Dr Pepper Q2 Earnings Preview: Another Strong Quarter Across CSD And Non-CSD Portfolios?
Dr Pepper Snapple (NYSE:DPS) is scheduled to announce its Q2 and half-yearly results on July 27, and we expect another solid quarter from the beverage company, which ranks behind Coca-Cola and PepsiCo in the U.S. CSD market. In 2015, while 46% and 56% of Coca-Cola and PepsiCo’s net sales came from the U.S., a larger 89% of Dr Pepper’s revenue came from the domestic market. Dr Pepper is more dependent on CSDs than both Coca-Cola and PepsiCo are, with 82% of its net volume in this beverage category. But the company has been able to increase both its volume and revenue in the U.S. CSD market in the last few years despite the slowdown in the overall market, by nabbing market share from its chief competitors. We expect this trend to continue into the second quarter.
In addition, Dr Pepper continues to perform well, and is expected to grow again in Q2. Allied brands allow Dr Pepper to leverage its large scale distribution network and participate in growing emerging categories where it doesn’t have a considerable presence as of now. The company is deriving high volume growth from its allied brands, which is expected to continue this year. The allied brands growth is included in the packaged beverage volumes for Dr Pepper, which is the distribution wing for these small but fast growing brands, such as Bai 5, Vita Coco, etc. At the gross margin line, the allied brands tend to carry lower gross margin because they have somebody else’s manufacturing profit in there, but are good contributors to Dr Pepper’s operating profitability. Allied brands form a small proportion of net volumes at present, but are an important factor of growth.
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In 2016, Dr Pepper expects CSD volume to be up slightly, but NCB growth to be down slightly, impacted by the termination of the distribution agreement on its water brand Aguafiel 10-liter business in Mexico. Despite the loss in volume, a focus on packages that have higher price per volume, in both CSDs and non-CSD categories, will help Dr Pepper boost its top line overtime.
Have more questions on Dr Pepper Snapple? See the links below.
- Dr Pepper Snapple Is Heavily Dependent On CSDs, But That’s Not A Problem
- Dr Pepper Beats Consensus Estimates; Grows Volume In Carbonated Beverages Too
- What’s Dr Pepper Snapple’s Revenue And EBITDA Breakdown?
- By What Percentage Have Dr Pepper Snapple’s Revenues And EBITDA Grown Over The Last Five Years?
- What’s Dr Pepper Snapple’s Fundamental Value Based On Expected 2016 Results?
- How Has Dr Pepper Snapple’s Revenue And EBITDA Composition Changed Over 2012-2016E?
- Why North America NCB Revenue Will Grow 5x North America CSD Revenue Over 2015-2018 For Dr Pepper
- Why Latin America Revenue Will Grow 2.5x North America Revenue Over 2015-2018 For Dr Pepper
- How Much Revenue Can Latin America Add By 2018 For Dr Pepper?
- Breakdown Of Dr Pepper’s U.S. CSD Vs Mexico CSD Presence
- How Much Can CSDs Add To Dr Pepper’s Top Line By 2018?
- How Much Can NCBs Add To Dr Pepper’s Top Line By 2018?
- 2015 Year In Review: Dr Pepper Snapple
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