Keurig Dr Pepper cautions ‘2021 arguably more difficult … than 2020’ despite strong Q2 results

“Just as we experienced in 2020, the COVID recovery period in 2021 is creating significant volatility in demand, which has required us to remain nimble and flexible in managing our business,”​ Gamgort told investment analysts last week during the company’s second quarter earnings call.

“We also face the added challenges of input cost and labor inflation, transportation constraints, labor shortages and supply chain disruptions, making 2021 arguably more difficult in many respects than 2020​,” he added, noting that he expects at least “another six to 12 months of macro volatility before a more predictable operating environment emerges.”

Gamgort explained that part of the ongoing challenge is the “mixed signals”​ coming from different regional responses to the pandemic, including reopening in some areas and “problems in others.”

The extreme degree of some challenges also is complicating Keurig Dr Pepper’s response, he added.

For example, he explained that while “we’ve all dealt with inflation”​ in commodities and input costs before now, “we’ve never seen this level of labor inflation.”

The unclear origin of the labor shortage also is hindering the company’s response to the challenge.

“I have no idea how much of it is tied to government stimulus and concern about going back to work, how much is tied to the fact that kids need to be in school in the fall to free up the labor force who are watching the children. We are going to know a lot more when September, October rolls around, but I’d say this is very much unprecedented in all of our careers,”​ he said.

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