Coca-Cola unveils recovery plan amid a 28% decline in revenues

The recovery plan includes investments against a defined growth portfolio by prioritising brands best positioned for consumer reach and share advantage

Coca-Cola has reported second-quarter 2020 results and provided an update on strategic actions that are positioning the soft drink giant to emerge stronger from the Covid-19 pandemic.

The company reported net revenues declined 28% to $7.2 billion, including a 22% decline in concentrate sales and a 4% decline in price/mix.

The revenue declines were primarily driven by pressure in away-from-home channels, which represent approximately half of the company’s revenues.

Coca-Cola also reported a 16% decline in global unit case volume in this period. The company noted, however, that since the company’s last earnings update in April, global unit case volume trends have improved sequentially from a decline of approximately 25% in April to a decline of approximately 10% in June.

Performance has been driven by improving trends in away-from-home channels, along with sustained, elevated sales in at-home channels.

Coca-Cola said the improvement in away-from-home trends during the quarter closely correlated with the easing of lockdowns, and the company expects this correlation to continue in the second half of 2020.

“I’m proud of the people of the Coca-Cola system as we continue to adjust and accelerate our strategies in this fast-changing landscape,” said James Quincey, chairman and chief executive.

“We believe the second quarter will prove to be the most challenging of the year; however, we still have work to do as we drive our pursuit of ‘Beverages for Life’ and meet evolving consumer needs.”

Recovery plan

While the company believes the second quarter will be the most severely impacted quarter of the year, given the ongoing uncertainty surrounding the coronavirus pandemic and levels of lockdown, the ultimate impact on full-year 2020 results is unknown.

Coca-Cola reported a “strong” balance sheet and said it is confident in its liquidity position as it continues to navigate through the crisis.

“Despite the high degree of uncertainty, the company is committed to emerging stronger by gaining share and consumers, maintaining strong system economics, strengthening its reputation with stakeholders and positioning the organization to win in the new reality,” Coca-Cola said in a statement.

Coca-Cola is accelerating its road to recovery. The company said the strategy includes investments against a defined growth portfolio by prioritising brands best positioned for consumer reach and share advantage.

The company said it will streamline the innovation pipeline against initiatives that are scalable regionally or globally.

The portfolio will be supported by a refreshed marketing approach, with a step-change in marketing investment effectiveness and efficiency.

The company prepares to implement efficiencies to support these investments and will invest in new capabilities to capitalise on emerging, lasting shifts in consumer behaviours.