In a bid to achieve additional US$800 million in cost savings over the next few years, Coca-Cola has revealed significant strategy changes, including 1,200 job cuts to be made throughout next year.
In a statement to Marketing, Coca-Cola confirmed the move saying that in February, it shared with its people plans of “designing a new operating model to support its growth strategy and transform the business into a true total beverage company”.
“Today, we shared that our work to implement a new lean corporate center will result in approximately 1,200 job reductions beginning in the second half of 2017 and carrying into 2018. These changes, while difficult, will help us create a faster, leaner and more agile corporate organisation that is focused on doing fewer things better with a clear focus on serving our operating units around the world while also maintaining appropriate corporate governance for the company,” said a Coca-Cola spokesperson.
“As has long been our culture at Coca-Cola, we do not take decisions about job impacts lightly and will treat our people with dignity, fairness and respect throughout this process. We are committed to moving quickly to build an organization that is agile and positioned for faster growth.”
Without commenting directly on the APAC marketing team, the spokesperson added that positions in all parts of the corporate organization, and at various levels will be eliminated to redesign the organisation to better support field operations and accelerate overall growth.
In a Q&A on the Q1 financial results release, James Quincy (pictured), incoming CEO, confirmed plans for the beverage company to broaden its consumer-centric portfolio. This comes as the company looks towards profit growth as opposed to volume growth.
According to Bloomberg, this is included in the introduction of smaller cans and bottles, which allows for higher prices per ounce compared to larger packaging. The concept is also slated to be rolled out in emerging markets after promotions in USA.
“Hopefully you’ll see that we’ve laid out a clear path to transform the company for the future to be bigger than our past – to be a company that is bigger than the Coca-Cola brand – to be a total beverage company that is well positioned across a wide range of beverage categories,” Quincy said in a Q&A on the Q1 results release.
The move follows the release of its recent quarterly results, which saw the beverage brand missing its estimates, with net revenues declining 11% to US$9.1 billion. This was a result of impact from acquisitions, divestitures and structural changes with 10% being related to the ongoing refranchising of bottling territories and a foreign currency exchange headwind of 1%.
Coca-Cola’s change in strategy also follows a slew of changes it had announced over the past year. Last April, the brand unveiled a complete overhaul of its packaging, furthering its new ‘one brand’ global marketing strategy. “One-Brand” seeks to unite Coca-Cola, Coca-Cola Light, Coca-Cola Zero and Coca-Cola Life under one the iconic Coca-Cola brand.
Coke said the new designs will help consumers make informed choices, by identifying each Coca-Cola product with its signature color – black for Coke Zero, silver for Coca-Cola Light and green for Coca-Cola Life. The brand has rolled-out the initiative in Singapore, Malaysia and Hong Kong.
C-suite changes to reflect new strategy
The brand is also undergoing a fair bit of senior level changes. As part of the new structure, its new CEO James Quincey, who is the current chief operating officer, will take over the top job of the company on 1 May from Muhtar Kent. The beverage company also got rid of its global chief marketing officer function by merging it with “customer and commercial leadership as well as strategy” to create a new chief growth officer role. This saw Marcos de Quinto retiring after a near 35-year career at the company.
Meanwhile, Francisco Crespo, currently president of the Mexico business unit, has been tapped for the newly created role of chief growth officer. According to Bloomberg, a new chief innovation officer role is also in the works, with both of the new roles reporting to the CEO.
“Next week I will proudly hand over the CEO reins to James Quincey with full confidence that he will complete the Company’s transformation and lead our aggressive growth agenda. His vision of accelerating The Coca-Cola Company’s evolution into a total beverage business with a focus on driving sustainable growth across a broad portfolio is exciting for all stakeholders, and he has my full support,” Kent added during the release of the latest financial results.