Daily Management Review

Pandemic Strategies To Be Used By Coca Cola To Prepare For Potential Delta Variant Hit


Pandemic Strategies To Be Used By Coca Cola To Prepare For Potential Delta Variant Hit
The strategy that it had successfully adopted during the Covid-19 pandemic – that if focusing on its bigger brands and focusing more on its supply chain, will be relied on by Coca Cola Co to address the impact of a possible new wave of the pandemic believed to be caused by the Delta variant of the coronavirus, said the company’s chief finance officer, John Murphy.
 These comments from Murphy came as the company beat analysts’ estimates for the second quarter for the second quarter of the beverage company with the re-opening of global economies, while also raising its sales forecast for the entire year. The better than expected results from Coca Cola resulted in a 3 per cent jump in the shares of the company.  
Lockdowns and other restrictions in some regions have been re-imposed because of a surge in Covid-19 infections from Australia to the United States which has raised concerns about the pace of a recovery for the global economy while shaking up the stock markets earlier this week.
Murphy said the resurgence of the pandemic hit sales of the company in some markets in Asia and added that some of the possible impacts of the new Delta variant of the coronavirus were also accounted for in the raised sales forecast by the company for the full year.
"When things get more constrained, the bigger brands are the ones you focus on," Murphy said.
Over the past year, streamlining of its product range has been done by Coca Cola to cushion the impact of the pandemic. The TaB diet soda and Coca Cola Energy brands in the United States have been discontinued by it while the ZICO coconut water brand has been sold by the company which owns brands such as Sprite, Fanta and Dasani.
The closing of theaters, restaurants and stadiums is one of the major threats to the company which is not the case with its rival PepsiCo which depends more on grocery and retail channels for sales.
"If we have a re-closing of venues or capacity restrictions re-implemented, Coke sales are going to suffer. For that reason we view it as the riskier name to Pepsi," said Garrett Nelson, senior equity analyst at CFRA Research.
A rise of 41.1 per cent in its adjusted overall revenue for the second quarter was reported by Coca Cola, at $10.13 billion, which comfortably beat estimates of $9.32 billion, according to IBES data from Refinitv.
The annual organic revenue target was also raised by the company to an increase of 12 per cent to 14 per cent from the high single digits rise that it had expected earlier. Annual adjusted earnings per share are expected to rise 13 per cent to 15 per cent.
Adjusted earnings of 68 cents per share beat expectations of 56 cents.