Coronavirus Economic Impact: Coca-Cola Takes A Hit In Quarterly Sales

Coca-Cola (KO) announced on Tuesday that it expects its second-quarter sales to be negatively impacted by the ongoing COVID-19 pandemic.

The Atlanta-based beverage company explained that the demand for soda products has declined in the current climate. With uncertainty mounting as the coronavirus outbreak continues, the company has also withdrawn its financial guidance for the rest of 2020.

“The ultimate impact on the second quarter and full year 2020 is unknown at this time, as it will depend heavily on the duration of social distancing and shelter-in-place mandates, as well as the substance and pace of macroeconomic recovery,” the company said in a statement. “However, the impact to the second quarter will be material.”

The soft-drink giant’s global volume has tumbled 25% since the start of April. In the first quarter, Coca-Cola saw only a 1% drop in revenue to $8.6 billion, while still beating projections by $300 million.

Up to the end of February, before most countries began instituting social distancing orders, Coca-Cola reported a 3% growth in volume and remained on-track to reach 2020 projections. However, once stay-at-home orders went into effect and non-essential businesses began to shutter, the company’s sales began to decline significantly.

Aside from changing consumer priorities, Coca-Cola also suffered due to the closures of restaurants, sports venues and movie theaters, which make up a good portion of its revenue.

In order to meet the current climate head-on, Coca-Cola has reoriented its short-term business plans towards digital promotions and e-commerce offerings. This includes increasing support for meal delivery services and changing refocusing on online sales.