Kraft Heinz, Keurig Dr Pepper report strong Q1 results buoyed by extended at home consumption

US – Kraft Heinz and  Keurig Dr Pepper, two of America’s most popular food brands have reported strong Q1 results, as sustained at home consumption amid a pandemic maintained the high demand for their goods that started at the onset of the pandemic.

As a result, Kraft reported a 2.5% organic growth for the quarter beating estimates that had projected the company to record flat-to-positive organic net sales growth

“Our first quarter was better than expected, with our team delivering strong results on top of exceptional growth last year,” said Kraft Heinz CEO, Miguel Patricio.

In the first three months of 2021, net sales stood at US$6.39 billion compared to US$6.16 billion last year, as the company witnessed a strong performance across all business segments.

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The company noted a continued resilience in developed markets’ retail consumption with sales in the US, rising by 2.5% to US$4.61 billion while Canada’s sales rose 8.8% to US$392 million.

Kraft reported continued growth in emerging markets with the international segment recording net sales of US$1.39 billion, representing 7.2% growth.

The owner of Philadelphia cream cheese however noted that its growth was partially offset by ongoing declines in food service and lower retail takeaway.

Operating income for the quarter increased 41.3% to US$1.09 billion compared to US$770 million last year, driven by strong gross profit growth and lower general corporate expenses than last year.

For Q2, Kraft Heinz expects a mid-single-digit percentage increase in organic net sales, versus the 2019 period – which it views as more meaningful given the exceptional, Covid-19 related consumer demand changes last year.

Therefore, this is equivalent to a low-single-digit percentage decline compared to 2020.

Keurig Dr Pepper’s exceptional first quarter

Meanwhile Keurig Dr Pepper (KDP) has reported 11.1% growth in net sales to US$2.9 billion for Q1, after the company saw ‘strong growth’ across all of its business segments.

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Both of the beverage giant’s largest units saw overall net sales growth– with packaged beverages growing its net sales by 7.4%, while coffee systems recorded a 17.4 % increase.

The coffee systems segment saw pod volume growth of 13.7% driven by strong at-home consumption, which was partially offset by weakness in the company’s away-from-home business.

Meanwhile, brewer volume recorded growth of 61% in the quarter, reflecting strong retail consumption.

In packaged beverages, net sales growth was driven by Dr Pepper, A&W, Canada Dry, Sunkist, 7UP and Squirt carbonated soft drinks, as well as growth of Snapple and Clamato, partially offset by a decline in Bai.

The company’s Latin America beverages and beverages concentrates divisions which recorded declines in 2020 bounced back to growth and  grew their net sales (by 6.8% and 7.2% respectively).

Overall, the company’s operating income increased 37% to US$640 million for the quarter, reflecting factors including the growth in net sales and lower marketing spending compared to pre-pandemic investment levels in Q1 2020.

Following the stellar performance of the business, Keurig Dr Pepper has raised its guidance for 2021 net sales growth to 4-6% – on a constant currency basis – up from its prior projection of 3-4% growth.

“We delivered an exceptional first quarter, driving double-digit net sales and earnings growth, behind outstanding in-market execution,” said Keurig Dr Pepper chairman and CEO, Bob Gamgort.

“Looking forward, we see an improving, but volatile, macro environment marked by increasing consumer mobility and rising inflationary headwinds.”

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