Coca-Cola shake-up: CEO Muhtar Kent to step down May 1

Coca-Cola CEO Muhtar Kent will step down as CEO of the soda giant after nearly a decade at the helm.

James Quincey, the company's current president and chief operating officer, will succeed Kent as CEO on May 1, 2017. Kent will continue as chairman of the board of directors, the Atlanta-based company announced Friday in a move that has been unanimously approved by Coca-Cola's board.

Quincey has been groomed to continue the world's largest beverage company's mission to become more diversified and nimble, Kent said. "For about a hundred years roughly, we’ve been a one-brand business and then over the last 30 years, we’ve added 4,000 new products with 550 to 560 new brands. That pace in the next 10 years is just going to continue to increase," Kent said during a conference call with media after the announcement. "James and his leadership team ... (can) take it to the next level."

"I know James and like him, and believe the company has made a smart investment in its future with his selection.” -- Berkshire Hathaway CEO Warren Buffett

Coca-Cola has seen declining revenues in recent years as consumers have cut back on sugary beverages. Revenue fell more than 3% from $46 billion in 2014 to $44.3 billion in 2015.

However, sales of Coke's waters and sports drinks have been on the rise and the company is in the midst of a move to franchise its North American bottling operations by the end of 2017. For 2016, the company expects a 3% gain in organic sales and a 4% to 7% decline in comparable earnings per share.

Quincey, 51, a 20-year veteran at the company, hailed Kent for his vision in remaking Coca-Cola. "Muhtar has catalyzed change here at the company driving the transformation of the global bottling system, expanding our product portfolio and making sustainability a business imperative," he said.

Coke (KO) shares were up more than 2% in midday trading Friday to $41.93. The company also owns and makes Sprite, Fanta, Dasani, Smartwater, Vitaminwater and Powerade.

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Kent, 64, who succeeded Neville Isdell as CEO in July 2008, joined Coca-Cola in 1978 and rose through the marketing and operations ranks to handle bottling operations in 12 countries in 1995 as managing director of Coca-Cola Amatil-Europe. He rejoined the company in 2005 as president and COO of the company's North Asia, Eurasia and Middle East Group after six years as president and CEO of the Efes Beverage Group.

Billionaire investor Warren Buffett, whose investment firm Berkshire Hathaway owns 400 million Coca-Cola shares, valued at about $16.4 billion, offered comments on the succession plan in the company's official release: "I know James and like him, and believe the company has made a smart investment in its future with his selection.”

Buffett's son, Howard Buffett, on Thursday announced that he would not seek re-election to the Coca-Cola board of directors.

“The timing of this announcement is a bit of a surprise but the move is not entirely unexpected," said Howard Telford, senior beverages analyst at Euromonitor International.  "The transition in leadership at the company in 2017 will conclude a busy period of transition in Coca-Cola’s overall business ... as it seeks to become a more nimble, profitable and less capital intensive operation."

Coca-Cola sells more than 19% of the world's soft drinks, by volume at retail, with competitor PepsiCo holding 9.5%, according to Euromonitor International.

Quincey's expectations that the beverage industry's future includes lower-sugar options recognize "the need to respond to declining carbonates consumption in key markets," Telford said. "The challenge for the next leadership team at the company will be ensuring continued sales growth in this new consumer environment (impacting both developed and developing markets) via higher value transactions, adjustments to price/package and targeted brand acquisitions in new, high value categories.”

Follow Mike Snider on Twitter:@MikeSnider.