Keurig Dr Pepper, Hershey report strong Q2 results as markets recover from pandemic downturn

US – Leading producer and distributor of hot and cold beverages Keurig Dr Pepper (KDP) and multinational chocolate company Hershey have reported strong second quarter results boosted by recovering demand in major markets globally. 

KDP, saw its Q2 net sales grow 9.6% to US$3.14 billion driven by what its executives describe as growth across its business segments. 

Both of the beverage giant’s largest units saw overall net sales growth in Q2 with packaged beverages growing its net sales by 7.6%, while coffee systems recorded a 5.6% increase. 

The coffee systems segment saw nearly flat pod volume growth of 0.2%, while brewer volume recorded growth of 29% in the quarter, reflecting continued strong retail consumption. 

In packaged beverages, net sales growth was driven by carbonated soft drinks, particularly Canada Dry, Sunkist, Dr Pepper, 7UP, A&W, and Squirt, as well as growth in core hydration and other specific brands, partially offset by a decline in Hawaiian Punch. 

“KDP delivered another strong quarter, as we successfully navigated a challenging macro environment marked by inflation, supply chain disruptions and a tight labour market,” said Keurig Dr Pepper chairman and CEO, Bob Gamgort. 

“For the first six months of 2021, we delivered 9% revenue growth and nearly 15% adjusted diluted EPS growth. Notwithstanding the expectation for ongoing challenges to persist for some time, we are confident in our strengthened top-line outlook and plan to reinvest any profit upside back into the business.” 

Following an impressive Q2, KDP has raised its guidance for 2021 constant currency net sales growth to 6-7% – up from its prior projection of 4-6% growth. 

The move marks the second time this year that the Texas headquartered company has raised its full-year outlook after an “exceptional first quarter” prompted the company to revise its original projection of 3-4% growth. 

Hershey benefits from away from home sales 

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Meanwhile, Pennsylvania-based chocolate maker Hershey has reported a double-digit rise in net sales for the quarter ending July 4th boosted by a robust recovery in away-from-home consumption and international markets, plus sustained elevated at-home consumption. 

The company’s net sales for Q2 increased 17% to US$1.99 billion from US$1.71 billion recorded in the year before.  

Hershey President and Chief Executive Officer Michele G. Buck noted that during the quarter, the company recorded healthy one-year and two-year trends in its confection brands, primarily driven by increased chocolate consumption. 

The Reese’s brand’s retail sales grew over 10% in the latest 12-week period, building on the growth of 16% in the prior-year period while the Twizzlers brand drove a 2% increase in retail sales during the quarter, on top of 6% growth in the year-ago period. 

Hershey’s International and Other segment delivered reported net sales growth of 70% in the quarter, which, when accounting for steep declines in the year-ago period, amounted to two-year growth of approximately 6%, Ms. Buck said. 

Net income attributable to The Hershey Co. in the quarter ended July 4 was US$301.2 million, up 12% from US$268.9 million, in the prior-year period.   

According to a report by Food Business News, Hershey’s results reflected volume growth, lower COVID-19 related costs, and productivity initiatives offset by increased supply chain costs and higher selling, marketing, and administrative expenses. 

Based on the company’s strong performance in the second quarter and the acquisition of Lily’s Sweets, LLC, the company’s management has now updated full year net sales and earnings growth to between   6% to 8%, up from the previous target of 4% to 6%. 

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