Coca-Cola Plans Cutting 1,200 Jobs After Sales Drop
The giant corporation announced that they're planning to cut 20 percent of jobs after demand for the drink fell. Coca-Cola says they will start letting go of employees later this year, targeting to cut costs by $800M in annual savings and save a total of $3.8B by 2019.
Incoming Coca-Cola chief executive James Quincey says in a conference call that majority of the savings will be from corporate workforce reductions. A spokesperson for the brand further added that savings would be made through supply chains, marketing, and modification of its operating model.
According to FactSet, the reduction is about 22 percent of Coca-Cola's 5,500 corporate employees. The company currently has a total of 100,300 workers and staff worldwide. This cost-cutting comes after the manufacturer noticed a consumer trend of reverting to healthier products.
Consumers from the US and UK seemed to have turned to a healthier lifestyle and are gradually turning away from the sugary drink, resulting in a drop in international sales for the first 3 months of 2017. Coca-Cola expects about 1 to 3 percent decline in profits by the end of the year.
Last year, Coca-Cola changed its recipe for Coke Zero in the UK and renamed the product Coke Zero Sugar in an attempt to "taste more and look more like" the original product. This change cost the company £10m to campaign.
Another move Coca-Cola made was creating a new organic workout drink that will rival the likes of Gatorade. Honest Sport is an organic sports drink that is made with cane sugar. The product started selling last June in over 400 stores. However, Pepsico's Gatorade still remains the leading sports drink market. Coca-Cola isn't the first major food and drink manufacturer to cut sales this year. Other big firms that have cut jobs include Kellogg, Hershey, and General Mills.
