Keurig Says at-Home Coffee Slows as Consumers Return to Work

Three years out from the initial COVID-19 outbreak, consumers are just getting back to normal.

Texas-based beverage giant Keurig Dr Pepper shared on a call with analysts Thursday (Feb. 23) discussing its fourth-quarter 2022 financial results that, even now, consumption trends continue to be impacted by the pandemic, with consumer mobility continuing to increase throughout last year.

“After significant at-home coffee volume growth in 2020 and 2021, due to increased consumer time spent at home, we began to see a deceleration in 2022,” said the beverage company’s chief financial officer, Sudhanshu Priyadarshi, on an earnings call. “This occurred globally in all forms of at-home coffee, which is quite unprecedented. We believe the primary contributors are a reduction in time spent at home for consumers, which we know correlates with coffee consumption, and the elasticity impact of significant pricing actions taken in 2022.

PYMNTS research revealed that, even as consumers continue to work remotely, many of those telecommuters are not doing their jobs from home but from all over. Findings from the study “The ConnectedEconomy™ Monthly Report: The Work-From-Anywhere Summer,” which drew from a survey of more than 2,700 U.S. consumers, found that 16% worked remotely from somewhere other than their homes every day in July.

Indeed, with coffee shops a popular destination for these remote workers, it makes sense that home brewing would be on the decline.

“What happened, especially in the second half of 2022 is that there was this global slowdown in volume of coffee that’s driven, we believe, primarily by mobility,” CEO Robert Gamgort explained on the call.

Additionally, as consumers purchase fewer coffee-brewing appliances from the company at brick-and-mortar retailers, Keurig Dr Pepper is turning its focus to digital sales of its products.

“We have seen a challenged retail environment,” Gamgort said. “While we’re working with [retailers] to continue to drive growth of the whole category and our brewers specifically, we also think it’s smart to continue to look for other opportunities to pick up that consumer demand elsewhere, where the consumer demand is moving. A lot of that, as you know, is moving towards eCommerce.”

Certainly, eCommerce adoption is on the rise. PYMNTS’ year-end 2022 report, “12 Months of the ConnectedEconomy™,” found that 64% of consumers shopped on digital marketplaces in November, marking a 3% year-over-year increase. Plus, 50% of consumers surveyed ordered on merchants’ retail sites for home delivery, representing an 18% relative to 2021.

However, consumers facing economic pressures have been holding off on purchases bigger-ticket items such as appliances. PYMNTS’ study “New Reality Check: The Paycheck-to-Paycheck Report: The Economic Outlook and Sentiment Edition,” created in collaboration with LendingClub, found that only 24% of consumers plan to purchase expensive electronics or appliances in 2023.

Yet, Keurig Dr Pepper is relying on consumers’ increasing demand for digital connectivity to offset this reluctance, supplementing its appliances with mobile offerings.

“In 2022, we expanded our lineup of connected brewers with the introduction of K-Café Smart, which has received outstanding consumer and professional reviews, [and] expanded the Keurig app, which works with both connected and non-connected brewers to help consumers make barista quality specialty coffee beverages at home,” Gamgort said.