Keurig Dr Pepper Shifts Focus to Soft Drinks Amid Coffee Segment Slowdown
Dubai, August 8, 2025 (Qahwa World) – Keurig Dr Pepper (KDP) is ramping up its investment in soft beverages and premium coffee lines as traditional coffee sales show signs of strain under inflationary pressure, volatile commodity markets, and shifting consumer behavior.
In its second-quarter earnings report, KDP announced a 6.1% increase in total net sales, reaching $4.2 billion, with growth largely driven by its U.S. soft drinks portfolio, which posted a 10.5% jump to $2.7 billion. Leading brands such as Dr Pepper, Canada Dry, 7Up, Snapple, and Electrolit contributed to the strong performance.
However, the company’s U.S. coffee segment reported a 0.2% decline in sales quarter-over-quarter, down to $0.9 billion. While price increases helped drive a 2% rise in adjusted operating income to $299 million, the segment saw a 3.6% decline in volumes, reflecting weakened consumer confidence and sensitivity to pricing.
“The U.S. Coffee segment will need to manage through impacts from higher commodity inflation, increased tariffs, and consumer uncertainty in the face of additional pricing,” said CEO Tim Cofer, noting further coffee price hikes are expected in Q3. “We expect segment performance to remain subdued for the balance of the year.”
The downturn is prompting KDP to recalibrate its coffee strategy, shifting attention away from its traditionally value-oriented offerings, such as Keurig Green Mountain and K-Cup capsules, and toward more premium-positioned innovations.
Among the highlights for the quarter:
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Lavazza K-Cup capsules were launched in Italian dessert-inspired flavors, including tiramisu.
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La Colombe ready-to-drink (RTD) coffee lines showed triple-digit sales growth, reflecting rising interest among younger, specialty-focused consumers.
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The upcoming K-Rounds, a plastic-free and aluminum-free pod, is scheduled for launch in 2026, signaling KDP’s push toward sustainability.
Cofer emphasized that while headwinds remain, the company sees long-term potential in its coffee business, provided it can deliver innovation that aligns with evolving consumer preferences.
“Looking ahead, the balance of 2025 will present challenges in the form of rising cost pressures, including from tariffs that remain highly fluid, as well as continued consumer caution,” he added.
KDP’s strategy reflects a broader trend in the U.S. coffee market, where flavor exploration, RTD beverages, and wellness are increasingly shaping consumption patterns — particularly among Gen Z consumers. The company’s challenge will be to retain its stronghold in value coffee while bringing its core category along on this more premium, lifestyle-driven journey.
