Beverage giant Coca-Cola is continuing with its plans to shed off more of its less profitable brands as part of its wider strategy to focus more on its core products and reduce its expenses. The company announced this week that it will be dumping more of its so-called "zombie" brands to cut costs and slim down its operations.
During the company's second-quarter earnings call on Tuesday, its chief executive officer, James Quincey, reiterated the company's plans of further cutting its underperforming brands. The announcement comes just days after Coca-Cola shut down its long-running juice brand Odwalla.
Similar to other food and beverage companies, Coca-Cola is attempting to streamline its product offerings to focus more on its best-selling brands. Given the continued disruptions and slump in demand caused by the coronavirus pandemic, most companies have been forced to focus most of their efforts on their profit-making products and temporarily halt any further expansions.
Coca-Cola is doubling down on those efforts given the impact of the pandemic on its sales. For its second quarter, the company reported a 28 percent drop in its sales to about $7.2 billion. Quincey noted that the company will be prioritizing its stronger brands moving forwards, while at the same time halting all further investments and expenses on "zombie" brands.
For its latest quarter, Coca-Coca did report better-than-expected profits. Although, its revenues for the quarter did fall short of analysts' expectations. Following the release of its latest quarterly earnings report, the company's stock prices increased by more than 2.4 percent in Tuesday's trading session. Since the start of the year, the company's stock has fallen by around 14.7 percent.
Quincey revealed that almost half of the company's more than 400 sub-brands are underperforming and have "little to no scale." Those brands only represent around 2 percent of the company's entire revenue, which means that cutting them off would have very minimal impact on its bottom line. The executive did not mention any specific brands.
Since the start of the year, Coca-Cola has reportedly shut down more than 275 products worldwide. This included flavor variations of its iconic Coca-Cola-branded carbonated drinks. Quincey stated that the company is continuing to hunt down and identify underperforming brands and products that are not delivering expected returns.
The elimination of some of its products is expected to result in massive job cuts. The shutdown of its Odwalla brand of juice beverages had resulted in around 300 job cuts. As more brands are placed under the chopping block, additional jobs could be in peril.
