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COVID resurgence slows recovery at Coca-Cola

Coke-Facebook-delivery-360x203A resurgent coronavirus slowed Coca-Cola’s recovery in the fourth quarter, and the company said the slump has continued into this year.

But, the Atlanta-based beverage giant said it’s confident it will see improvement as vaccines roll out around the world and it delivers new products in fast-growing categories, like an updated version of Coke Zero Sugar and Topo Chico Hard Seltzer, a rare foray into alcohol for the company.

As a measure of that confidence, Coke issued financial guidance for the first time since the pandemic began, saying it expects 2021 earnings to match or exceed those in 2019. Many of the biggest corporations in the U.S. have pulled projections due to the unprecedented scope of the pandemic.

“The trajectory of the recovery will be a significant factor, and we expect to be dealing with COVID-19 for the better part of the year, with the first half likely to be more challenging than the second half,” Coke chief financial officer John Murphy said in a conference call with analysts.

Coke has been decimated by the closure of arenas, restaurants, theatres and other public places, where it normally books about half its revenue.

Global case volume slipped 3% for the October-December period, exceeding Wall Street projections for a decline of 2.2%, according to analysts polled by FactSet. Case volume rose 2% in Latin America thanks to strong demand in Brazil, but it fell elsewhere.

Unit case volumes of soft drinks fell 1% in the fourth quarter, primarily due to declines in away-from-home business in North America and Europe. Juice and dairy sales fell 2% and water and sports drink demand fell 9%. Tea and coffee sales dropped 15% as the virus hampered sales at Costa coffee shops.

Coke’s net revenue fell 5% to US$8.6 billion for the fourth quarter. It was a significant improvement from the second quarter, when revenue fell 29%, and the third quarter, when revenue fell 9%.

Coke earned $1.46 billion, or 34 cents per share. That per-share number would be 47 cents if one time costs and benefits are removed, six cents better than Wall Street had projected.

Coke Chairman and CEO James Quincey said the company is confident it will return to growth in 2021, despite sales declines that have persisted through February. Coke expects to deliver organic revenue growth in the high single digits in 2021, as well as single-digit growth in its per-share earnings.

But it also revealed a potential headwind. Coke said it could potentially face $12 billion in liability as the result of an ongoing lawsuit filed by the U.S. Internal Revenue Service over the profit split of drinks that are made and sold overseas.

In November, a U.S. tax court ruled in favour of the IRS in the six-year-old case, saying Coke must pay the bulk of a $3.4 billion tax bill. The $12 billion figure would include previous years and interest, Murphy said. But Coke is appealing and said it is confident it will eventually prevail.

Quincey said the company can emerge from the pandemic stronger thanks to restructuring actions it took in 2020. Coke pared its brands from 400 to 200 and dropped slow sellers like Tab, Zico coconut water and Odwalla juices.

Coke’s workforce is also getting leaner. The company announced in December it would lay off 2,200 workers, or 17% of its global workforce. Coke said severance packages would cost between $350 million and $550 million.

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Coca-Cola Canada makes changes to its sales team

Screen Shot 2021-01-15 at 10.57.13 AMWith its senior vice-president of sales Scott Lindsay retiring at the end of next month, Coca-Cola Canada has made changes to its executive roster. These changes took effect Jan. 1.

Tim McNerney, who has been with the company for eight years, was promoted from vice-president of sales to head of Canadian retail sales.

Additionally, Caroline Nadeau has been promoted from vice-president of sales to lead commercial strategy efforts across Canada and the North East United States. She has been with the company for seven years.

Originally published at Canadian Grocer. 


Coca-Cola recovery continues as it grows leaner in pandemic

Coke-Facebook-delivery-360x203Coca-Cola measured gradual improvement in the third quarter as it focused on emerging leaner from the global pandemic.

Revenue fell 9% to US$8.7 billion, edging out Wall Street expectations of $8.4 billion, according to analysts polled by FactSet. It was far better than the 28% drop in revenue in the second quarter.

Net income was $1.7 billion. Earnings, adjusted for one-time items, fell 2% to 55 cents per share. That also outpaced analyst forecasts of 46 cents.

Coke has been decimated with the closure of arenas, restaurants, theatres and other public places where it books about half of its revenue.

