Keurig Dr Pepper Braces For 'Prominent' Tariff Impact In Second Half of 2025 — 'Segment Performance To Remain Subdued'
Beverage company Keurig Dr Pepper Inc. (NASDAQ:KDP) is bracing for a challenging second half of 2025, as rising tariffs and inflationary pressures weigh on its U.S. coffee segment.
Check out the current price of KDP stock here.
What Happened: During its second-quarter earnings call on Thursday, the company’s CEO, Timothy Cofer, acknowledged that “the tariff impacts will become prominent” in the second half of this year.
“We have included all tariffs as implemented as of today. And we know that those tariff impacts will be more prominent and put some additional pressure,” he said.
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In addition to tariffs, the company flagged higher commodity costs and retailer behavior as headwinds. “Commodity inflation will build as we roll into the back half and we roll into our higher cost hedges on green coffee,” Cofer said. “I also think our retail partners will likely continue to manage their inventory levels tightly, in particular on brewers.”
Keurig Dr Pepper plans to implement further pricing actions to mitigate rising costs, but acknowledged the risk of demand softness. “We did a round of pricing at the beginning of the year. We’ve announced another round of pricing that will take effect next month, and we’ll need to closely monitor how that elasticity evolves,” Cofer said.
Despite sequential improvement in Q2, the company struck a cautious tone regarding the segment’s performance for the rest of the year. “We are planning for some segment OI [operating income] pressure in the second half,” Cofer said.
Keurig’s CFO, Sudhanshu Priyadarshi, echoed similar concerns, noting that rising tariffs, more expensive coffee hedges, and uncertain consumer sensitivity to further price hikes are expected to weigh on the segment's operating income through the rest of 2025.
Why It Matters: Recently, Kraft Heinz Co. (NASDAQ:KHC) announced that it would be investing $3 billion in its U.S. factories to help offset the impact of President Donald Trump’s tariffs. This was particularly aimed at its Maxwell House coffee brand, which is now subject to import tariffs.
Keurig released its second-quarter results on Thursday, reporting $4.16 billion in sales, up 6.1% year-over-year, ahead of consensus estimates at $4.13 billion. Profits during the quarter stood at $0.49 per share, which was broadly in-line with estimates.
Price Action: Shares of Keurig were up 0.21% on Thursday, trading at $33.57, and another 0.39% after hours.
According to Benzinga’s Edge Stock Rankings, Keurig shares are ranked low across key metrics, but have a favorable price trend in the short and medium terms. Click here for deeper insights on the stock, its peers and competitors.
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Posted-In: Earnings
