Black Rifle Coffee's Q1 2025: Unpacking Contradictions on Energy Distribution, Market Trends, and Margin Guidance

Energy drink distribution expectations, trade spend and promotional strategy, coffee market trends in economic downturns, gross margin guidance and investments, Walmart market share and distribution strategy are the key contradictions discussed in Black Rifle Coffee Company's latest 2025Q1 earnings call.



Revenue and Segment Performance:
- Black Rifle Coffee Co reported a 9% decline in first quarter revenue to $90.3 million, primarily due to the impact of $8.5 million in barter transactions and a $3.4 million benefit from a change in loyalty rewards accruals in the prior year.
- The Wholesale segment, which primarily sells packaged coffee and ready-to-drink beverages to retailers, saw a 6% year-over-year decline, but excluding nonrecurring revenue from the prior year, sales grew 9%.
- Direct-to-consumer segment revenue declined 15% in the first quarter, though excluding the loyalty rewards accrual change impact, the decrease was 5%, driven by increased retail availability and broader shifts in consumer behavior.

Productivity and Cost Management:
- Gross margin declined 680 basis points to 36% of sales in the first quarter, with pressures from increased investment in trade and pricing (500 basis points), green coffee inflation (330 basis points), and loyalty rewards change (200 basis points).
- Operating efficiencies led to a 11% decline in salaries, wages, and benefits and a 23% decrease in G&A expenses, driven by lower professional services spend and corporate infrastructure reductions.

New Energy Drink Launch:
- Black Rifle Energy launched into retail in January, and by the end of the first quarter, it was available in nearly 12,000 retail locations, reaching 21% ACV.
- The early traction was bolstered by a partnership with Keurig Dr Pepper, providing access to an extensive direct store delivery network covering 180,000 doors.

Tariff and Inflation Impact:
- The company estimates that tariffs under the existing framework will result in approximately $5 million impact to EBITDA in 2025.
- A price increase was implemented to offset rising green coffee prices, which have more than doubled since the beginning of 2024, with a modest top-line benefit expected in the second half of 2025.