Keurig Dr Pepper Inc. (NASDAQ:KDP) Q4 2022 Earnings Call Transcript

If you looked at it in the recovery period from COVID, you see a deceleration in attach rates. And what happened, especially in the second half of 2022 is that there was this global slowdown in volume of coffee that’s driven, we believe, primarily by mobility, but on a secondary basis, it’d be driven by some elasticity, because there was significant pricing in there. Why do we have confidence in this is because the Keurig System continues to outperform year in and year out within at-home coffee. None of us believe that at-home coffee is a long-term problem. In fact, it has significant tailwinds. This is just an adjustment as people are spending less time at home, more time out of home. We know that the number one driver of at-home coffee consumption is time spent at home.

And it’s as straightforward as that, and we expect to see the recovery in the category of at-home coffee to occur as mobility improves throughout the year.

Bonnie Herzog: Thank you.

Operator: Thank you. And ladies and gentlemen, our final question today comes from Filippo Falorni from Citi. Please go ahead.

Filippo Falorni: Hey, good morning, guys. On the pricing front, can you talk about how much of your pricing plan for 2023 is carryover pricing from 2022? And how much is new pricing? And then in terms of the new pricing where it’s concentrated is it mainly on the beverage side or on the cost side? Are you planning for price increases there as well? Thank you.

Robert Gamgort: Yes. The great majority of the pricing that shows up in our 2023 P&L is carryover from 2022, and I’ll remind you that we took extensive price actions in 2022, and they did not flow through to the P&L all the way through in €˜22. So that’s happening. We did take some additional pricing actions in the early part of €˜23 on our packaged beverage business to close some of the remaining margin gaps. So that will flow through as we move into the remainder of 2023, but that’s all that we have planned right now.

Operator: Thank you. Ladies and gentlemen, this concludes today’s question-and-answer session. I’d like to turn the conference back over to the management team for any closing remarks.

Maria Sceppaguercio: Hi, everyone. This is Maria. We are around today to take your questions. We’d love to connect with you afterwards if you have any. Feel free to call as usual. Have a good day.

Operator: Thank you, ma’am. This concludes today’s conference call. And we thank you all for attending today’s presentation. You may now disconnect your lines, and have a wonderful day.