It has been making up for some of that damage as people buy more beverages, such as orange juice, at home. However, sales of sparkling soft drinks fell 1% in the July-September period; sales of trademark Coca-Cola grew 1% for the quarter. But other beverages struggled. Sales of enhanced water and sports drinks dropped 11% and tea and coffee sales were down 15%, hurt by closures of Costa retail stores.

So far this month, sales based on unit cases are seeing single-digit declines compared to last year; in April, those sales were down 25%.

Chairman and CEO James Quincey said the company had accelerated a planned reorganization that would put more emphasis on fast-growing brands.

In August, the company began offering voluntary buyouts to around 4,000 people, which it hopes will reduce the number of people it eventually lays off. Coke is reducing the number of individual business segments from 17 to nine.

Coca-Cola Co. also announced last week it was retiring several products this year, including Tab, Zico coconut water, Diet Coke Fiesty Cherry and regional offerings such as Northern Neck Ginger Ale. In July, the company announced it would retire Odwalla juices.

Coke plans to reduce its brands by half, to 200.

Coke said it would use the savings to invest in growing brands like Minute Maid and Simply juices and fund the launch of new products like Topo Chico Hard Seltzer, Coca-Cola Energy and Aha sparkling water.

Alfredo Rivera

Alfredo Rivera named new president of Coca-Cola North America

Alfredo RiveraAlfredo Rivera is the new president of Coca-Cola North America, replacing Jim Dinkins, who is retiring.

Rivera is a 23-year veteran of the company and most recently served as president of the Latin America group, which includes 40 countries. He was named to the role in 2016 and takes on his news new role effective immediately. (Coca-Cola said it will share more information about future leadership plans for Latin America operations at a later date.)

Rivera, 59,  joined the company in 1997 in the Central America and Caribbean Division as a district manager for Guatemala and El Salvador. He went on to serve in roles of greater responsibility in Brazil, Ecuador and Mexico before being named president of the Latin Center business unit. Prior to joining the company, Rivera worked for two independent Coca-Cola bottlers in Honduras and El Salvador.

Rivera will report to president and Chief Operating Officer Brian Smith.
Rivera replaces James L. “Jim” Dinkins, who has led Coca-Cola North America since 2018. Dinkins joined Coca-Cola in 1988 and went on to serve in a series of roles of increased responsibility. Dinkins will serve as a senior advisor until his retirement on Feb. 28, 2021.
“Alfredo has had a remarkable career in Latin America, which is made up of a large number of highly complex and diverse markets,” James Quincey, chairman and CEO of The Coca-Cola Company, said in a statement. “Alfredo has built a networked organization that is positioning our business to emerge stronger from the current pandemic. He is a strong successor for the top role in our flagship North America market, where he will build on the great progress we’ve seen under Jim’s leadership. I thank Jim for his many years of service to the company and countless contributions to our business.”


With stadiums, theatres closed, Coke Q2 revenue plunges

Beverage giant thinks the worst is behind it

Coca-Cola’s revenue plunged 28% in the second quarter, but the company thinks the worst could be behind it.

Coke chairman and CEO James Quincey said sales improved sequentially in May, June and July despite surging cases in key markets like the U.S., Iran and Australia.

While the path forward is unclear and the global economic recovery will take years, Quincey said it’s unlikely that the world will see another worldwide lockdown as it did earlier this spring. Even in countries that have seen virus flareups, like Japan, sales have not fallen as far as they did the first time, Quincey said.

“I am pretty confident the second quarter will ultimately prove to be the most difficult and the most impactful quarter,” Quincey said this month in a conference call with investors.

The sales volume of Coke based on the number of unit cases declined 25% in April compared to the previous year. By June, that decline stood at 10%. In China, case volumes actually rose for the quarter.

Still, the recovery will be bumpy. Half of Coca-Cola’s sales come from stadiums, movie theatres and other places where people gather in large numbers _ venues that have blinked out in the pandemic. In the U.S., Major League baseball will begin playing this week, but to empty stadiums with piped in crowd noise.

Fast food restaurants saw less impact as sales continued through drive-thru windows, Quincey said. But sales at office buildings have ground to a halt.

