November has been a busy month for layoffs at The Coca-Cola Co (NYSE:KO). The soft drink manufacturer filed three Worker Adjustment and Retraining Notification (WARN) reports with the Georgia Department of Economic Development, affecting 179 employees at three different facilities in Atlanta. These layoffs are in addition to the more than 400 job cuts in the state announced earlier this year.
The mass layoffs at Coca-Cola are part of the company’s efforts to save $800.0 million by 2019. Much of the cost savings will come from downsizing. More broadly, the beverage industry has been suffering from flat sales and a weak outlook, resulting in a large number of layoffs in 2017.
Coca-Cola’s 2nd Round of Layoffs in 2017
Coca-Cola announced plans to lay off an additional 179 jobs in its hometown of Atlanta as part of its broader restructuring plans, announced earlier this year. In three separate filings with the Georgia Department of Economic Development, Coke said three corporate offices in the city will face downsizing.
Layoffs at 1 Coca-Cola Plaza NW will affect 128 people, 46 people are being terminated at Coke’s office at 303 Peachtree St. NE, and five people will be out of work at the end of the year at Coke’s facility on Northyards Blvd. NW. All of the layoffs from the global beverage behemoth are effective December 31, 2017.
Job Cuts Made by Coca-Cola Earlier in 2017
November’s announced job action is in addition to the more than 400 layoffs announced earlier this year. In April, Coca-Cola announced that its first-quarter results fizzled, with overall sales down 11% year-over-year to $9.1 billion. First-quarter net income tumbled 20% to $1.18 billion, or $0.27 per share.
Coke’s revenue and profitability have taken a hit over the last number of years as consumer tastes shift away from sugary drinks. Even sales of the company’s diet brands are falling away. Coke might be moving into once unimaginable healthier beverages, like water, milk, and soy-based drinks, but it’s going to take some time for the company to rebound.
To help facilitate growth, Coke announced it was expanding its $3.0-billion Productivity and Reinvestment Program to save an additional $800.0 million in annualized savings by 2019. This would bring the total annualized savings of the company’s six-year program to $3.8 billion.
The majority of these additional savings are expected to be occur in 2018 and 2019. A large chunk of these savings are expected to come from the 1,200 job cuts that will take place through the first half of 2018. A “significant” portion will come from the Atlanta area. The company has about 7,500 employees in the Atlanta region, and 9,000 in Georgia.
In June, Coca-Cola filed three WARN reports affecting 421 employees at the same three Atlanta locations that were recently hit by layoffs.
The 421 layoffs were effective July 15. Combine this with the layoffs effective Dec. 31, and the layoff total so far is 600. That means Coca-Cola is halfway to its restructuring target of 1,200 job cuts.
The last time Coca-Cola announced massive layoffs was in January 2015, when it said it was cutting up to 1,800 jobs.
More Beverage Layoffs in 2017
It’s been a tough year for beverage companies of every size. Coke has already laid off 600 and will cut an additional 600 jobs in the first half of 2018. In March, Coke’s main American competitor, PepsiCo, Inc. (NYSE:PEP), laid off up to 100 employees at distribution plants in Philadelphia.
The job cuts accounted for approximately 20% of Pepsi’s 423 Philadelphia-based employees. The company blamed a soda tax for eating into its sales. Philadelphia introduced its soda tax in January, which, in some cases, resulted a 12-pack almost doubling in price. As a result, soft drink sales plunged by as much as 50% in some areas.
In July, Wisconsin-based Black Bear Bottling Group filed for receivership. The 97-year-old soda maker filed for protection from competitors just a few weeks after expanding operations at its Oak Creek facility and adding a third production line.
Black Bear reported total debt of $19.7 million and assets with a book value of $9.4 million, but a fair value that was “significantly less.”
Shortly after filing for receivership, it announced it was shuttering its doors permanently. The company ceased operations on September 12, leaving 76 employees out of work.
“WARN Website Data,” Georgia Department of Economic Development, last accessed November 20, 2017.
“The Coca-Cola Company Reports First Quarter 2017 Results,” The Coca-Cola Co, April 25, 2017.
“Philly’s Soda Tax Has Cut Soft-Drink Sales by As Much As Half,” Grub Street, February 28, 2017.
“Black Bear Bottling to close in September, eliminating 76 jobs,” Milwaukee Business News, July 19, 2017.