Sep 24, 2020
190 Views
0 0

How Is Keurig Dr Pepper Making Money Post Its Merger With DPS?

Written by

Keurig Dr Pepper Chairman & CEO Bob Gamgort foreground right is applauded as he rings the New York. Dr Pepper (NYSE: KDP) was formed following the merger between Dr Pepper Snapple and Maple Holdings Parent Corp. (which owned Keurig) in July 2018. Post the deal Keurig which was initially a significant player inside the coffee business saw diversification in its offerings and operating segments making it the fourth largest US

 

-based beverage company. You can view the Trefis interactive dashboard – Keurig Dr Pepper: How Does KDP Make Money? – to higher understand the corporate s business model such as revenue trends for all its divisions. Moreover here’s more Consumer Staples data. A] What Does It Offer? KDP offers products under here 4 operating segments:

1) Beverage Concentrates Reflects sales of branded concentrates and syrup – mostly carbonated soft drinks (CSDs) – to third-party bottlers primarily inside the US

 

and Canada. Major brands are Dr Pepper Canada Dry Crush Schweppes Sunkist soda A&W and 7UP. 2) Packaged Beverages Students Get Creative For National Voter Registration Day Manufactures and distributes packaged beverages of its brands such as distribution of packaged beverages for allied brands and manufacturing for certain private label beverages inside the US

 

and Canada. 90% of revenues come from sale of its own brands. 3) Latin America Beverages Includes carbonated mineral water flavoured CSD bottled water and vegetable juice categories. Major brands include Peñafiel Squirt Aguafiel Clamato and Crush. 90% of segment sales are from Mexico. 4) Coffee Systems Develops and sells quite a variety of Keurig coffee brewers sale of specialty beverages such as hot and iced teas hot cocoa and other beverages in K-cup pods to be used with Keurig brewing systems and brewer accessories

5) Total Revenue Trend and Segment Revenue Analysis and Projection KDP s Total Revenue is anticipated to maintain its rising trend with the corporate projected to feature practically $0

 

4 billion to its revenue base inside the next 2 years. Beverage Concentrates Revenue marginally increased in 2018 and the rising trend is anticipated to continue through 2020

Strong price realization such as growth in sales of Squirt Schweppes Big Red and Hawaiian Punch is anticipated to drive revenue growth

 

However total segment volume is anticipated to say no largely with the help of declines inside the carbonated soft drinks category as millennials are moving toward healthier non-carbonated options

Latin America Beverages The segment revenue grew in 2018 on the back on higher net price realization and rising sales of Penafiel such as Clamto Squirt and Motts

 

Though revenues are expected to increase revenue growth inside the near term is prone to remain subdued with the help of lack of revenue following the exit of Aguafiel bulk water business which was considered one of its largest brands

Coffee Systems Segment revenue remained flat in 2018 as volume growth was offset by discount realization

 

However Coffee Systems is anticipated to feature over $200 million to its revenue base inside the next two years driven by increase in K-Cup pod volume and brewer volume. Additionally volume growth of branded partners and private label is anticipated to drive revenue growth

The division would also cash in on the success of its K-Cafe campaign which enables consumers to make lattes and cappuccinos at home using any K-Cup pod

 

Improvement inside the brewer quality is likewise expected to bring about better price realization. Packaged Beverages Though the segment saw revenue growth in 2018 revenue is anticipated to drop marginally in 2019 mainly with the help of changes inside the allied brands portfolio (under which KDP distributes 3rd party brands for a fee)

Post the merger with DPS the corporate lost two of its biggest allied partners – Fiji Water (which decided to construct its own distribution network) and BODYARMOR

 

Lack of revenue from allied brands portfolio (which comprises about 10% of segment revenues) is anticipated to be partially offset by higher sales of CORE Evian Dr Pepper Canada Dry and Xyience led by a brand new campaign such as growth in contract manufacturing

6) Outlook For 2019 and 2020 For the complete year we predict revenue to increase by about 1

 

3% to $11. 2 billion in 2019 and extra by 2. 3% to $11. 4 billion in 2020 cashing in on the launch of recent varieties. KDP is anticipated to capitalize on the launch of Diet Canada Dry Ginger Ale & Lemonade and the introduction of Canada Dry Ginger Ale and Orangeade both of which will be supported by marketing investment

The company has also stuck to its strategy of partnerships that is a key component to its Coffee Systems business

 

KDP recently partnered with Tim Hortons the enduring coffee brand in Canada which was previously unlicensed and Panera the well-regarded bakery cafe brand in the U. S. As per Keurig Dr Pepper Valuation by Trefis we’ve a value estimate of $30 per share for KDP s stock

We believe that strong organic growth improving margins and benefits from new launches would supply support to KDP s stock

 

What s behind Trefis? See The way it s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product R&D and Marketing Teams More Trefis Data Like our charts? Explore example interactive dashboards and create your own

Article Tags:
· ·
Article Categories:
Make Money

Leave a Reply