Coca-Cola swallows sales decline but expects growth again

Coca-Cola expects to return to organic growth this year after a very tough 2020. The beverage giant is counting on the global rollout of vaccines to ensure that consumers can soon enjoy cinema visits and sporting events again.

Sharp decline in sales

The Atlanta-based company derives more than a third of its revenue from non-retail channels, but the corona crisis slowed down restaurant operations, prevented numerous events from taking place and kept consumers indoors for the most part. As a result, Coca-Cola’s sales fell 11% last year to 33 billion dollars (27.2 billion euros). On an organic basis, revenues fell 9%, writes Reuters.

“It is still early days in the vaccination process, and we’d expect to see further improvements in our business as vaccinations become more widely available over the coming months,” CEO James Quincey said. He added, however, that short-term recovery is still heavily influenced by the virus. For the full year, the company expects high single-digit growth in adjusted profit and organic sales.

Reorganisation

In response to the pandemic, Coca-Cola has accelerated the restructuring of its workforce and slimmed down its portfolio. The beverage giant announced at the end of last year to cut about 11% of the jobs worldwide. Furthermore, the number of brands will be reduced to around 200.

Overall, volumes fell by 6% last year. All divisions lost ground, but the damage was most severe in the waters (-11%) and in the coffee and tea business (-17%). Minute Maid juices were also hit.

Taxes

In the context of an ongoing dispute with the American federal tax service IRS, Coca-Cola also booked a tax reserve of 438 million dollars (361 million euros). The dispute revolves around the amounts the company charged to foreign subsidiaries for the rights to produce and sell Coke products.