VALUATION HIGHLIGHTS
- Beverage Concentrates (U.S. Beverages, U.S. Coffee) constitute 84% of the Trefis price estimate for Keurig Dr Pepper's stock.
- International constitutes 16% of the Trefis price estimate for Keurig Dr Pepper's stock.
WHAT HAS CHANGED?
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KDP Stock vs. S&P 500 Performance
The changes in KDP stock over the recent years have been far from consistent. Returns for the stock were 17% in 2021, -1% in 2022, -4% in 2023, and -1% in 2024. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, 24% in 2023, and 23% in 2024 — indicating that KDP underperformed the S&P in 2021, 2023 and 2024.
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Q3'25 Earnings
Net sales for Q3 2025 increased 10.7% to $4.31 billion. This growth was led by a 14.4% surge in the U.S. Refreshment Beverages segment (aided by the GHOST acquisition), alongside a 10.5% increase in International segment sales. The U.S. Coffee segment also saw a modest turnaround, with sales rising 1.5% year-over-year.
The overall constant currency net sales growth of 10.6% was driven by:
A 6.4% rise in volume/mix (with the GHOST acquisition contributing 4.4 percentage points).
A 4.2% favorable net price realization.
The company reported Adjusted diluted EPS of $0.54, marking a 5.9% increase compared to the $0.51 reported in the prior-year quarter.
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Dr Pepper Snapple's merger with Keurig
JAB Holdings, Keurig's owner, built an extensive portfolio by acquiring various coffee brands (like Jacobs, Peets, Caribou) and food companies (including Krispy Kreme, Panera Bread, Au Bon Pain). However, distributing this diverse range of products effectively posed a challenge. The merger with Dr Pepper Snapple addressed this by providing access to its massive distribution network. In return, the legacy Dr Pepper Snapple business benefited from leveraging Keurig's strong e-commerce capabilities.
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Strong coffee growth expected
The potential customer base for hot drinks is substantial, representing a significant economic opportunity. This market sector is experiencing rapid expansion each year. This growth is advantageous for KDP, given the strength of Keurig Green Mountain's coffee offerings. The company has successfully increased the number of homes using its products through its single-serve pods.
BUSINESS SUMMARY
Keurig Dr Pepper is a prominent coffee and beverage company operating in North America. Their product range includes a variety of flavored sparkling soft drinks (excluding cola), still beverages like teas, juices, water, and mixers, as well as specialty coffee. Keurig is recognized as a major creator of single-serve brewing technology.
Several well-known brands fall under the company's umbrella, such as Keurig, Dr Pepper, Green Mountain Coffee Roasters, Canada Dry, Snapple, Bai, Mott's, and The Original Donut Shop.
Keurig Dr Pepper came into existence through the combination of Keurig Green Mountain and Dr Pepper Snapple, finalized in July of 2018.
KEY TRENDS
Popularity of Ginger Ale
The rising appeal of ginger ale can be attributed to younger consumers seeking genuine, high-quality drinks with natural tastes. Beverages flavored with ginger are becoming more popular in numerous countries globally, with significant demand increases observed in places like the United States, the United Kingdom, Spain, and Mexico. This category is projected to maintain its robust expansion in the foreseeable future.
