Food & Beverage

Coke goes 'lean,' to cut 1,200 jobs as part of $800 million cost-savings plan

Key Points
  • Coca-Cola announced Tuesday plans to eliminate 1,200 jobs from its corporate center.
  • Incoming CEO James Quincey said he wants to focus more on "lean" operations.
  • Coke plans to save an additional incremental $800 million by 2019, reinvesting about half of that in the company, Quincey told CNBC's "Squawk Alley."
James Quincey
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Coca-Cola said Tuesday it will eliminate 1,200 jobs from its corporate center as part of a multiyear cost-cutting effort, with the reductions beginning in the second half of this year.

Incoming Coca-Cola CEO and current COO James Quincey said on the company's earnings conference call that the company is planning "more focused, lean" operations.

In its quarterly earnings report Tuesday morning, Coke announced plans to expand a productivity and reinvestment program to eke out an incremental $800 million in annualized savings over the next two years. This added savings will boost Coke's target for a six-year savings program to $3.8 billion, the company said.

"The changes in [Coke's] corporate center will make us more agile, more focused on growth," Quincey further explained the announcement on CNBC's "Squawk Alley" in an exclusive interview Tuesday.

Quincey said that "about half" of the $800 million in savings by 2019 will be reinvested in the company, adding: "We will be a much smaller company by next year."

"I think here the clear intent is that this [reinvestment] is more directed to some of the newer categories or some of the other categories to drive growth," he said, clarifying where some of the cost savings will be deployed at Coke.

In particular, "savings will be reinvested at reinvigorating revenue growth of [Coca-Cola's] sparkling category," the incoming CEO told CNBC.

On Tuesday, the company reported its eighth consecutive quarterly decline in revenue. Coke was hurt most by expenses involved with refranchising its North America bottling operations, which impacted its bottom line, and it faced headwinds in Latin America, where economic conditions remain challenging.

Quincey will succeed Muhtar Kent and become Coke's CEO on Monday.

Read: Coke reports first-quarter earnings