The K-shaped recovery took another big step forward today when - with stocks at all time high and bitcoin exchange Coinbase announcing it is filing for a confidential IPO - one of the most iconic US companies, Coca-Cola, said it was cutting 2,200 jobs globally, including 1,200 in the US, as the coronavirus pandemic forces the soda giant to restructure, i.e., slash costs. The reductions amount to roughly 12% of the company’s US workforce.
Coke will make the job cuts through a combination of buyouts and layoffs, a spokesman told the WSJ. In August, Coke offered voluntary-separation packages to about 4,000 employees in the U.S. and Canada, but it hasn't said how many people participated.
The Atlanta-based company, which had 86,000 employees at the start of the year, has been slashing expenses and products amid the covid-induced wasteland that has resulted in closures of restaurants, bars, movie theaters and sports stadiums. In Q3, Coke reported $8.7 billion in revenue, down 9% Y/Y while profit fell a third from a year ago to $1.74 billion.
According to the Journal, Coke’s North America business unit will be reorganized to look more like other units around the world, by which it means "streamlined" in order to eliminate unnecessary overhead.
Until now in North America, the company’s fountain-machine business, bottle-and-can business and Minute Maid operations each had their own teams for marketing, communicating with retailers and coordinating with bottlers. Those teams will be consolidated, the company said.
Coke expects the job cuts to result in annual savings of between $350 million and $550 million, the spokesman said. The latest cuts include about 500 jobs in the Atlanta metro area, where the company is based.
In addition to the layoffs, Coke previously said it would also slash its 430 master brands by about half, to 200, narrowing its beverage portfolio to products that are growing and can achieve a large scale. The company is also retiring its Tab soda and Zico coconut water brands, and earlier this year closed its Odwalla juice and smoothie business.
The restructuring won't affect Coke’s bottling operations, which are mostly independent. Those bottlers employ hundreds of thousands of people around the globe.
The restructuring will allow the company to function more like a network needing “less decision making, less bureaucracy and ultimately less people,” Coke finance chief John Murphy said in a November interview. When a company faces such an immediate disruption in sales, “it really forces you to re-evaluate through a more stringent lens,” he said, referring to the blow to Coke’s business from the pandemic.