Keurig Dr Pepper (NASDAQ:KDP) executives told investors the company finished 2025 with results in line with its annual guidance and is moving ahead with a planned acquisition of JDE Peet’s and a subsequent separation into two “pure play” businesses. Management highlighted strong performance in U.S. Refreshment Beverages and International, while acknowledging softer profitability trends in U.S. Coffee amid commodity and tariff-related cost pressures and stepped-up investment spending.
Strategic transformation: JDE Peet’s deal and planned separation
CEO Tim Cofer said 2025 was “a strong year” operationally and strategically, with market share gains across the portfolio and “the fastest U.S. retail sales growth among top food and beverage manufacturers.” He framed 2026 around three priorities: delivering low double-digit EPS growth, closing and integrating JDE Peet’s, and preparing for a separation into Beverage Co. and Global Coffee Co.
Full-year 2025 results and fourth-quarter performance
New CFO Anthony DiSilvestro said KDP’s 2025 performance was consistent with its guidance, with constant-currency net sales up 8.6%, operating income up 4.9%, and EPS up 7.3%. Cofer added that net sales rose “almost 9%,” including about five points from the base business and nearly four points from the GHOST contribution, while EPS rose 7%.
For the fourth quarter, DiSilvestro reported net sales increased 9.9%, with growth across all three segments. Net price realization contributed six percentage points and volume/mix contributed 3.9 points, including 3.6 points from GHOST. Gross margin contracted 150 basis points due to inflationary pressures partially offset by pricing and productivity, while SG&A improved 80 basis points as a percent of sales due to overhead efficiencies. Operating income increased 4.8%, and EPS increased 1.7% to $0.60, reflecting higher interest expense and a slightly higher tax rate.
Cofer described quarterly profit flow-through as “limited” due to cost pressures and higher reinvestment spending, resulting in 2% EPS growth on his adjusted basis framing.
Segment trends: strength in refreshment and international, pressure in coffee profits
U.S. Refreshment Beverages again led results. DiSilvestro said segment net sales rose 11.5% in Q4, with volume/mix contributing seven points (primarily GHOST) and net pricing contributing 4.5 points. Segment operating income increased 8.7%, driven by sales growth and productivity savings, partially offset by inflation, higher SG&A, and the impact of “elapsing a C4 performance incentive” from the prior year.
Cofer highlighted innovation and marketing, including Dr Pepper’s Blackberry innovation earlier in 2025 and precision marketing tied to Fansville, as well as momentum in energy and hydration. He said KDP’s multi-branded energy platform (C4, GHOST, Bloom, and Black Rifle) outperformed the category, with market share increasing nearly 1.5 points. In Q&A, Cofer said he expects both the energy category and KDP’s brands to gain shelf space, particularly in convenience channels, and said he does not expect the gains to be cannibalistic to the rest of KDP’s portfolio.
U.S. Coffee showed resilient top-line trends but weaker profitability. DiSilvestro said Q4 net sales grew 3.9%, driven by 8 points of net price realization, partially offset by a 4.1-point decline in volume/mix. Pod shipments fell 2.8%, while brewer shipments declined 16.8% amid higher price elasticity and retail inventory reductions. Segment operating income declined 8.8%, reflecting cost inflation and unfavorable volume/mix.
Management emphasized commodity timing effects. DiSilvestro said year-over-year cost headwinds from green coffee prices and tariff impacts should be most pronounced in Q1 2026, with a “six to nine-month time lag” from market changes to the P&L due to inventory timing and hedging. He said the impact should sequentially improve after Q1, with cost headwinds easing and “flip[ping]” in the second half, but that relief from current market prices would likely be “the latter part of the second half.”
International delivered strong Q4 results. DiSilvestro reported 16% constant-currency net sales growth (21% reported) and 20% operating income growth, aided in part by timing benefits. He noted buying in Mexico ahead of a beverage tax increase effective at the beginning of 2026, which he said would contribute to a softer start for the segment in Q1 2026, while the full-year plan assumes “healthy” top- and bottom-line delivery.
2026 guidance: JDE Peet’s contribution, Q1 pressure, and financing details
DiSilvestro provided 2026 guidance inclusive of the JDE Peet’s acquisition, assuming an early April close and current FX rates. KDP expects net sales of $25.9 billion to $26.4 billion, including an incremental $8.5 billion to $8.7 billion from JDE Peet’s beginning in Q2. The company guided to low double-digit constant-currency EPS growth, including a 6–7 percentage point contribution from JDE Peet’s on a three-quarter basis, consistent with an unchanged outlook for approximately 10% accretion in the first year post-close.
For standalone KDP, the outlook calls for 4%–6% constant-currency net sales growth and 4%–6% EPS growth, with FX expected to be about a one-point tailwind to standalone growth. Below-the-line assumptions included interest expense of about $1.07 billion to $1.12 billion, an effective tax rate of about 22% to 23%, and about 1.37 billion diluted weighted average shares.
KDP also guided to Q1 2026 EPS of $0.36 to $0.37 versus $0.42 a year ago. DiSilvestro attributed the year-over-year decline to lapping a $0.02-per-share Vita Coco gain in Q1 2025, peak coffee and tariff cost headwinds in Q1, and anticipated retailer inventory adjustments affecting U.S. Coffee. He said pressures should ease after Q1 and that the company has “very good visibility” to positive standalone EPS growth in Q2 with acceleration in the back half, aided by improving coffee cost comparisons and the JDE Peet’s accretion after closing.
On financing, DiSilvestro said KDP upsized its Beverage Co. convertible preferred equity raise to $4.5 billion, finalized and prepared to close a $4 billion Global Coffee Co. pod manufacturing joint venture, and expects to fund the remaining acquisition consideration through debt, while continuing to assess non-core asset divestitures. He also said KDP will no longer consider a partial IPO of Beverage Co. In Q&A, DiSilvestro said incremental acquisition debt and assumed JDE Peet’s debt would stay with Coffee Co., while existing KDP debt would remain with Beverage Co., along with the convertible preferred.
On cash generation, DiSilvestro said KDP produced $1.519 billion of free cash flow in 2025, including a $225 million impact from one-time distribution termination payments. He said standalone KDP free cash flow is expected to rise to approximately $2 billion in 2026, with an update to include JDE Peet’s expected cash flow after the deal closes.
Governance and leadership updates
Cofer said Lead Independent Director Pam Patsley will become board chair at the end of Q1 as Bob Gamgort steps off the board. The company also plans to add two new independent directors in early March: Amie Thuener, Alphabet’s Corporate Controller and Chief Accounting Officer, and Bill Newlands, Constellation Brands’ President and CEO. Cofer said KDP will split its existing Remuneration and Nominating Committee into separate Nominating and Governance and Compensation Committees.
Regarding leadership for the future Global Coffee Co., Cofer said the company is in the “final stages” of an internal and external CEO search and plans to announce the appointment by deal close, with the process led by the KDP board.
About Keurig Dr Pepper (NASDAQ:KDP)
Keurig Dr Pepper (NASDAQ: KDP) is a North American beverage company formed in July 2018 through the combination of Keurig Green Mountain and Dr Pepper Snapple Group. The company designs, manufactures, markets and distributes a wide range of hot and cold beverages and related equipment, combining Keurig’s single‑serve coffee systems with a large portfolio of carbonated and noncarbonated drink brands. It operates a network of manufacturing, packaging and distribution facilities to supply retail, foodservice and e-commerce channels across its served markets.
The company’s product mix includes single‑serve coffee brewers and coffee pods under the Keurig brand as well as a broad assortment of branded beverages.
