KDP's Business Model
Keurig Dr Pepper (KDP) was formed following the merger of Dr Pepper Snapple and Maple Holdings Parent Corp. (which owned Keurig) in July 2018.
KDP is a leading beverage company in North America, which offers products under the following 4 operating segments
1. Beverage Concentrates:
Reflects sales of branded concentrates and syrup (mostly carbonated soft drinks (CSDs) to third-party bottlers, primarily in the U.S. and Canada.Major brands are Dr Pepper, Canada Dry, Crush, Schweppes, Sunkist soda, A&W, and 7UP.
2. Packaged Beverages:
Manufactures and distributes packaged beverages of its brands, along with distribution of packaged beverages for allied brands and manufacturing for certain private label beverages in the U.S. and Canada.90% of revenues come from the sale ofits own brands.
3. Latin America Beverages:
Includes carbonated mineral water, flavored 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 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, for use with Keurig brewing systems, and brewer accessories.
KDP to add $0.4 billion in total revenues in the next 2 years, led by growth across all segments, partially offset by lower sales in the packaged beverages division
For the full year, we expect revenue to increase by about 1.3% to $11.2 billion in 2019, and further by 2.3% to $11.4 billion in 2020, benefiting from the launch of new varieties.KDP is expected 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, which is a key element of its Coffee Systems business.KDP recently partnered with Tim Hortons, the iconic coffee brand in Canada, which was previously unlicensed, and Panera, the well-regarded bakery cafe brand in the U.S.
Total Revenue (A + B + C + D)
Beverage Concentrates (A)
Packaged Beverages (B)
Latin America Beverages (C)
Coffee Systems (D)
Despite lower volume sales, revenue growth in Beverage Concentrates division is expected to be driven by higher price realization
Revenue marginally increased in 2018 and the rising trend is expected to continue through 2020.Strong price realization along with growth in sales of Squirt, Schweppes, Big Red, and Hawaiian Punch is expected to drive revenue growth.However, volume is expected to decline, largely due to declines in the carbonated soft drinks (CSD) category, as millennials are moving toward healthier non-carbonated options.
Latin American Beverages' Revenue Growth to be subdued in the near term due to exit of Aguafiel water business (one of the main brands of the segment)
The segment revenue grew in 2018 on the back on higher net price realization and rising sales of Penafiel, along with Clamto, Squirt, and Motts.However, revenue growth in the near term is likely to remain subdued, due to loss of revenue following the exit of Aguafiel bulk water business, which was one of its largest brands.
Latin America Beverages
DISAGREE WITH OUR FORECASTS? CREATE YOUR OWN
1. How to save your forecasts:
Click on the blue "Try Trefis" button in the header to create an account, then navigate back to this dashboard. Now, any changes you make to these inputs will be auto-saved as a scenario (see left panel of dashboard).
2. How to monitor your scenario vs. actual results
Once you've saved your forecast, you can "rename" your scenario by clicking on the gear icon next to the scenario (on the left panel). For more info, see this quick, 30-sec video (look at the 9 sec mark)
With your forecast saved and named, you can see how well you forecast the company's performance at the end of each period and compare your forecasts to hundreds of other Trefis users who came up with their own forecasts. Lastly, you can share with friends and colleagues to show them how you fared and compare your forecasts to theirs.