Dive Brief:
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Coca-Cola plans to cut between 250 and 350 jobs — mainly management positions at its Atlanta headquarters — as part of an ongoing reorganization. The layoffs will start this week and be staggered during the next few months.
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The company will eliminate some jobs, "re-orient others" and create new positions, so it hasn't stopped hiring, Kent Landers, a Coca-Cola spokesman, told Food Dive. These changes will help "meet the accelerated growth agenda of our business," he said.
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These newly announced cuts are separate from the company's reduction of about 1,200 jobs worldwide announced last year, with about half of those taking place in Atlanta. Coke has about 8,000 total employees in its North American business unit, with about 5,000 of them working in Atlanta or at another facility in Alpharetta, Georgia. Globally, Coke employs more than 100,000 people.
Dive Insight:
Coca-Cola's net revenues dropped 20% during the fourth quarter, according to its most recent earnings report, in part due to the process of refranchising bottling facilities. Sales of branded water, sports drinks, and tea and coffee beverages — a focus of growth for the company — were up compared to its core soda business as consumers trend away from sugary drinks and toward healthier and lower-calorie ones.
"Over the last year we have been implementing a new operating model that returns ownership of our bottling system to local operators, increases our productivity and creates a performance-driven culture to accelerate the growth of our total beverage business in the United States and globally," Landers said. "As part of this, we expect there to be a net reduction of about 250-350 positions in our U.S. business in the coming months."
James Quincey, Coca-Cola's CEO, has promised to transform Coke into a "total beverage company." According to the Atlanta Business Chronicle, Quincy told investors back in November that the previous Atlanta layoffs were "some more painful changes" required by selling off the bottling companies, bringing in new digital technology and shrinking the head office. "So we're taking the necessary steps in a Coke way — humanely and with dignity — but we're gonna be productive," he said.
Coke's soda competitors, along with Big Food manufacturers, have also been laying off staff as they look to consolidate operations and trim wherever they can in the face of slumping sales. PepsiCo announced last year it would cut 80 to 100 jobs in Philadelphia after sales dropped 40% following adoption of a soda tax.
Kellogg said last year it would likely lay off 1,100 employees, on top of an earlier plan to cut 250 jobs, in an efficiency drive called "Project K" designed to save $425 million to $475 million per year. Tyson Foods announced last fall it would eliminate 450 positions at its Arkansas headquarters and at corporate offices in Chicago and Cincinnati. And Kraft Heinz laid off 1,200 people in the U.S. and Canada in 2016 and 2017, including salaried workers at its headquarters in Chicago and Pittsburgh, with a stated goal of ultimately shedding 5,150 positions.
Large companies often seek to create a leaner and more efficient organization by cutting jobs. With Coca-Cola overhauling its bottling operations, the company no longer needs as many people in these positions. It appears these layoffs are part of a broader reset rather than a sign of an underlying problem. As the company looks to expand its presence in the beverage space — and develops new technology to make its drinks more appealing — Coca-Cola will likely look to boost its ranks in these areas.
Some companies make efforts to slim down in order to appear more appealing in a potential acquisition, and Coke could be one of them. Seeking Alpha noted last August that Anheuser-Busch InBev was reportedly checking out a purchase in 2016, while Kraft Heinz was said to be considering buying PepsiCo. At the time, Coke was valued at $176 billion, according to CNBC, although its market cap has risen by about $10 billion since then.
Three years ago, Coke announced that it planned to cut operating costs by $3 billion by 2019, and Quincey said last year that target had increased to $3.8 billion, according to the Atlanta Journal-Constitution. That's a big target and a tough goal to reach just from reducing administrative overhead unless more job cuts — and/or major changes to its product lines — are in the works.