Coca-Cola Beverage (Image courtesy of LG Household & Health Care)
SEOUL, Dec. 17 (Korea Bizwire) – Coca-Cola Beverage, a subsidiary of LG Household & Health Care, has conducted its first voluntary retirement program since being acquired in 2007.
The program, targeting older employees in the sales and logistics departments, reflects growing pressure on the company amid declining profits in the domestic beverage market.
Details of the Retirement Program
From November 4 to 15, Coca-Cola Beverage invited employees born before 1971 to apply for voluntary retirement.
Eligible participants were offered severance packages ranging from 0.5 to 2 years of base salary, depending on age, along with up to four semesters of tuition support for their children. The number of applicants was not disclosed.
The company stated the program aimed to address workforce stagnation and promote organizational renewal.
Declining Performance
Industry observers attribute the move to financial challenges. Despite years of rapid growth, Coca-Cola Beverage’s operating profit fell 1.8% in 2022 to 204.1 billion won, marking the first decline in eight years.
For 2023, while the company’s financial results have not been released, LG Household & Health Care’s Refreshment division, which includes Coca-Cola Beverage, reported a 15.2% year-on-year drop in cumulative operating profit for the first three quarters, totaling 157.9 billion won.
Historically, the beverage business accounted for over 40% of LG Household & Health Care’s annual operating profit. However, the sector has faced headwinds from slowing consumer demand and high exchange rates.
Coca Cola (Image courtesy of Rawpixel/CCL)
Broader Industry Context
A source in the food and beverage sector noted that the voluntary retirement program reflects efforts to streamline operations amid challenging market conditions.
“The domestic beverage market has been affected by weakened consumer spending and high foreign exchange rates,” the source said.
Coca-Cola Beverage remains a critical player in LG Household & Health Care’s portfolio, contributing 90% of the Refreshment division’s sales with flagship products like Coca-Cola, Sprite, Minute Maid, and Powerade.
However, the recent slowdown signals mounting challenges in maintaining its role as a cash cow for the parent company.
Lina Jang (linajang@koreabizwire.com)
