The Coca-Cola Company is taking swift actions both to adapt to near-term challenges presented by the coronavirus pandemic and to position the business for long-term success, Chairman and CEO James Quincey told analysts today.
The company, in reporting first quarter 2020 earnings, said it is “recalibrating” its business strategy in real time and working with bottlers and customers to address “seismic” shifts in consumer behavior across all channels.
Quincey shared several actions the Coca-Cola system is taking to weather the coronavirus crisis, including partnering with grocery customers to simplify supply chains and prioritize delivery and promotion of core brands and SKUs like multipacks as consumers adjust to stay-at-home lifestyles and make fewer stock-up trips.
“With shoppers spending less time browsing, it’s crucial we work to minimize out of stocks and maximize share of visible inventory,” Quincey said, adding that the company is reshaping its innovation pipeline to focus on scalable products and packaging that meet evolving consumer needs.
To support the recent upsurge in the e-commerce channel – which has doubled in some countries as more people order necessities for home delivery – the Coca-Cola system is concentrating on package sizes that are fit-for-purpose for online sales, boosting investment in digital promotions, increasing in-app visibility with e-delivery grocers and piloting digitally-enabled fulfillment methods.
The company also is supporting independent, mom-and-pop retailers through efforts like the Small Trade Activity Recovery (STAR) coalition in Brazil, and helping foodservice customers adapt to a drive-through/carry-out model by offering bottle/can availability as a temporary alternative to fountain drinks and supporting the National Restaurant Association’s Great American Takeout movement.
The health and safety of Coca-Cola system employees remains the company’s top priority in the current phase of the COVID-19 crisis, Quincey said. Nearly all office-based employees – about 14,000 of them – are working remotely, and associates in manufacturing and distribution facilities are using enhanced hygiene and sanitation practices.
“Through these practices, we’re ensuring our system associates are well and our products are safe, and that they’re delivered safely to our customers and consumers,” Quincey said.
Together, the Coca-Cola system and The Coca-Cola Foundation are committed to contributing more than $100 million to support COVID-19 relief efforts around the world, with an initial focus on community programs and providing critical medical supplies and equipment to front-line healthcare workers. Read about specific actions Coca-Cola teams around the world are taking to support communities.
‘Temporary But Significant Impact’
The Coca-Cola Company was off to a solid start in the first quarter, Quincey noted, with volume up 3% through February, excluding China. As shelter-at-home orders and social distancing began to take effect around the world, the business took a hit.
The company expects a “temporary but significant impact” on its second quarter results, Quincey said, noting that volume is down approximately 25% globally so far in April, driven by sharp declines in away-from-home channels, which account for about half of the company’s revenue.
China is providing early learnings about what Coca-Cola can expect in markets as they graduate from the outbreak phase to a time of gradual re-opening and ultimately a return to a “new normal.” All Coca-Cola plants are back in operation, employees have returned to the company’s Shanghai offices, and the business is showing encouraging signs as outlets reopen.
“Undoubtedly, there will ups and down in the coming months,” Quincey said. “But, with our bottling partners, we are clear on what needs to be done – both now and in the future. I have never been more proud to be part of the Coca-Cola system...nor indeed more optimistic. Coca-Cola has a history of leadership, of resilience, and of doing the right thing… and this time is no different.”