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Coca-Cola Co (NYSE:KO) Expects To Prune Its Business Units To 9 From 17 In 4 Geographies And Offer A Buyout To 4,000 Employees: Focus On Sports Drinks, Teas And Coffees

Coca-Cola Co (NYSE:KO) is reorganizing its business units. It plans to focus on popular segments such as products that include Teas, Coffees, Sports Drinks, and the Coca-Cola line. However, it will expand the growing products that include plant-based drinks and sparkling water. The company intends to cut 4,000 jobs across the world.

Those who joined Coca-Cola on or before September 1, 2017, will get affected because of the job cuts. Coca-Cola also plans to downsize the businesses to 9 from 17 worldwide to stay afloat because of the impact of coronavirus crises.

Will spend $550 million for severance

Coca-Cola expects to spend between $350 million and $550 million for severance across the world. It has 86,200 employees on its payroll as of December 31, 2019, and positioned 10,100 of them in the US businesses. Most of the job cuts are proposed in the US, Puerto Rico, and Canada. It is the largest job cut in two decades for the drinks giant.

More discontinued products

Coca-Cola expects to discontinue product categories like Zombie brands, which are not generating impressive sales. In July 2020, the company removed the Odwalla Smoothie brand from its product range. James Quincey, CEO of Coca-Cola said the company is prioritizing stronger and bigger brands to satisfy consumer needs. However, it may discontinue some more products soon as part of the reorganization.

Focuses on five marketing categories

Coca-Cola holds 400 brands across the world. James further said the smaller brands account for 50% of its product line but generate only 2% of the revenues. In the aftermath of reorganization, the company will focus its leadership on categories such as plant-based products (milk, juice, nutrition, and plant); sports drinks, teas, coffees, and hydration; sparkling flavors; Coca-Cola, and upcoming categories. The company expects to unveil an innovative ‘Coffee plus soda hybrid drink’ in the US early next year.

Sales decline

When other companies are struggling to survive at this difficult juncture, Coca-Cola is moving ahead with minor changes in its organization. However, it posted a decline of 28% in Q2 2020, to $7.2 billion. It is on the backdrop of closures of bars and restaurants. Coca-Cola improved its sales in June and May 2020.

Published by Donna Fago

I believe in writing content Informing investors with the knowledge they need to invest better today- I have been following the markets for many years and was asked to join the team at recently due to my passion for the markets.

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