Coke or Pepsi? For many Americans Coca-Cola has been the gold standard for soda beverages. Despite their market dominance, however, the company has been faced with a difficult financial year due to the pressures of coronavirus. This pressure has resulted in the restructuring of the company. Coca-Cola has reported a plan to both shift its level of employment and restructure its business plan.
As far as employment goes, the company intends to offer voluntary layoff packages to employees within the United States and Puerto Rico so far as they meet the qualifications. Among the qualifications is that they were hired on or before September 1st of 2017. The package will be extended to approximately 4,000 of the company’s 86,000 worldwide employees. The company hopes that many people will accept the severance offers, thereby preventing a large amount of individuals to be involuntarily laid off. Coca-Cola projects that the program will cost between $300 million to $550 million.
When it comes to operations, Coca-Cola is also planning to make changes. They intend to replace the current seventeen divisions with nine new ones that will focus on “scaling new products faster and eliminating the duplication of resources” (NBC News). NBC continues to report that “Coke’s global ventures and bottling investments divisions will be unchanged.” The company hopes to streamline its portfolio and place a greater emphasis on its most successful brands.
In streamlining their products, Coke intends to focus more intensely on a few key categories. Among these include its namesake soda brand; nutrition, juice, milk and plant; sparkling flavors; hydration, sports, coffee and tea; and other emerging products.
The changes to Coca-Cola come as economic pressures have forced them to reconsider their business plan. Though the company is worth over $210 billion, Coke experienced a fall in their stocks at a significant amount of twelve percent. Moreover, the company experienced a fall of 33% in its second quarter earnings. The trouble Coca-Cola has encountered is indicative of the markets overall turbulence as a result of the coronavirus pandemic.
It is unlikely that Coca-Cola is going to be significantly impacted by these changes as they have a very strong reputation and foundational business. In fact, the CEO James Quincey—who has held the position since 2017—has stated that he is trying to bring Coke out of this crisis and make it the strongest it has ever been. Only time will tell if Quincey’s plans will reach fruition.