Quincey said the pandemic has accelerated Coke’s plans to cut slow-selling “zombie brands” like Odwalla juice, which it will stop producing next week.

Coke has 400 brands, more than half of which are single-country brands that make up less than 2% of revenue, Quincey said. Going forward, he said, Coke will prune some of those brands and invest in bigger or more promising brands like Aha sparking water.

The virus is also forcing other changes. Quincey said affordability is a major issue, as people have less disposable income to spend on drinks. So the company is offering smaller pack sizes and increasing refillable bottles in places like Brazil.

Coke is also meeting consumer demands for contactless service by introducing a mobile pay option for its 52,000 Freestyle soda dispensers, which let customers mix sodas and pour them into their own containers. Mobile payment will roll out to U.S. Freestyle dispensers by the end of this year, the company said.

Coke said sales of water and sports drinks dropped 24% in the second quarter, while coffee and tea sales plunged 31% as the company temporarily closed its Costa coffee stores in Europe. Soft drink sales fared better, falling 12% globally. Coca-Cola Zero Sugar sales fell just 4%.

In North America, Atlanta-based Coke’s home market, customers bought more Simply and Minute Maid juices and Fairlife milk, offsetting losses elsewhere. Case volumes in the region fell 16%.

Coke reported net income of $1.8 billion for the April-June period, down 32% from the same period a year ago. Excluding one-time items, the Atlanta company earned 42 cents per share. That tops Wall Street’s per-share expectations by 2 cents, according to analysts polled by FactSet.

Coke’s revenue fell to $7.2 billion, matching expectations.

Shares rose 3% to $47.60 in morning trading.

In response to global protests over the death of George Floyd, Coke has committed to spending $500 million with Black-owned suppliers in the U.S. over the next five years. It has paused spending on social media for the month of July in response to claims that Facebook is not doing enough to combat hate speech.


Coca-Cola discontinues Odwalla juice brand

Odwalla-Facebook-e1593787412194Coca-Cola is shutting down Odwalla, its juice and smoothie brand, at the end of this month.

In 2001, Coca-Cola acquired U.S.-based Odwalla for $181 million, but, according to reports, had struggled with the business in recent years, due to consumer concerns about sugar content in juices, as well as a waning interest in smoothies.

In addition, the wholly-owned subsidiary of the beverage giant involved logistical challenges, as products had been delivered to retail locations via a fleet of more than 200 refrigerated trucks. The distribution network will also be shuttered.

In all, the closure at the end of July will result in about 300 job losses.

Source: Coca-Cola

Coca-Cola and Sheridan College team up to produce safety shields for c-stores

Source: Coca-Cola

Source: Coca-Cola

Coca-Cola is working with Sheridan College’s Centre for Advanced Manufacturing and Design Technologies (CAMDT) to produce and distribute protective countertop shields for small businesses, including local convenience stores and restaurants hit by the COVID-19 pandemic.

The initiative is designed to support and help business owners continue to operate while maintaining physical distancing measures.

The project came about when Coca-Cola spoke to their customers and realized that a number of smaller, local businesses did not have protective shields or or only had temporary solutions, thereby putting staff and customers at risk.

“Retailers and restaurants are working hard to ensure that Canadians can get the food, drinks and supplies they need during this challenging time,” Ron Soreanu, VP, public affairs & communications at Coca-Cola Ltd., said on the company’s website. “We know that the COVID-19 pandemic has been devastating for many retailers and we wanted to help businesses that may be overwhelmed trying to keep their business running. Protective barriers between the cashier and the customer will give an extra layer of confidence to everyone during their shopping experience. And, we hope that this investment will enable Canadians to continue supporting their favourite local store or restaurant as our economy begins to re-open.”

Coca-Cola Ltd. is investing $75,000 to fund the purchase of materials and lead the project. Coke Canada Bottling is sourcing the locations and stores that need protective shields and will lead distribution and delivery.

Dave Bryans, president and CEO of the Ontario Convenience Stores Association, says his organization “has partnered with Coca-Cola and Sheridan College to supply safety shields to family run c-stores in Ontario. We will be installing these wonderful new shields in upwards of 100 Hasty Markets throughout the province ensuring the safety of our customers and employees. A big thanks to both Coca-Cola and Sheridan College.”

