Coca-Cola, Atlanta, announced today, April 25, it will cut 1,200 jobs, the latest major food manufacturer to accelerate its cost-cutting efforts as the industry struggles with a weak growth outlook. The soda company said it would trim the job cuts will take place beginning in the second half of 2017 and 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 as CEO of Coke later this year. Coca-Cola also reported it would expand its 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 reports say it's still finalizing an overall plan on how it will use all of the savings beyond simply saying it would create value for shareholders.The maker of Fanta, Sprite and Smartwater added the job cuts will come from its corporate staff around the world.
The announcement came as many major food and beverage manufacturers are eliminating jobs as a way to trim costs and restructure their operations. Big Food manufacturers are discovering their legacy brands are pressured by consumer trends toward foods and drinks they deem healthier, a trend executives say will only accelerate over time. Others companies that have cut jobs include Hershey, General Mills and Kellogg. All have been under pressure to reduce expenses to boost cash flow and could be influenced by the aggressive at 3G-backed Kraft Heinz moves that put some pressure on the others to step up their game.
Said Quincey, "We are rapidly evolving our growth model to make changes that will result in an even more consumer-centric portfolio that meets people's changing tastes and preferences. Importantly, these portfolio changes will help our consumers moderate the amount of added sugar they consume. In addition, as we approach the end of our refranchising and implement our new, more agile operating model, we are expanding our productivity program. Our revamped portfolio, a stronger global bottling system and a leaner enterprise structure will allow us to capture an increasing share of the vibrant value growth available in the beverage industry and to deliver value for our shareowners. It will be an honor and a privilege to lead the organization as CEO, and I look forward to working with our people around the world to accelerate our growth."
The company's total volume was even for the quarter because of a 1-percent drop in sparkling soft drinks and a flat performance for its juice, dairy and plant-based beverages. There was some growth for Coke's waters and sports drinks (up 3 percent) and tea and coffee (up 2 percent). Coke reportedly aims to boost its healthier offerings by selling more Smartwater, flavored water Vitaminwater and dairy brand Fairlife.
According to a Forbes article, financial analysts have wondered if acquisitions, including those for food brands that which less expose Coke to the current beverage trends, might be in the offing. Quincey replied that for a deal to occur, it would need to be financially attractive, and be able to "unite a willing buyer with a willing seller." Some food executives say acquisitions in the soft drink space can be a challenge as startups command valuations that are too high to justify. Coke's rivals each landed deals last year: Dr Pepper Snapple bought Bai Brands; and PepsiCo acquired KeVita. Quincey reported Coke will continue to make "bolt-on" acquisitions, but will focus more on what it can organically.