Coca-Cola Sales Slide as Pandemic Progresses -- 2nd Update
April 21 2020 - 11:22AM
Dow Jones News
By Jennifer Maloney
Coca-Cola Co. said its global sales volume has fallen 25% since
the beginning of April amid pandemic lockdowns, and cautioned that
consumer spending won't immediately bounce back as countries begin
to reopen.
"We may be at the end of the big global lockdown, but we are
still a long way from the new normal," Chief Executive James
Quincey said on a call with analysts Tuesday.
In China, where Coke's plants are running and employees have
returned to company offices in Shanghai, there are still limits on
crowd sizes, and consumption is down from last year, Mr. Quincey
said. And other places such as Tokyo are implementing a second
round of restrictions, he noted.
About half of Coca-Cola's business is generated by
away-from-home retail channels -- the restaurants, bars, movie
theaters and sports stadiums that have been shut world-wide. The
company has also seen a decline in on-the-go drinks typically sold
in convenience stores, Mr. Quincey said. The company expects the
sharpest impact on its sales in the second quarter of this year.
Roughly two-thirds of its sales are outside North America.
As economies enter a phase of graduated reopenings, consumers
will continue to lean heavily on e-commerce because of "the specter
of the virus over us," Mr. Quincey said. He said he also expects to
see "a very profound theme of affordability," as shoppers brace for
an economic downturn.
"As the virus crisis abates, economic crisis will be the next
phase," Mr. Quincey said on a call with reporters Tuesday.
The beverage giant can shift toward refillable bottles, smaller
packages and multipacks -- all with lower price points, the CEO
said. He added that he expects long-term consumer trends toward
pricier, healthier beverages to continue but at a slower rate.
"It's not so much of a time for trying out all sorts of new and
different things if incomes are under pressure," Mr. Quincey said.
"You tend to go back to what is known. There will be some favoring
of tried and trusted in the short term."
Coke has cut marketing and capital spending and has put 16,000
Costa Coffee café employees in the U.K. on paid furlough through
June. Executives said they are focusing on supplying grocery stores
with core brands to help them simplify their supply chains. And the
beverage giant is canceling smaller projects in its R&D
pipeline to focus resources on developing products that could scale
more easily, Mr. Quincey said.
The soda giant, whose brands include Dasani water, Minute Maid
orange juice and Powerade, reported lower revenue for the
March-ended quarter, with sales down 1% to $8.6 billion. The
Atlanta company said organic revenue, which excludes the effect of
currency swings, acquisition and divestitures, was flat.
For the quarter, Coca-Cola reported earnings of $2.76 billion,
compared with $1.68 billion in the comparable quarter last year.
Adjusted earnings were 51 cents a share, ahead of the 44 cents
analysts had expected.
Unit-case volume for its carbonated soft drinks, which include
its namesake soda, Diet Coke, Fanta and Sprite, fell 2% for the
quarter, led by a decline in Asia Pacific, particularly China. It
was the company's first quarterly decline in global sales volume
since 2016, according to FactSet.
--Dave Sebastian contributed to this article.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
April 21, 2020 11:07 ET (15:07 GMT)
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