---
title: "Coca-Cola's 'Elephant Turn': Halving Its 500 Global Brands and Cutting 4,000 Jobs"
description: "Coca-Cola announced a $550 million severance package and 4,000 job cuts, and plans to halve its 500 global brands, including discontinuing its coconut water brand Zico, as part of a restructuring to cope with the COVID-19 crisis. Despite a 28% drop in Q2 sales, the company saw a 14% sales increase in China, which is recovering faster from the pandemic."
author: "New Distribution"
publisher: "New Distribution"
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published: "2020-10-07"
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# Coca-Cola's 'Elephant Turn': Halving Its 500 Global Brands and Cutting 4,000 Jobs

> Coca-Cola announced a $550 million severance package and 4,000 job cuts, and plans to halve its 500 global brands, including discontinuing its coconut water brand Zico, as part of a restructuring to cope with the COVID-19 crisis. Despite a 28% drop in Q2 sales, the company saw a 14% sales increase in China, which is recovering faster from the pandemic.

Misfortunes never come alone.
Recently, Coca-Cola, one of the "twin giants of sugary drinks," announced an estimated $550 million (3.8 billion RMB) in severance costs and 4,000 job cuts.
On October 5, according to multiple overseas media reports including The Wall Street Journal, Fox News, and CNN, Coca-Cola will discontinue its coconut water brand Zico and consider eliminating some less popular varieties of Coca-Cola and Diet Coke. It was also learned that, in response to the COVID-19 crisis, Coca-Cola is significantly trimming its brand portfolio.
**-01-**
**Halving 500 Brands, Zico Coconut Water to Be Discontinued**
As is well known, Coca-Cola is a "weird flavor manufacturing company" with a wide variety of beverages. It has ventured into milk tea, coffee, lemon tea, and sparkling juice, offering over 4,300 soft drink products.
Coca-Cola has 500 wholly or partially owned brands globally, including Coca-Cola, Fanta, Sprite, and Diet Coke. Carbonated drinks are its core business, but it also covers bottled water, energy drinks, juices, ready-to-drink tea, coffee, and almost all other soft drink categories.
CEO James Quincey said in a conference call with analysts on Tuesday that the company will eliminate other underperforming small brands worldwide, noting that more than half of its several hundred brands are single-country brands with little or no scale. Quincey admitted, "We have not been decisive enough" in eliminating these small brands.
**Therefore, driven by its business restructuring strategy, Coca-Cola plans to cut more than half of its 500 wholly or partially owned global brands.**
As for the first confirmed product to be discontinued, Zico coconut water, a spokesperson said in a statement: "Discontinuing Zico is part of Coca-Cola's broader plan to streamline its vast beverage production line. This decision was not made lightly, and it comes as we focus on meeting consumer needs while driving scale growth across our beverage portfolio."
According to available information, Coca-Cola acquired Zico in 2013 to strengthen its non-cola product lineup, but Zico's sales have not been as ideal as Coca-Cola had imagined.
During the pandemic, Zico's performance continued to disappoint, especially compared to its competitor Vita Coco, whose sales surged.
Additionally, according to sources familiar with the matter, the company is screening brands that can achieve large-scale production. Products currently under review include Diet Coke, low-calorie Coke, and stevia-sweetened Coca-Cola, as well as regional American soda brands such as Northern Neck Ginger Ale and Delaware Punch. It also plans to stop retail sales of Hubert's Lemonade and close Odwalla juice and smoothie operations.
**-02-**
**4,000 Job Cuts in North America**
According to CNBC, on August 28, Coca-Cola announced an employee restructuring plan, offering voluntary severance packages to 4,000 employees in the U.S., Canada, and Puerto Rico, hoping to avoid subsequent involuntary layoffs.
As of December 31, 2019, Coca-Cola had 86,200 employees, with 10,100 in the U.S. Including bottling partners, the company employs over 700,000 people globally. **Historical data shows that Coca-Cola has been continuously downsizing over the past eight years, reducing its total workforce by nearly 100,000.**
The company also stated that it will offer similar voluntary severance packages in other parts of the world in the future, with total severance costs ranging from $350 million to $550 million (approximately 2.4 billion to 3.78 billion RMB). When asked, Coca-Cola China said, "We have not received relevant information from the Chinese company."
At the same time, Coca-Cola plans to consolidate its 17 business units into 9 and establish a new operations unit responsible for data management, consumer analytics, and e-commerce, aiming to improve efficiency and fully leverage its global scale to better "focus on winning products" and drive business growth.
**-03-**
**Biggest Quarterly Drop in 25 Years**
**Industry insiders point out that "compared to other beverage companies, Coca-Cola has been more affected by the COVID-19 pandemic, which may accelerate its restructuring plans."**
Half of Coca-Cola's sales come from public venues such as stadiums, cinemas, and bars, most of which were forced to close during the pandemic. In contrast, its main competitor PepsiCo has benefited from the "home economy" driven by snacks and breakfast foods.
Although food and beverages were relatively less damaged in this pandemic, the global beverage giant Coca-Cola did not escape unscathed.
In July, Coca-Cola's Q2 2020 earnings report showed sales of $7.15 billion, compared to $9.997 billion in 2019, **a year-over-year decline of 28%, the largest quarterly drop in 25 years.**
Net profit for Q2 was $1.78 billion, down 33% year-over-year, meaning about one-third of profits would be used to pay employee severance.
Chairman and CEO James Quincey estimated that the global economy would take two to three years to recover and considered Q2 of this year to be the company's most difficult period.
Among regions, North America generated $2.648 billion in revenue, one of the most important revenue areas; Europe, Middle East, and Africa totaled $1.21 billion, ranking second; and Asia Pacific ranked third with $1.183 billion.
It is worth noting that despite revenue declines in most regions in Q2, **in China, which is recovering fastest from the pandemic, Coca-Cola's sales actually increased by 14%, partially offsetting the overall decline in Asia. Coca-Cola led the growth, with strong growth in zero-sugar products.**
**-04-**
**China Market Stands Out**
In the face of COVID-19, China has become the first market globally to resume production.
**Coca-Cola's self-rescue measures are not limited to "increasing revenue and reducing costs"; the company is also actively trying to overcome the crisis with its accumulated brand strength, including developing new products and increasing investment in the Chinese market.**
In April, Coca-Cola officially entered the dairy market in China, receiving approval to establish a joint venture with Mengniu Dairy to produce and sell low-temperature milk products in China. In the future, the two parties will complement each other's strengths in dairy R&D, dairy processing technology, brand influence, and distribution channels to develop new brands.
In June, Coca-Cola China extended its reach into social e-commerce. innocent, a brand invested in by Coca-Cola, launched its fresh-pressed fruit products in the Chinese market, opening up a new subcategory and promoting Coca-Cola's exploration and layout in the juice market while also selling nationally through social e-commerce channels for the first time.
On the supply chain front, in May, COFCO Coca-Cola launched a fully automated can beverage production line in Sichuan, the fastest in the global beverage industry. The line can produce 120,000 cans per hour, with an annual capacity of 260,000 tons and an output value of 1.3 billion RMB.
In the second half of 2020, Swire Coca-Cola China will put six new production lines into operation, with a total investment of 250 million RMB and an additional annual output value of over 1.7 billion RMB.
**Coca-Cola's plan to cut its brand count by more than half and lay off employees is just one of the broad restructuring measures triggered by the COVID-19 pandemic. Trimming ineffective products during stagnation or recession while retaining core mainstream businesses is indeed a correct move to ensure the company's normal operations.**
Article sources: CCTV Finance Weibo, CCTV News Client, Wall Street CN, China Fund News, etc.
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