Beverage innovation playing ‘important role’ for Keurig Dr Pepper

BURLINGTON, MASS. — Executives with Keurig Dr Pepper said beverage innovation will be a key component in helping the company achieve its financial goals for the rest of 2026, particularly in its carbonated soft drink segment with the Dr Pepper and Canada Dry brands, during a recent call to investors announcing the company’s first-quarter earnings.

“Canada Dry Fruit Splash Strawberry launched nationally in February and has driven healthy consumer trial, strong on-shelf velocities and incrementality to the franchise,” said Timothy Cofer, chief executive officer of Keurig Dr Pepper. “The launch contributed to Canada Dry’s Q1 share gains and should provide a further tailwind in coming quarters. In addition, the fan favorite, Dr Pepper Creamy Coconut limited-time offering relaunched earlier this month, and we’re confident it will build on its successful initial run during 2024 as it taps into ongoing consumer interest in dirty sodas. … Creamy Coconut is going to be a big success this year.”

Cofer added that Dr Pepper Zero Sugar continues to grow at a double-digit rate with further upside, and the company’s energy drink portfolio “expanded market share during the first quarter, led by Bloom and Ghost, which were two of the top three fastest-growing major trademarks in the category.”

“We’ve taken a portfolio approach,” he said. “We have four brands of scale that we go to market with. Ghost, a great lifestyle brand; C4 in performance; Bloom, female forward; and Black Rifle in mainstream. 

“You saw continued market share growth here in the first quarter, and we expect that to continue for the year. Our (energy) portfolio is well over $1 billion now, and we see continued upside. … Overall, US Refreshment Beverages continues to represent an outsized growth driver for KDP, and we expect this segment to remain a key contributor in 2026.”

For the first quarter ended March 31, 2026, Keurig Dr Pepper saw total sales rise to $3.97 billion from $3.63 billion during the prior first quarter, an increase of 8%. The company attributed the increase to favorable net price realization of 5.5% and volume/mix growth of 2.6%.   

Net income fell nearly 48% to $270 million, equal to 20¢ per share on the common stock, compared with $517 million, or 38¢ per share, in the same period a year ago. The company said transaction and acquisition-related costs were behind the drop, along with the phasing of cost and tariff impacts, and lapping a below-the-line gain compared to a year ago.

Keurig Dr Pepper also saw unfavorable exchange rates that resulted in a loss of $150 million, compared with a loss of $2 million during the first quarter last year.

“We expect Q1 to represent the most significant year-over-year gross margin decline for our legacy KDP business, with trends improving as inflation and tariff impacts ease, particularly in the back half,” said Anthony Di Silvestro, chief financial officer.

Within the company’s business segments, US Refreshment Beverages saw sales rise to $2.59 billion, an increase of nearly 12% compared with $2.32 billion a year ago

Keurig Dr Pepper launched its Canada Dry Strawberry Fruit Splash in February, part of the company’s beverage innovation strategy in 2026. 

| Photo: Keurig Dr. Pepper.

Sales in the US Coffee segment fell to $857 million from $877 million during the prior first quarter.

“As expected, our reported results were impacted by some meaningful but temporary headwinds,” Cofer said. “Peak year-over-year cost pressures constrained Q1 segment profitability, reflecting the timing of higher cost green coffee hedges and tariffs. And as previewed last quarter, trade inventory adjustments pressured pod shipments, which declined 7% and lagged point-of-sale trends, weighing on operating income. 

“Importantly, these headwinds should ease slightly in Q2 and moderate more meaningfully in the back half, providing visibility to improve top and bottom-line trends over the balance of the year.” 

Peet’s deal completed

Keurig Dr Pepper finalized its acquisition of JDE Peet’s on April 1, and the company said it will continue to target operational readiness to separate Keurig Dr Pepper into stand-alone beverage and coffee companies by the end of 2026, with the official separation likely to occur in early 2027, subject to market conditions.

In detailing what those two companies — temporarily called Beverage Co. and Global Coffee Co. — will look like, Cofer said, “Beverage Co. will be a growth-oriented challenger in the large and attractive $300 billion North American refreshment beverages market, with iconic brands, differentiated go-to-market capabilities and a proven track record of white space expansion, the stand-alone beverage business should deliver compelling financial results while also possessing strategic optionality over time. 

Keurig Dr Pepper finalized its $18.4 billion acquisition of JDE Peet’s on April 1. 

| Photo: ©SHIELAF2002 – STOCK.ADOBE.COM

“Global Coffee Co. will be a scaled leader in the $400 billion global coffee market with an enhanced set of capabilities to meet consumer needs across formats, channels and geographies. Supported by a portfolio of leading global and regional brands, deep expertise in sourcing, blending and appliances and strong synergy potential, the coffee business will also have a compelling value creation model,” he said.  

Keurig Dr Pepper’s Global Coffee Co. will be led by Rafael Olivera, JDE Peet’s current chief executive officer. Keurig Dr Pepper said it will report Peet’s financials as a separate segment until the stand-alone businesses are ready to launch.

“We’re starting the year on solid footing,” Cofer said. “We completed the JDE Peet’s acquisition. We’re making steady progress advancing our transformation agenda, and we remain on track to achieve our full year outlook. 

“As we look ahead to the rest of the year, we’re focused on sustaining base business momentum, integrating JDE Peet’s with excellence and laying the groundwork for two strong stand-alone companies.”