m happy to report that our coffee supply recovery plan has been completed ahead of schedule with part manufacturing output restored to levels that will provide full service to our partners and retailers.”
The next day, in a previously disclosed change, Mr. Dokmecioglu succeeded Bob Gamgort as CEO.According to Mr. Dokmecioglu, Keurig Dr. Pepper will introduce a K-Cafe Smart brewer with global ID technology in the third quarter that can identify coffee pods and modify the brew. Moreover, it features multi-stream technology, which allows for a broad temperature range.
“In addition, this new brewer features a new multi-speed product that allows users to make specialty coffees like lattes and cappuccinos using an interactive recipe experience found in the Keurig app,” Mr. Dokmecioglu stated. When combined, the K-Cafe Smart gives customers the ability to replicate a coffee shop experience at home at a much lower price, making it more appealing to younger households.
In the second quarter of this year, Keurig Dr. Pepper’s net income dropped by 51% to $218 million, or 15¢ per share on common stock, from $448 million, or 32¢ per share, in the same period the previous year. The drop was caused by a drop in operating income as well as an adverse year-over-year impact from comparability-affecting factors.
The quarter saw a 13% rise in net sales, from $3.14 billion to $3.55 billion. Keurig Dr. Pepper updated its projection for net sales growth for the entire year, which was previously expected to be in the high single digits, to low double digits.
“All inputs, including ingredients, packaging, and manufacturing labor, experienced cost of goods sold inflation during the quarter,” Mr. Dokmecioglu stated. “Moreover, during the period of strong consumer demand, we also saw a much higher rate of inflation in transportation and warehousing.”Compared to the first quarter’s 15% inflation, the quarter’s inflation rate was over 17%.
You may also like:
Food security in emerging nations: issues and remedies
Are drinks the secret to increasing cannabis use among consumers?
Managing the lack of labour for mushroom picking
Mr. Dokmecioglu stated, “We expect inflation to be even higher in quarter three, largely driven by our green coffee positions.” “We intend to counteract this incremental inflation to generate EPS growth for the quarter, as we are benefiting from greater pricing in our P&L (profit and loss) for the third quarter.
We anticipate that in quarter four, the rate of inflation relative to the previous year will be around half that of quarter three. Recall that we will be reaping the full benefits of prices that have already been taken, allowing us to take advantage of the notable rise in inflation that we saw in the fourth quarter of last year.to offset inflation and deliver margin improvement in the fourth quarter.”
Over the first six months of the fiscal year, Keurig Dr Pepper had net income of $803 million, or 57¢ per share on the common stock, which was up 3.9% from $773 million, or 55¢ per share. Six-month net sales of $6.63 billion were up 10% from $6.04 billion.