Coca-Cola made a big announcement on Tuesday that could affect quite a number of people. The beverage giant announced that it would be eliminating 1,200 jobs from its corporate center beginning in the second half of this year. The cuts are a part of the company’s effort for multiyear cost-cutting.
Also on Tuesday the beverage company released its earnings report that represented an eight consecutive quarterly decline in revenue. It’s no wonder they are trying to cut costs now.
According to Coca-Cola’s next CEO and current COO James Quincey, the company is planning “more focused, lean” operations. Quincey will succeed Muhtar Kent and become Coke’s CEO on Monday of next week.
As part of the earnings report, Coke revealed its plans to expand a productivity and reinvestment program to eke out an incremental $800 million in annualized savings over the next two years. The company said that this savings will boost Coke’s target for a six-year savings program to $3.8 billion.
Quincey told CNBC’s “Squawk Alley” in an interview on Tuesday, “The changes in [Coke’s] corporate center will make us more agile, more focused on growth.”
According to the soon to be CEO, about half of the $800 million in savings by 2019 will be reinvested in the company. Quincey said, “We will be a much smaller company by next year.”
“I think here the clear intent is that this [reinvestment] is more directed to some of the newer categories or some of the other categories to drive growth,” he said.
“Savings will be reinvested at reinvigorating revenue growth of [Coca-Cola’s] sparkling category.
Disclaimer: We have no position in The Coca-Cola Co (NYSE: KO) and have not been compensated for this article.