Coca-Cola Cuts Costs,
Reinvests in Marketing
Up to $650 Million Savings Will Be Used for Brand-
Building, Commodity Costs
In announcing its fourth-quarter results, Coca-Cola said it plans to cut $550 million to $650 million in annual costs by the end of 2015. That money will be reinvested in marketing and brand building, as well as used to address rising commodity costs. The company also said it exceeded its goal of cutting $500 million in costs during the past four years.
On Thursday, PepsiCo is widely expected to announce it will pour an additional $400 million to $500 million into marketing its brands this year. Analysts, pointing out that ad spending on beverages has trailed Coca-Cola, have called for increased investment, particularly in the company’s North American beverage brands.
“This program will further enable our efforts to strengthen our brands and reinvest our resources to drive long term profitable growth,” said Coca-Cola CEO Muhtar Kent during a conference call with analysts. “We remain relentless in our efforts to become more efficient, leaner and adaptive to changing market conditions, while at the same time building a continuous improvement in cost management culture in keeping with our 2020 vision.”
Mr. Kent repeatedly emphasized that Coca-Cola places brands first, calling brand Coca-Cola “the very oxygen of our business.” In contrast, PepsiCo has been under fire for neglecting its brands, specifically its flagship cola.