Coca-Cola to axe 1,200 jobs as it shifts to new ‘cluster’ model

Marketing jobs could be at risk as part of Coca-Cola’s plans to axe 1,200 jobs. The cuts are part of wider plans to restructure the business around five “strategic clusters” as it looks to transform into a consumer-centric total beverage company.

Speaking on an investor call this afternoon (25 April) following Coca-Cola’s quarterly results announcement, incoming CEO James Quincey said the job reductions will take place in the second half of 2017 and into 2018 as the company looks to build a “faster and more agile business”. The aim is to reduce complexity, simplify processes and speed up decision-making.

“We are working through redesigning the organisation to be faster and more agile,” he explained. “The necessary changes will be difficult, but it they will enable us to do fewer things better.”

Quincey said the changes are part of a wider restructure at the company as it shifts to what it calls a “category cluster” model. The move will see it focus on five strategic categories – sparkling soft drinks; energy; juice, dairy and plant-based drinks; water, enhanced water and sports drinks; and tea and coffee.

The aim is to ensure Coca-Cola is more disciplined about its investments, with a focus on launching new products through innovation, changing recipes to reduce added sugar and acquiring new brands in categories such as tea and plant-based drinks. For example, Coca-Cola is expanding its premium Smartwater brand into flavoured sparkling waters, while the newly reformulated Coca-Cola Zero Sugar is expanding into more markets.

The hope is this will deliver a further $800m in productivity savings, at least half of which it will reinvest into the company.

However, Quincey was quick to point out that Coca-Cola is keeping its focus on local markets and will not be moving to a model that sees each category given its own P&L.

“We will run the business local to drive local entrepreneurship,” he said. “We will use the chief growth officer for strategic reasons – to stay connected to what is happening globally and have someone with the right and authority to bring those insights, needs and initiatives to the table.”

The new chief growth officer role

Francisco Crespo is taking on the CGO role and he will be responsible for leading this change, ensuring that the company spots strategically important trends and opportunities and acts on them.

“Our principle operating model is local and geographic due to the franchise system. But anything you organise against has blind spots and we have to mitigate those. [The CGO] will provide a global and category perspective.”

But Quincey said that is not the only reason for the role. He explained: “As brands and experiences are created today and in future they will be less cleanly-delineated between TV ad and customer programmes. There will be greater intersection and integration in how to engage with shoppers.

“We are bringing together global marketing, customer, commercial leadership and strategy teams, underpinned by dig engagement to allow us to more seamlessly operate.”

The job cuts, model shift and leadership changes are all aimed at accelerating growth at Coca-Cola, which has struggled as consumers have moved away from buying sugary carbonated drinks. In its Q1 results, total revenues were down 11.3% – the eighth consecutive quarter of declines. Profits also came in below expectations, although Coca-Cola has said it is “on track” to deliver on its full-year guidance.