FRISCO, TEXAS — Ghost Energy, which Keurig Dr Pepper (KDP) acquired in late 2024, has become the company’s fourth $1 billion beverage brand, joining Dr Pepper, Canada Dry and Mott’s, the company said during its recent third quarter earnings call.
“Ghost performance in the quarter was driven by continued distribution gains and accelerating velocities, including benefits from innovation,” said Tim Cofer, chief executive officer, Keurig Dr Pepper. “For example, the brand’s A&W Root Beer limited-time offering has resonated with consumers and proven incremental to the franchise, and we look forward to adding both this flavor and Ghost 7UP to our permanent lineup starting in 2027.”
Ghost also leads KDP’s lineup of energy brands, which includes Bloom and C4. Combined, they are generating $1.5 billion in net sales annually, Cofer said.
“In energy drinks, we achieved two notable milestones in the quarter,” he said. “First, our portfolio surpassed a 10% market share position in the category, up from approximately 6% when we acquired Ghost just a couple of years ago. Just a couple of years ago, we were less than a 1% market share, and we’ve now crossed the 10% mark. That’s more than 2.5 points of share growth year-over-year if you look at the third quarter numbers.”
Cofer added that KDP’s US Refreshment Beverages business unit saw double-digit growth for the eighth quarter in a row, highlighted by energy, and carbonated soft drinks, including the Dr Pepper brand and Dr Pepper Zero in particular – which grew 25% in the third quarter and now exceeds $1 billion in sales on an annualized basis. Canada Dry’s net sales also were up double-digits, led by its Strawberry Fruit Splash line extension, which Cofer said performed well during the quarter.
Hydration brand Electrolit saw 40% retail sales growth during the third quarter.
| Photo: Electrolit
Hydration growth
Cofer said the Electrolit hydration brand, which KDP distributes, saw 40% retail sales growth during the third quarter.
“The brand holds a 9% market share of sports drinks which has more than doubled since the KDP distribution partnership began three years ago and has now established itself as the clear leader in the attractive rapid hydration subcategory with further expansion opportunities still ahead,” he said.
In foodservice, the company secured a fountain distribution deal with Jersey Mike’s Subs, “and we see a path to expand our presence in additional chains as well,” Cofer said. “This incremental distribution opportunity should serve as another ongoing tailwind for the brand.”
Cofer also said a partnership with Chobani is expected to produce a high protein shake collaboration next year.
“The (Chobani) deal had three elements,” he said. “One was the monetization of our minority stake in Chobani. The second was the sale of our Allentown, Pennsylvania facility to Chobani. The third element was an expanded multi-year distribution partnership with Chobani.
“As a result of this deal now with Chobani, we have the opportunity to support further growth for both companies, and one of those opportunities is to work together on a future ready-to-drink innovation, including high-protein shakes that Chobani has referenced in their recent announcement. We’re excited about bringing that to our portfolio, likely sometime next year.”
Value sensitivity
For the third quarter ended September 30, Keurig Dr Pepper saw net income increase 22% to $810 million, equal to 60¢ per share on the common stock, compared to $662 million and 49¢ per share during the previous third quarter.
Net sales rose nearly 71% to $7.34 billion, up from $4.30 billion a year ago. Keurig Dr Pepper said the sales boost can be partially attributed to the finalization of its JDE Peet’s acquisition, which closed in April and is appearing in the company’s quarterly earnings for the first time, contributing $2.65 billion to the overall sales numbers.
In Keurig Dr Pepper’s other operating segments, US Refreshment Beverages saw sales increase 11% to $3.03 billion from $2.73 billion last year. US Coffee sales rose 2.7% to $1.01 billion from $991 million a year ago, and KDP International’s sales were $644 million compared to $580 million during the third quarter last year.
Keurig Dr Pepper said value-oriented coffee formats, like ground and instant, are outperforming single-serve formats like the K-Cup, due to cost-conscious consumers.
| Photo: ©JAMMER GENE – STOCK.ADOBE.COM
While US Coffee sales increased, the company said current economic pressure on consumers is dampening the potential for growth in KDP’s single-serve cup business.
“Although segment performance improved sequentially from the first half, the US single-serve subcategory has been softer than we anticipated, with value-oriented coffee formats continuing to outperform,” Cofer said. “We view this dynamic as largely a reflection of the current macro backdrop, but it impacted our quarterly results.
“We are seeing heightened value sensitivity in at-home coffee, particularly among the low- and middle-income consumers. As a result, what you’re seeing is lower-cost formats of at-home coffee. Think ground, whole bean, instant. They are now outperforming single serve.”
Based on its third-quarter results, KDP maintained its full-year guidance of net sales in the $25.9 billion to $26.4 billion range, which now includes an approximately $8.3 billion to $8.4 billion contribution from JDE Peet’s.