The Coca-Cola Co.

We believe the plan to streamline the portfolio--which should reduce complexity and trim the number of stock keeping units (SKUs)--also factors into Coke's decision to reorganize its operations by reducing the number of business units to nine from 17 (while maintaining the Global Ventures and Bottling Investments Group) and offer approximately 4,000 associates in the U.S., Canada, and Puerto Rico the ability to participate in a voluntary separation program (almost 5% of the global work force). The company will offer similar voluntary force reduction programs in many countries internationally. Although these actions come with the risk of market share losses, we believe the benefits of a more targeted product management strategy and streamlined organization will outweigh such risks. We expect

...We view Coke's decision to streamline its portfolio positively because it should result in more efficient product development and allocation of marketing resources. Coke's portfolio includes about 400 master brands; less than half of which generate 98% of revenue and are primarily composed of global, regional, and local brands. The remaining master brands--which total more than 200 and mainly consist of single country brands--account for only 2% of revenue, have little scale, and grow below the company average. We expect Coke will sell, exit, or replace many of these smaller brands with growth brands. This strategy is demonstrated by the recent Odwalla Juice exit. Coke is also building a networked global organization that it says will position it to capture growth by combining scale with knowledge to win locally. It has also formed a platform services organization--expected to be up and running by early 2021--that will service operating units, including with respect to data management,...

Full Report