Coca-Cola seeks to optimize its efficiency by attacking “zombie brands”


In a call to investors today, Coca Cola (NYSE: KO) CEO James Quincey outlined the soft drink giant’s strategic plan to phase out several of its brands, shedding ‘zombie’ product lines while building support for successful brands. The move follows a -28% drop in second-quarter revenue year-over-year due to the staggering economic fallout from the COVID-19 pandemic.

During the call, Quincey noted that of the company’s 400 brands, 200 generate 98% of the revenue, while the other 200 manage to earn just 2%. However, low profit brands still gobble up resources, such as salaries, ad spend, and many types of overhead.

Image source: Getty Images

Quincey said the company had previously failed to eliminate brands even though they had failed to generate rapid growth, noting, “We have not been assertive enough and directive enough to weed out explorers who do not. ‘haven’t worked so we can redirect resources to the Explorers and Challengers with the greatest opportunity. He also detailed some of the winning brands, including sales volume of seltzer and sparkling water in China, which jumped 14% in the last quarter. He specifically cited Coca-Cola’s Topo Chico sparkling mineral water brand as one of the winners where the company wants to “support our investments”.

The brand’s first closure was announced on July 1 when Coca-Cola announced the closure of its Odwalla juice brand. Quincey says the company is “prioritizing fewer but bigger and stronger brands” and plans to “leave some zombie brands and not just zombie SKUs.” Streamlining is expected to help the company’s supply chain run more smoothly, while also forming a key facet of its post-COVID rebound.


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