Sheridan College designed the prototype behind these shields and is using an alternative form of plastic, which is just a story as plexiglass, for which there are shortages across North America due to high demand in the wake of the pandemic.

Sheridan is manufacturing multiple designs to suit different countertop configurations for employees working at cash registers or takeout counters.

“Our dedicated team responds to industry needs in an agile way and puts Sheridan in a position to contribute to our communities efficiently and effectively,” Dr. Michelle Chrétien, director of CAMDT at Sheridan College, said in a statement. “We’re delighted to be supporting small business owners with a solution that helps facilitate safe interactions with customers.”

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Caffeinated energy drinks boost sales

Screen Shot 2019-12-16 at 4.45.23 PMAt just 2% to 3% of the market, energy drink sales represent a small but mighty segment of the Canadian beverage market. By 2022, annual sales in Canada are expected to reach US$604 million, according to  

Innovation and a thirsty public keen for something fast and convenient to provide a mental and physical boost are fuelling steady growth. More good news: Data indicates that 59% of all energy drink sales worldwide happen in convenience stores. That means ample opportunities to tap into the popularity of these caffeinated beverages enjoyed largely by young adults (ages 18 to 24). Coming on strong though are adults age 40+, a market segment that has seen a 279% increase in consumption over the past 10 years. From students to party-hearty types, to shift workers to weary parents, the demographics stretch across a broad spectrum.

“We’re seeing, particularly in the last year and a half, a lot of new products hitting the market that can either be classified as caffeinated energy drinks, or beverages that just may have some additional caffeine in them,” says Jim Goetz, president, Canadian Beverage Association. “The market has been quite rigorous in terms of the number of new entries on Canadian shelves.”

 While the big players—Red Bull, Monster and Rockstar—dominate the energy drinks category, smaller regional companies have managed to grab a sliver of the market themselves. British Columbia’s Beaver Buzz flaunt their Canuckness with flavours such as Saskatoon Berry. Based in Quebec, Guru has managed to crack the U.S. market with its organic versions made from botanical extracts to appeal to health-conscious buyers. Hamilton, Ont.-based Bomb Energy Drink has gone international, too, selling its citrus-infused formulation stateside and in the Dominican Republic.

The industry leaders aren’t sitting on their laurels as competition heats up. Monster has introduced fresh flavours, like Mango Loco and has added Reign, a sporty energy drink with amino acids, electrolytes and CoQ10, to its lineup. It is also jumping on the tea (band)wagon with Monster Dragon Tea, a three-SKU selection featuring green tea, white tea and yerba mate. 

Meanwhile, Red Bull is charging forward with new tastes, too, with coconut berry, tropical fruits, blueberry and kiwi. Big brands will continue offering low-calorie or zero-sugar versions of their offerings. Exotic variations aside, Red Bull Classic, first introduced in 1987 in Austria, remains the No. 1 seller with almost $3 billion in U.S. sales alone. 

As Health Canada finalizes its regulations for caffeinated energy drinks, industry insiders foresee even more new companies and products coming with regulatory stability. In the temporary guidelines introduced a decade ago, the government capped caffeine content at 100 mg for small single-serve energy drinks (250 mL and less), like energy shots. Larger single-serve cans are limited to 180 mg. The new regulations are expected late in 2020.

Responsible marketing is a concern among companies selling in Canada. Members of the Canadian Beverage Association (CBA) voluntarily adhere to a code created for the energy drinks, outlining that these types of beverages should not be marketed to children from grades K-12. The organization is also working with Health Canada to talk about caffeine awareness as a whole, says Goetz, as opposed to a single category. 

Crystal ball gazers watching trends in the energy drink sector say we’ll be seeing companies ride the wave of popularity around CBD and incorporate it into products. Expect also to see more crossover products, like caffeinated, fitness-focused beverages, more energy teas and coffees, formulations using naturally sourced sugar (like monk fruit) and caffeine with newcomer guayusa extract and the addition of stimulants like ginseng. 

And there’s a possible game changer: U.S. retailers will be selling Coca-Cola Energy, the iconic brand’s first entry into the sector, starting in January 2020. Canadian convenience stores may want to save a spot on their shelves for all the new products coming down the pipe.