KDP Keurig Dr Pepper Inc

By Nina Trentmann 

Keurig Dr Pepper Inc. says tracking how many pods are used to brew coffee in homes and other user tools are helping with its planning and financial forecasts. The beverage company recently reaffirmed its full-year guidance when many other businesses have withdrawn their outlooks.

The owner of brands such as Dr Pepper, Snapple and Canada Dry relies on data it receives from several real-time and distribution channels to determine size of orders, trucking routes and inventory planning, Chief Financial Officer Ozan Dokmecioglu said.

Keurig Dr Pepper's interconnected system, which was introduced about three years ago, relays data on when and how frequently its coffee machines in people's homes are used, showing consumers drank more coffee in the house as they adjusted to remote work starting this spring. Keurig Dr Pepper is relying on 10,000 refitted, Wi-Fi-enabled coffee brewers to share information from households where consumers opted to take part in the data-gathering exercise.

The company plans to start selling a coffee brewer with Wi-Fi capability and voluntary opt-in from consumers in the mass market later this year. The new coffee machines can be controlled from a smartphone and customized to consumers' favorite temperature and brewing preferences, Keurig Dr Pepper said.

The company's coffee segment sales increased 5.4% to $1.04 billion in the quarter ended June 30, Keurig Dr Pepper reported last week.

Keurig Dr Pepper, based in Burlington, Mass., and Plano, Texas, also gathered intelligence as employees stocked the shelves of supermarkets, gas stations and convenience stores with its products.

"This technology set enabled us to very quickly pivot to consumer demand, to adjust production and order raw materials ahead of time," Mr. Dokmecioglu said. "We saw surges in people drinking coffee, and we saw surges in people not leaving the home."

The beverage company held its full-year guidance of net sales growth of 3% to 4% and adjusted diluted earnings per share of $1.38 to $1.40 in 2020, up from $1.22 in 2019. "We were among the few companies that held the guidance," he said.

In withdrawing guidance, many businesses cited economic uncertainty due to the coronavirus pandemic. At least 220 companies in the S&P 500 withdrew their guidance between Jan. 15 and July 22, according to data tracked and analyzed by Dow Jones Newswires.

Keurig Dr Pepper last week reported second-quarter profit of $298 million, down from $314 million during the year-ago period.

Using its consumer data, Keurig Dr Pepper placed more orders for aluminum cans in expectation of rising sales of canned drinks. Its data also show that many consumers have shifted to a big weekly shopping trip to the supermarket, while buying less at gas stations and convenience stores, Mr. Dokmecioglu said.

Keurig Dr Pepper also is expanding the use of its predictive ordering tool for its direct-to-store distribution channel, Mr. Dokmecioglu said. The tool, which was introduced about 18 months ago, has algorithms that decide which brands to put on the company's more than 6,000 trucks for restocking shelves and how to plan routes across the country. Mr. Dokmecioglu declined to comment on the costs associated with its data-tracking tools.

Larger rivals Coca-Cola Co. and PepsiCo Inc. also operate direct-to-store distribution networks, and like other consumer-goods companies rely on technology to improve efficiency, said Nicholas Johnson, an analyst at Morningstar Research Services LLC.

Keurig Dr Pepper intends to spend $1.4 billion to $1.5 billion on capital expenditures over the three-year period ending 2021, which usually includes technology spending. It hasn't provided an update on its capital-spending plans recently.

Write to Nina Trentmann at nina.trentmann@wsj.com

(END) Dow Jones Newswires

August 06, 2020 18:51 ET (22:51 GMT)

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