The world’s biggest beverage maker will cut 1200 jobs as it deepens its cost cutting measures.
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.
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
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.