Plus, KDP says DSD partners are fueling sales growth͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ 
 
 
BevnetJuly 25, 2024
DAILY BRIEFING
Today's news & insights for the beverage industry.

In this issue of Daily Briefing

  • 📊 KDP: DSD Partners Fuel Sales
  • 🇨🇭 Nestlé Touts Strong Organic Growth
  • 🔢 Non-Alc Bev Sales ‘Broadly Stable’ 
  • 📈 Trends At IFT First & Another PRIME Lawsuit

📰 Today's Top Story

🥤J.D.’s Joke? (Diet) Dew Disrespect

🥤J.D.’s Joke? (Diet) Dew Disrespect

Is Diet Mountain Dew racist? Well, no… but why would it be? That’s the head scratching question social media users, cultural analysts, and, uh, beverage trade journalists have been trying to answer this week after the Republican Vice Presidential candidate, J.D. Vance, invoked the idea during a stump speech on Monday. The strange moment even had a former GOP advisor calling it “cringe.”

Vance was speaking at his hometown high school in Middletown, Ohio when he suggested that Democrats “say it’s racist to do anything.”

“I had a Diet Mountain Dew yesterday, and one today, and I’m sure they’re gonna call that racist too,” said the junior Senator from Ohio, then adding “It’s good.” 

The line was quickly met with confusion and derision online, where users on X (a.k.a. Twitter) – including some Democratic politicians – mocked the idea that anyone would consider the soft drink to be racist. Mostly, people took offense at his preference for the aspartame-packed diet version of PepsiCo’s citrus soda.

Now, it’s obvious that this was meant to be a joke trying to ridicule the American left as being overly sensitive. Whether it was a good joke, well, we as objective journalists are not in a position to weigh in (though, conventional wisdom in comedy suggests if you have to spend this much energy explaining the punchline you might want to workshop it some more). However, the choice to shout out Diet Mountain Dew might have an ounce of logic behind it.

As The Atlantic pointed out, Mountain Dew has a history of association with Appalachia and the hillbilly culture Vance claims to hail from. Long before it became the gamer drink of choice, the Dew (a name that doubles as old slang for moonshine) used to tout a hillbilly mascot promising the soda would “tickle yore innards” and as recently as 2015 the brand was still most popular in the region.

So, perhaps Vance deserves some more credit for knowing his audience. More recently, Mountain Dew – and in particular Diet Mountain Dew – appeared to over-index with Republicans. A day after the speech, Republican researcher Will Feltus posted to X results from a 2023 NielsenIQ and Scarborough survey which found that although only 1.8% of Americans called Diet Mountain Dew their preferred soft drink of choice, Republicans rated 16 points higher than Democrats in choosing the drink at 46.1% right to 30.1% left – more than any other major soda brand. But does that make it racist? How about we all just quit with the name-calling, already?

Meanwhile, Democrats had Fanta in their corner with a 32.1 point spread, so maybe that’s something for Kamala Harris to consider.

While the soda wars clash with political campaigns, calm yourself down with this Lana Del Rey throwback.

 

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📊 KDP: DSD Partnerships Fuel Single Digit Sales Growth

📊 KDP: DSD Partnerships Fuel Single Digit Sales Growth

Keurig Dr Pepper reported its Q2 earnings this morning with net sales up 3.5% to $3.9 billion despite challenges in coffee pricing. 

🔥 The beverage giant recently turned up the CSD heat with rival PepsiCo and has been leveraging its DSD network with brands like C4 Energy, Electrolit, Black Rifle Coffee and La Colombe. KDP CEO Tim Cofer said on the call this focus has been “the single greatest driver of top line acceleration.” Let’s look at the numbers:

  • Adjusted operating income was $723 million, up 11.9% from Q2 2023.
  • Adjusted operating margin of 30% in the quarter.
  • U.S. refreshments segment sales were up to $2.4 billion, a 3.3% increase from the same period last year. 
  • U.S. coffee sales were down to $950 million, a $20 million decrease year-over-year.
  • International net sales were $565 million with a 14.7% rise in constant currency segment.

🏭 Company leadership expressed confidence that its planned acquisition of Kalil Bottling will continue to bring “competitive advantage” to the drink maker in the Southwest. Additionally, the company said green coffee prices continue to drag on profits in the category but it is hedging to reduce the impact on its P&L in the back half of the year.

BevNET Insiders can read the full report for all the insights.

 

🇨🇭 Nestlé CEO Touts Strong Organic Growth in H1 2024

Nestlé is projecting a strong sense of momentum and “real internal growth” as it reports organic revenue growth of 2.1% in the first six months of 2024, the company announced today in its half-year earnings results.

❤️‍🩹 Nestlé CEO Mark Schneider noted that divisions within the company, such as Nestlé Health Science, are “recovering as planned” and the business is preparing for “a strong second half” with new innovations expected to help maintain growth.

📊 Although total reported sales fell 2.7% to CHF 45 billion (around $51.1 billion), the conglomerate benefited from other metrics including a 1.8% EPS increase, 2% organic growth in retail sales, and 10.6% improvement in ecommerce.

Coffee proved to be the largest contributor to organic growth, up “mid single-digit” with Nescafé, Nespresso and Starbucks all performing well. Waters also rose, with “continued momentum” for sparkling brands S.Pellegrino and Perrier.

 

🔢 Data: Non-Alc Beverage Sales ‘Healthy and Broadly Stable’ in Early July

Non-alcoholic beverage sales growth remained “healthy and broadly stable” on a sequential basis in the two-week period ending July 13, according to the latest analysis of NielsenIQ retail scanner data by Goldman Sachs Equity Research. Here’s the top-level view: 

  • Overall dollar sales grew +3.6% in the two-week period, slowing from +3.9% in the four-week period, but up from +3.3% in the 12-week period.
  • Volume sales moderately accelerated to 3.7% in the period compared to +3.4% in the four-weeks and +2.1% for 12-weeks. 
  • Average pricing growth moderated to -0.1%, per the report, versus +0.5% in the four-week period and +1.2% in the 12-week period. 

BevNET Insiders can access the complete recap with the latest data from across categories later today. 

 

🎙️ Now Streaming: CPG Week

📈 Trends At IFT First & Another PRIME Lawsuit

📈 Trends At IFT First & Another PRIME Lawsuit

What was on the floor at IFT First? Why is PRIME in more legal hot water? And would anyone really wear 5-Hour Energy cufflinks? 

This week Nosh managing editor Monica Watrous and senior reporters Lukas Southard and Brad Avery explore the latest news from the CPG industry.

🥼 After a couple days in Chicago last week, Lukas shares what trends proliferated the show floor of the Institute of Food Technologists’ yearly expo including weight reduction ingredients, alternative sweeteners and a number of innovative new products.

🧑‍⚖️ Later in the show, Brad digs through PRIME’s most recent legal issues, this time raising the ire of the U.S. Olympic Committee over a LTO Kevin Durant hydration drink.

Listen to the full episode on Nosh.

Like what you are listening to? Please don’t hesitate to rate our show and leave a review on your podcast platform of choice.

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