Coca-Cola CEO James Quincey said he is not anticipating a fast economic rebound now that the world is reopening for business.
It is more likely the economy’s recovery post-pandemic will be more of a U- or “extended U”-shape, not a “V-shape” with a quick bounce back to normal, he told CNBC on Wednesday (May 20).
“The economic impact of the lockdown is just starting to begin,” Quincey said, and everyone will “have to recognize that coming after this virus crisis will be the economic impact and hangover of the lockdown, and there will be a much greater focus from the consumer on affordability or getting the prices lower.”
Coke isn’t sure yet how people’s spending habits will unfold as life starts to return to a new normal post-pandemic, Quincey said. But the company is anticipating that most people will have less money for discretionary spending.
The company’s sales fell 25 percent in April and although there has been an uptick in May, global volumes are still negative, Quincey said, since about 50 percent of the company’s revenue stems from entertainment-type venues like restaurants, theaters and arenas.
In China, for example, demand for Coca-Cola products have not yet rebounded to pre-pandemic levels even though stay-home mandates began lifting last month.
The $191 billion market value of Coca-Cola dropped 19 percent this year, but premarket trading was up 1 percent for its shares, according to the news outlet.
The Congressional Budget Office said on Tuesday (May 19) that real gross domestic product (GDP) will contract by 11 percent in the second quarter of 2020 — equal to a 38 percent drop at an annual rate. Further, employment is expected to be roughly 26 million lower than in the fourth quarter of 2019.
The Federal Reserve Bank of Atlanta is forecasting that the national GDP will drop by nearly 43 percent in the second quarter — the worst since World War II.