Keurig Dr Pepper (NYSE:DPS) is in the early days of its post-merger existence but it has reported some encouraging results. Using pro forma figures to give an apples-to-apples comparison, the combined entity saw revenue rise by 2.9% over the previous year. The new company breaks its business down into four segments: packaged beverages, coffee systems, beverage concentrates, and Latin America. The first two account for about 80% of its sales.

In this segment from Industry Focus: Consumer Goods, host Vincent Shen and contributor Daniel Kline discuss the beverage giant's most recent quarterly results.

A full transcript follows the video.

This video was recorded on Dec. 11, 2018.

Vincent Shen: Yeah. To give listeners an idea of some of the headline numbers and performance from this combined report revenue -- oh, I should add, all these figures I'm about to use are pro forma, adjusted essentially so it's an apples-to-apples comparison for this quarter where it's a combined entity to the prior year as if it were a combined entity at that time.

Revenue up 2.9% to $2.9 billion over those pro forma prior-year figures. Again, in terms of annual revenue, as Dan mentioned, it's amounting to be about a $11 billion business. Net income up 19% year over year to $301 million. The way the company reports for its business, it breaks it down into four segments. In descending order by revenue, we have Packaged Beverages, Coffee Systems, Beverage Concentrates, and then Latin America Beverages. Package Beverages is the core business where the company's producing and distributing its own drinks, some third-party brands. Coffee Systems is that legacy Keurig Green Mountain business. Beverage Concentrates is when they're selling these concentrates to bottlers and fountain customers. And then, the last one, obviously, their beverage business focus in Latin America.

The two biggest segments are Packaged Beverages and the Coffee Systems. Together, they make up over 80% of the company's top line and, I think, drive a lot of the story for the company. Any updates specific to those two segments, Dan, that you want to highlight?

Dan Kline: One I thought was really interesting -- you and I used to cover Keurig when it was a publicly traded company. We'd look at the K-cup sales as an indicator of where the company was going. There was a lot of thought that Keurig had plateaued, and that because of some of the environmental backlash, there was going to be a slowdown. And we see here that K-cup sales are actually up 3% year over year in the quarter. Brewer sales, which stunned me, were up 8%. And that's on the strength of the company launching two new, more functional, they make lattes, cappuccinos, without having to use a different pod. The company has struggled with that, go from the basic cup of coffee to go to the full latte/ cappuccino. If you remember, the Vue struggled. Now, they have a system where you don't have to buy anything special, you just have to add milk, and it will make you those products. And consumers are really liking it.

They also had success with a revised version of their Mini. I'm looking over my Keurig Mini just off-camera here. The new one is much sleeker, it takes up a lot less shelf space. Consumers have bought, which, I have to be honest, surprises me, because I've never particularly cared for the cup of coffee a Keurig makes.

Shen: I will say, that 8% growth, especially for the volume in brewers, that's a nice longer-term signal, where they're growing that installed base of devices. And ultimately, that's what they want. Once that device is in your home, there exists the potential for them to create that more sustainable recurring revenue with the pods.

Something with the pods that they've changed is the way they view pricing. I think in the beginning, they realized that what they called a barrier to entry for consumers to their whole Keurig system is the price of the pods being expensive, them having to deal with lower-price competitors, getting some public backlash from trying to lock out people using these third-party pods. But now, they're approaching it from the view that they have to lower their prices, make it more competitive, and this recurring revenue will speak for itself.

Kline: I think it's a case where they've proven that this is how Americans make coffee, for the most part. It's a convenience over quality model. You're certainly going to get the people like me, who are going to sit there and do pour-over cups, or French presses, or who knows what $400 brewer you might have. But for the average office, the average person, this is the standard. The other thing that staying part of this JAB Holdings family is, is you're starting to see a couple of more partnerships within that family. The ability to roll in all those different coffee brands --Douwe Egberts and Caribou and I can't even list all of them, Peet's is one. You have this in your home, and now, JAB, Dr. Pepper, they can make all of these new deals to keep it interesting. Tim Hortons is one they just partnered with, and that's the biggest coffee brand in Canada. So, being able to have that as your flagship for that market should continue to push sales.

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