by Umar Farooq
The world’s biggest beverage maker will cut 1200 jobs as it deepens its cost cutting measures.
The cost-cutting comes as the soda giant has found its legacy brands pressuring by a consumer trend toward foods and drinks they deem healthier, a trend executives say will only accelerate over time. Coca-Cola sales have taken a hit as consumers in North America and Europe have increasingly turned away from sugary drinks. Its global carbonated drink sales fell 1% in the quarter to 31 March, Coca-Cola said.
The soda giant said it would trim the jobs beginning in the second half of 2017 and carrying into 2018 as it tries to become “faster and more agile.” “While these necessary changes are always very difficult, they will help us do fewer things better to lead and support our operating units,” said James Quincey, who will succeed Muhtar Kent to become CEO of Coke (KO, -0.51%) this year. Overall, the soda manufacturer said it would expand the company’s current cost-savings program by $800 million to $3.8 billion. Quincey said the company aims to re-invest “at least half of the savings,” though Coke is still finalizing a complete plan for how it will use all the savings beyond simply saying it would create value for shareholders.
“Coca-Cola Co. said the cuts would help it find another $800 million in annualized savings, in addition to the $3 billion the company previously said it is trimming. Most those savings are expected to be realized in 2018 and 2019, it said. The cuts are part of a comprehensive review and won’t be concentrated in any one place, the company said. The company has also been reshaping its business by selling back its bottling and distribution operations to independent bottlers. That means Coke is becoming more focused on selling concentrates to bottlers and marketing for its brands. James Quincey who prepares to officially take over as CEO next week, has said he plans to focus on making Coke a “total beverage company,” meaning it will more aggressively seek growth in promising drinks other than soda to better reflect changing tastes. The efforts have included putting more marketing behind options like Smartwater, including a carbonated variety of the bottled water.” usnews
The eating habits are changing, posing problems for coca cola moving ahead. New startups offering more healthier foods have built up impressive sales because consumers say they want the cleaner labels those smaller firms often offer. As a result, companies like Coca-Cola—which is highly exposed to the declining soda industry—have had to change. Coke has aimed to bulk up the company’s healthier offerings by selling more Smartwater, flavored water Vitaminwater, and dairy brand Fairlie.
by Umar Farooq