Can Keurig's U.S. Refreshment Beverages Sustain Growth Momentum?

Keurig Dr Pepper’s KDP U.S. Refreshment Beverages segment has emerged as a key growth driver in the current quarter, reflecting the strength of both legacy brands and newer innovations in an increasingly competitive market. Consumers continue to embrace a mix of traditional favorites and healthier, functional options, creating opportunities for companies to expand their portfolios and capture share. With resilient demand despite inflationary pressures, the segment has shown that it can adapt to shifting preferences while delivering solid financial performance.

In the second quarter of 2025, Keurig’s U.S. Refreshment Beverages segment posted a robust 10.5% year-over-year net sales increase, powered by a 9.5% gain in volume mix and modest pricing growth. Much of this momentum stemmed from the GHOST energy acquisition, which added 6.6 percentage points, alongside steady base growth from Dr Pepper and 7UP. Segment operating income rose 8% year over year, demonstrating that top-line expansion is translating effectively into profit growth, supported by strong brand equity and disciplined execution.

Growth has been broad-based across categories, with carbonated soft drinks, sports hydration and energy all delivering impressive gains. Dr Pepper and 7UP continued to expand share, while energy brands including GHOST, C4 and Bloom surpassed a $1 billion annual run rate, with retail sales growth exceeding 30% in the quarter. Product innovation, such as the launch of Dr Pepper Blackberry and increased distribution of Dr Pepper Zero, also reinforced the balance between heritage favorites and fast-growing new entrants.

Looking ahead, management expects the segment to remain a mid-single-digit contributor to long-term growth, though sustaining momentum will require careful navigation of inflation, competition and affordability concerns. Still, with strong execution and expanding distribution, the segment is well-positioned to carry its growth trajectory into the rest of 2025.

Keurig’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #3 (Hold) company have declined 17.2% in the past three months, underperforming both the industry and the broader Consumer Staples sector, which lost 5.5% and 3.7%, respectively. However, the stock also lagged the S&P 500, which gained 9% in the same time period.

KDP Stock's Past Three-Month Performance

Is KDP a Value Play Stock?

Keurig currently trades at a forward 12-month P/E ratio of 12.84X, lower than the industry average of 17.40X and the sector average of 16.96X. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.

KDP P/E Ratio (Forward 12 Months)

Stocks to Consider

Celsius Holdings Inc. CELH specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. The company presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average. The Zacks Consensus Estimate for Celsius’ current financial-year sales and EPS indicates growth of 77.7% and 54.3%, respectively, from the year-ago reported numbers.

PepsiCo Inc. PEP is one of the leading global food and beverage companies. It currently has a Zacks Rank of 2 (Buy).

PepsiCo delivered a trailing four-quarter earnings surprise of 1%, on average. The Zacks Consensus Estimate for PEP’s current financial-year sales indicates growth of 1.3% from the year-ago reported number and that for EPS suggests a 1.6% decline.

Zevia PBC ZVIA focused on addressing health challenges resulting from excess sugar consumption by offering a portfolio of zero-sugar, zero-calorie, naturally sweetened beverages. It carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for ZVIA’s current financial-year sales and EPS implies growth of 3.8% and 48.4%, respectively, from the year-ago reported numbers. ZVIA delivered a trailing four-quarter average earnings surprise of 45.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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