Coca-Cola will discontinue about 200 drink brands, halving its portfolio, according to its earnings call on Thursday.
What We Know:
- During an analyst call, CEO James Quincey stated that they didn’t name the brands it would scrap. Still, it will likely remove more brands from its “hydration” category, including brands like Dasani, Powerade, and Smart Water.
- Since June, the company has mentioned it will discard drinks such as Tab, Zico, and Odwalla.
- Coca-Cola’s profits are dominated by its most famous brands, Coke, Sprite, and Fanta. Quincey said more than half of the company’s brands collectively generate just 2% of its revenue in July.
- Due to this, Coca-Cola has selected to terminate specific brands so it can make sure drinks with the most substantial potential to expand their consumer bases increase frequency and drive system margins, it said.
- Despite terminating some brands, the company stated it will continue to search for new beverage categories. It started its Topo Chico Hard Seltzer in Latin America in the third quarter through an agreement with Molson Coors Beverage Co. and will launch the product in the US in the first half of 2021.
- In the quarter to September, Coca-Cola stated that net revenues declined 9% to $8.7 billion because of a drop in out-of-home drinking, as restaurants in some areas remained shut, and fewer people dined out. Sales had recovered in the previous quarter, the company mentioned, but at a slower rate.
- The company still beat revenue expectations, with revenues around $300 million higher than analysts had prognosticated. Unit sales, which don’t include currency variations, fell by just 4%.
Water and sports-drink volumes, the category Quincey said could face further cuts, fell 11%. The company attached this to a drop in water brands. The company said the ultimate impact of the pandemic on its near-term results was “unknown,” and Quincey mentioned, “many challenges still lie ahead”.
