Coca-Cola said Tuesday it will cut 1,200 corporate jobs this year as part of an expanded cost-cutting program as it grapples with sluggish soda sales and internal restructuring.
Coke President James Quincey, who takes over as chief executive of the Atlanta giant on May 1, announced the job cuts during a conference call with investors after the company’s first-quarter earnings announcement.
Quincey said most of the job cuts will be at the company’s Atlanta headquarters.
The company has about 7,500 employees in metro Atlanta and 9,000 in Georgia, including both bottling operations and its corporate headquarters.
“The majority of the job reductions will be in Atlanta,” said Quincey, who is replacing long-time CEO Muhtar Kent. “As painful as it is, I still think that’s the right decision.”
The job cuts will begin in the second half of 2017 and extend into 2018.
A spokesman said the reduction will come through involuntary job cuts or transfers to other positions rather than buy-outs.
Coca-Cola hopes to save about $800 million annually though the layoffs and other actions by 2019, and to reinvest half of that back into the business, mostly in new products.
Quincey and other company officials said the job cuts and other cost-cutting efforts are tied to a years-long restructuring that has included re-tooling bottling operations and buying or launching scores of new products to offset slowing growth of its core soda business.
Customers have been turning to other drinks and avoiding sugary sodas partly due to concerns about the risk of obesity and diabetes. A recent report showed that in 2016, Americans for the first time drank more bottled water than soda on a per capita basis.
Coca-Cola’s worldwide employment swelled past 150,000 workers a few years ago as it bought up its bottlers and distributors around the world, to make them more efficient and quicker at launching new products.
But over the last two years it has been selling or “refranchising” those bottlers at a rapid clip, and its total headcount is expected to fall below 40,000 by next year as many of its current employees follow those bottlers out the door.
Coca-Cola currently has 100,300 employees worldwide, including 57,300 in North America.
As a result of its evolving structure, said Quincey, the company is re-thinking which corporate jobs are still needed.
“We’re working through redesigning the organization to be faster and more agile,” said Quincey. “While these necessary changes are always very difficult, they will help us do fewer things better to lead and support our operating units.”
Coca-Cola spokesman Kent Landers said the job cuts will come from a pool of about 5,500 corporate employees in Atlanta and elsewhere.
Quincey said the company’s cost-cutting goals also will be met through reduced marketing spending and restructuring of some operations.
In 2015, Coca-Cola announced plans to cut costs by $3 billion by 2019. Including the new cost-cutting efforts, Quincey said that cost-cutting target now goes to $3.8 billion by 2019.
The last time Coca-Cola announced big job reductions was in early 2015, when the company said it would cut up to 1,800 jobs, including about 500 at its Atlanta headquarters. The company had about 8,900 people at its midtown Atlanta office at the time.
In Tuesday’s financial report, Coca-Cola reported big drops in both revenue and profits in the first quarter, mostly due to shedding bottling businesses.
Revenue declined 11 percent in the first quarter, to $9.1 billion from $10.3 billion a year earlier.
First quarter profit declined 21 percent, to almost $1.18 billion from $1.48 billion a year earlier.
The report mostly showed flat financial results when the effects of restructuring efforts were removed.
In a report, Wells Fargo Securities analyst Bonnie Herzog said she was encouraged by Coke’s efforts to re-tool its business — but still waiting for improvement in the bottom line.
“We continue to believe that (Coke) has a significant opportunity … following its “transition” period to re-accelerate earnings growth and demonstrate the merits of its strategic overhaul,” she said.
Coca-Cola at a glance
Coke announced it will cut 1,200 jobs in 2017-2018. Most will be at its Atlanta headquarters. Here are the current workforce numbers:
Total employment: 100,300
North America: 57,300
Georgia: 9,000
Metro Atlanta: 7,500
Source: Coca-Cola Co.
James Quincey
President and Chief Operating Officer
Becomes CEO on May 1, succeeding Muhtar Kent
Age: 52
Bio: Born in London. Degree in electrical engineering. Bilingual in English and Spanish. Married; two children.
Career: Hired in 1996. Rising positions with postings in Latin America, Europe and the U.S.
