(Corrects paragraph 1 to say Thursday, not Tuesday)
(Reuters) -Keurig Dr Pepper reported first-quarter revenue and profit above Wall Street expectations on Thursday, helped by strong demand for its energy drinks and beverages among U.S. consumers.
WHY IT IS IMPORTANT
The Snapple maker saw resilient demand for its higher-priced ready-to-drink beverages, especially in the U.S. market, fueled by new flavor variants including Dr Pepper Blackberry and Snapple Peach Tea & Lemonade.
Keurig has also benefited from the popularity of energy-drink maker Ghost’s products, having bought a 60% stake in October.
In contrast, bigger rival PepsiCo cut its annual profit forecast and warned of higher production costs and more volatility from President Donald Trump’s trade tariffs, after narrowly missing quarterly profit estimates.
MARKET REACTION
Shares of Keurig Dr Pepper, which have risen about 10% so far this year, were up about 2% in premarket trading.
CONTEXT
U.S. consumers may face a surge in product prices following President Donald Trump’s tariffs on trading partners. Tariffs have put the company’s business in Canada and Mexico at risk, especially as Canadian consumers boycott certain U.S. products.
Coffee prices could also rise further due to tariffs, hurting the company’s margins and consumer demand.
An ongoing destocking at retailers is expected to weigh on some packaged foods makers, but RBC analyst Nik Modi said Keurig’s increased distribution of La Colombe coffee, Electrolit beverages and Ghost energy drinks may help offset those pressures.
BY THE NUMBERS
Keurig Dr Pepper posted an adjusted profit of 42 cents per share for the quarter, beating analysts’ average estimate of 38 cents per share, according to data compiled by LSEG.
Net sales rose 4.8% to $3.64 billion, compared with estimates of $3.57 billion.
Its biggest segment, U.S. Refreshment Beverages, saw an increase of 11% in sales.
The company reaffirmed its annual revenue and profit forecasts from February.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Saumyadeb Chakrabarty)
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