Coca-Cola Company expects hard times ahead, announcing Tuesday a 25% drop in volume of drinks sold globally so far in April.
The pandemic sliced into consumers’ outside purchases at places such as restaurants, movie theaters and sporting events, which normally account for about half of company sales.
In a call with analysts, Chief Executive Officer James Quincey suggested the second quarter of 2020 — April through June — is likely to be the company’s most financially severe for the year.
Coke’s worst full-year volume declines were 17% in 1932 and 1945. It also suffered a 15% drop in 1918 amid a massive influenza pandemic, according to the company.
Quincey suggested the financial troubles for the Atlanta-based company are temporary, but he stressed the uncertainty about the longevity of effects from both the pandemic and broader global economic damage. Gradual reductions in government restrictions on businesses and personal activities are only one step in the process, he said.
“We are still at the beginning. We may be at the end of the big global lock down, but we are still some way from the new normal,” Quincey said.
Coca-Cola noted changes in consumer behavior. There were initial increases in sales at places such as groceries. And e-commerce sales growth doubled, but it remains a small part of the company’s overall mix.
Consumers are increasingly focused on affordability, executives said. Other activities that had been in decline, such as eating breakfast at home, are growing as people shelter in place. That’s helped Coca-Cola brands such as Minute Maid and Simply juices, Quincey said.
At the same time, the company is putting less focus on newer beverage entries as it tries to focus on some of its biggest brands in tough times. And Coca-Cola, which typically spends billions of dollars a year toward advertising, has paused its big marketing campaigns.
Coke often markets heavily around major sports events.
“It’s pretty clear that we are going to see a fairly limited — not say none — amount of large sporting events with audiences in the next couple of quarters,” he said.
During a later call with reporters, Quincey said Georgia Gov. Brian Kemp’s plans to ease some business restrictions are unlikely to lead companies to quickly call back teleworking employees to large office complexes such as Coke’s global headquarters in Atlanta.
“We are entering unknown territory,” Quincey said, adding later, “We are not in a rush.”
He said some lab workers could come back sooner.
Asked by an analyst about the pace of recovery and when he expects a return to normal sales levels, Quincey said, “I would love to be able to tell you there is an answer to that question, but there isn’t.”
On Tuesday, Coke also reported first-quarter results, which showed somewhat limited impact from by the pandemic. Net revenues fell 1% compared to the quarter a year earlier.
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