Coke Layoffs May Signal Slowdown in Beverage Industry

Knoxville — The Coca-Cola company’s anticipated layoff of 6,000 employees is the largest job cut ever for the soft-drink business.

But a University of Tennessee economist said the cuts are a sign of the slow growth of the industry.

“When things are booming and market share is growing, Coca-Cola needs high employment levels to ensure that enough product is being made,” said Dr. Matthew Murray. “But when market share is flat, the company can do very little other than cutting costs, and job cuts are a quick way to cut costs.”

The company’s restructuring will cost $800 million, but analysts say Coke could save $300 million annually after the layoffs, which will reduce the company’s payroll by 21 percent.

“Significant downsizing of beverage companies is not a surprise,” said Murray, “but what is a surprise is that we’re talking about Coca-Cola, which is one of the national, if not global, leaders in the beverage industry.”