The Coca-Cola Company today announced it has begun taking steps to reorganize its corporate structure, which will include offering voluntary buyouts to approximately 4,000 employees in the U.S., Canada and Puerto Rico.
In a press release, the world’s largest beverage company shared its plans to overhaul its existing business architecture by focusing on key priorities, including innovation, marketing efficiency and effectiveness. The announcement comes just over a month after Coca-Cola announced a 28% drop in net revenue during the second quarter of 2020.
“We have been on a multi-year journey to transform our organization,” said Coca-Cola chairman and CEO James Quincey in a press release. “The changes in our operating model will shift our marketing to drive more growth and put execution closer to customers and consumers while prioritizing a portfolio of strong brands and a disciplined innovation framework.”
Quincey noted that these will include “significant changes in the structure of our workforce.” Around 4,000 employees in the U.S., Canada and Puerto Rico that were hired on or before Sept. 1, 2017 will be offered a separation package.
The program, expected to cost $350 million to $550 million, is “expected to reduce the number of involuntary separations.”
To streamline operations, the company is consolidating its 17 business units, spread over four geographic regions, as well as the Global Ventures and Bottling Investments divisions. That structure will be replaced with nine new operating units that will be “highly interconnected” and aim to reduce redundancies and inefficiencies by sharing resources to scale products quickly.
The operating leaders will report to Coca-Cola president and COO Brian Smith.
Having announced the end of premium juice line Odwalla earlier this summer, Coca-Cola is set to continue its process of portfolio rationalization in the months ahead. According to the release, the company will be “reinforcing and deepening its leadership in five global categories with the strongest consumer opportunities”: Coca-Cola; Sparkling Flavors; Hydration, Sports, Coffee and Tea; Nutrition, Juice, Milk and Plant; and Emerging Categories.
The leaders of those segments will report to CMO Manolo Arroyo.
A new division, called Platform Services, has been created to help units within the company “create efficiencies and deliver capabilities at scale across the globe” through data management, analysts, social media and e-commerce.
Coca-Cola’s shift from soda giant to “total beverage company,” a long-stated goal of Quincey’s, has come into sharper focus over recent months, as established brands within its portfolio have taken on new roles. In January, Coca-Cola Energy launched in the U.S., and Coca-Cola With Coffee is set to follow next year. Meanwhile, Coke has positioned flavored sparkling water line AHA, launched in March, to play in conventional retailers, while premium carbonated mineral water Topo Chico will see Coke’s first alcoholic product, Topo Chico Hard Seltzer, released in 2021.