The coronation of Coke’s new CEO began with him swinging a big ax at the heads of about 1,200 of his employees, mostly in Atlanta. Mass layoffs are a pretty jarring first act by a new CEO, especially at a company that is all about optics and image and giving the world a smile.
Kind of makes me wonder what James Quincey’s second act will be as he tries to set a healthier future for Coke’s business.
But one thing that he’s stressing more now is an aim to become a “consumer-centric, total beverage company.”
He’s been saying that line repeatedly lately. I think it’s suppose to emphasize that Coke intends to be way more than a soda company.
Seem a little late?
Big Red ain’t dead. Not even close. Fully caffeinated Coke and its carbonated soft drink spinoffs are cash machines.
But it shouldn’t be a startling conclusion that Coke can’t continue to heavily bank on them for its long-term growth.
If you haven’t cut back on sodas, it’s likely you know people who have. Our tastes are changing.
Yes, Coke has expanded the stunning array of beverages it markets around the world. Coke leaders told Beverage Digest that non-carbonated drinks (Dasani, Minute Maid, Powerade, Honest Tea, Fuze, Glacéau Vitaminwater, etc.) now make up 30 percent of its business, compared to 10 percent a decade ago.
Yet it felt like company executives continued to give the most love to their most profitable sodas. That maybe isn’t surprising, but those drinks also generated the most fire over health and obesity concerns.
When Quincey’s predecessor, Muhtar Kent, rose to CEO nearly a decade ago, he said sodas were the company’s “lifeblood.”
“Sparkling beverages are the oxygen of our company and this entire industry,” he said.
But that kind of thinking is running out of air.
Funky young-gun beverage rivals are offering consumers more choices beyond bubbles. So Coke has been busy trying to buy more up. The company has also responded to health concerns, in part, by putting Coke in smaller cans.
I’m wondering how much smaller they’ll go. Coke in shot glasses? Coke as an apéritif? Eyedropper portions?
Or maybe the company needs to work more on the angle of mixing healthy stuff in sodas. Kale Coke?
Coke’s ultimate goal, besides making more money, is to get a bigger share of the world’s stomach.
That’s not cheap.
Kent, the now former CEO, said the planned elimination of 1,200 Coke jobs this year will create “ammunition” that will be used in part to invest in new brands. (How’s that for making your employees feel like cannon fodder?)
Business giveth, and business taketh away.
Charles Elson, who grew up in Atlanta and now heads the University of Delaware’s Center for Corporate Governance, said big layoffs by brand new CEOs aren’t common, but they happen.
“We are in an evolving period with companies that manufacture soft drinks and changing public attitudes,” he said.
Coke’s “a good company, obviously, but the American public’s tastes are changing. It’s an assault on their product.”
He volunteered to me that he had a caffeine-free soft drink earlier in the day. But then he also pointed out that he writes with a fountain pen.
We’ll see how much of the past the new CEO, Quincey, holds on to. But imagine a day, maybe during his tenure, when Coke and its kids are no longer the biggest deal at Coca-Cola.
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