Keurig Dr Pepper Reports Strong Earnings While PepsiCo Falters as Tariffs Loom
PepsiCo warned about increased supply chain costs, forecasting earnings per share to fall by 3 percent this year.
In its 2025 guidance, the company said it expects net sales to rise by a mid-single-digit range, with EPS growing in a high-single-digit range.
PepsiCo was more negative in its 2025 outlook, forecasting a low-single-digit increase in organic revenue, with EPS falling by 3 percent.
Earnings reports of Keurig Dr Pepper and PepsiCo come amid new U.S. tariffs on foreign imports, which could impact the two companies very differently. This is primarily due to how each of these companies sources concentrates for their beverages. Concentrates are flavored syrups that are mixed with carbonated water and other ingredients to make soft drinks. Concentrates are usually manufactured at one location and sent to bottling plants where the finished product is made.
Related Stories
The exact details of concentrate plant locations are not publicly revealed by companies.
PepsiCo CEO Ramon Laguarta said the company is expecting “more volatility and uncertainty, particularly related to global trade developments,” which he said the company expects will increase its supply chain costs.
Dr Pepper CEO Tim Cofer was upbeat about the first-quarter results, saying the company’s first-quarter performance “represented a strong start to the year.”
“We delivered healthy top- and bottom-line growth, driven by momentum in key categories and brands, high-quality commercial execution, and disciplined expense management,” he said.
“Our reaffirmed full-year outlook incorporates our latest view of changing market conditions, and we expect another solid year of growth in 2025.”
The Epoch Times has reached out to PepsiCo and Keurig Dr Pepper for comment.
Tariff Impact
Company responses in the food industry have generally varied on the Trump administration’s tariff policies.
Mexican and Canadian imports are facing 25 percent tariffs, while reciprocal tariffs are placed on a host of other nations.
The company produces soup in the United States, which is then exported to Canada. This could be affected by retaliatory tariffs from Canada, Beekhuizen said.
“From a mitigation perspective, we’re closely working with our suppliers to mitigate potential impact. At the same time, depending on how long these tariffs would be in place as well as the extent of the tariffs, we might need to take other actions. And that could include, for instance, pricing for some of our products,” he said.
“I think we’re in danger of exaggerating the impact of the 25 percent increase in the aluminum price relative to the total system,” he said.
While the tariff is not insignificant, it’s not going to “radically change” a multibillion-dollar American business, Quincey said, adding that packaging only makes up a small part of the total cost of their products.
“So firstly, it’s not a billion-dollar problem relative to the input cost. It’s a much more manageable number. And so between mitigation of supply chain, sourcing, weights of the cans, price increase of the cans at some level potentially switch to PET, it’s a manageable problem in the context of the total U.S. business,” he said.
PET is a polyethylene terephthalate, which is a type of clear, durable, and versatile plastic.
Quincey added: “And I don’t think we should—you should not conclude that this is some huge swing factor in the U.S. business. It’s a cost. It will have to be managed.”
