The Coca Cola Company have increased their cost-cutting measures in attempt to “restore momentum” and “reinvigorate growth.”
The company published its third quarter and year to date results, reporting even net revenues in the quarter and a two percent decline year to date.
“We are taking decisive action to position The Coca-Cola Company to continue delivering long-term value for our shareowners,” said Muhtar Kent, chairman and chief executive officer of The Coca-Cola Company.
“We have taken a hard look at our progress to date and realize that while the strategies we laid out at the beginning of the year are on the right track, the scope and pace of our actions must increase.”
Kent said Coca-Cola expects the macroeconomic environment will remain challenging through 2015, but is confident the company can return to sustainable growth over the long term.
Key changes:
- Streamlining and simplifying its operating model to speed decision making and enhance local market focus.
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Expanding its current productivity program by targeting annualized savings of $3 billion per year by 2019. This productivity program will focus on four key areas:
- Restructuring the Company’s global supply chain, including manufacturing in North America;
- Implementing zero-based budgeting across the organization;
- Streamlining and simplifying its operating model; and
- Driving increased discipline and efficiency in direct marketing investments.
- Refocus on its core business model, which will include refranchising the majority of Company-owned North American bottling territories by the end of 2017 and a substantial portion of the remaining territories no later than 2020.
- Strategically targeting brand and growth investments that leverage its global strengths. This includes previously announced plans to improve the quantity and quality of marketing, as well as making future investments that will target markets and categories where brands remain underfunded relative to the opportunity.
- Beginning in 2015, revenue growth will be added as a metric in the Company’s incentive plans. The Company will adjust the relative importance of volume and price/mix in each market in order to drive the right behaviour for each market type.