Keurig Dr Pepper's Dirty Soda Success: CEO Says Social Media Helped Drive 8th Consecutive Year Of Market Share Growth

Beverage maker Keurig Dr Pepper Inc. KDP exceeded analyst expectations in the fourth quarter as its “consumer-obsessed brand building” initiatives paid off. The firm said it “capitalized” on the dirty soda’s popularity with the help of social media.

What Happened: A dirty soda is a drink made of a carbonated beverage, flavored syrups or juices, and cream.

CEO Tim Cofer said during the earnings call, “We capitalized on the dirty soda cultural phenomenon powered by social media, which helped drive our eighth consecutive year of market share growth for Dr Pepper.

According to the CEO, the company’s strong annual results were primarily due to the U.S. refreshment and international divisions, which contributed over 70% of revenue, and they had also reinforced the U.S. coffee business during inflationary times.

CFO Sudhanshu Priyadarshi said that the company expects an incremental contribution from its move into the energy drink market after the GHOST acquisition. He added that the beverage maker will face headwinds from foreign exchange rates of 1-2%. Also, “U.S. Coffee is likely to remain more subdued in a dynamic commodity environment, even with higher pricing,” he added.

Lastly, he said that the company anticipates “a stronger top line and bottom line momentum in Q2 through Q4, particularly as the contribution from GHOST builds following the transition to our distribution network.”

Why It Matters: The company beat fourth expectations with adjusted EPS of $0.58 and sales of $4.07 billion, up 5.2% year-on-year and above the $4.02 billion expected by the consensus. Operating income rose 3.4%, though margins slightly declined to 27.7%.

Price Action: KDP rose 2.40% on Tuesday, contrasting with a 1.26% fall in the Invesco QQQ Trust, Series 1 QQQ, which tracks the Nasdaq 100 index.

The stock remains 10.01% higher on a year-to-date basis and up 18.44% over a year.

Benzinga tracks 18 analysts with an average price target of $37.67 for the stock, reflecting a “buy” rating. Estimates range widely from $34 to $42. Recent ratings from Barclays, UBS, and TD Cowen average $36.33, suggesting a potential 4.86% upside.