After an increasingly rocky eight-year run atop the world's biggest beverage company, Muhtar Kent will resign as chief executive of Coca-Cola Co. and hand the keys in May to his top lieutenant
Mr. Kent, who will turn 65 next year, will be succeeded by James Quincey, a 20-year veteran, was appointed president and operating chief last year, setting the 51-year-old up to take the top job. Mr. Kent will remain chairman of the $178 billion company.
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"This transition comes at a time of important evolution for the Coca-Cola company," Mr. Kent said in a statement.
The decision to elevate Mr. Quincey isn't a surprise, but the timing of the announcement had been unclear. Some Coke insiders didn't expect the succession announcement until early next year.
Under Mr. Kent, Coca-Cola has missed its growth targets for past three years as consumers scale back on sugary sodas. Despite a diversification push into juices, bottled waters and other beverages, soda still represents about 70% of company sales. Coke's annual sales have declined slightly for the past two calendar years, and in the first nine months of this year revenues slumped 5%.
The CEO change comes after a Coca-Cola board meeting this week, when Howard Buffett, the oldest son of billionaire Warren Buffett, chairman of Berkshire Hathaway Inc., Coke's largest shareholder, said he would leave the board.
The elder Mr. Buffett on Friday praised Mr. Kent's leadership and the selection of Mr. Quincey as successor. "Muhtar has been an excellent steward of Coca-Cola's business over the last eight years," said Mr. Buffett in a written statement. "I know James and like him, and believe the company has made a smart investment in its future with his selection."
Mr. Quincey will have to find a path forward for the soda giant in the face of shifting consumer preferences. Coke said he has been involved with recent moves designed to fit these trends, including selling soda in 7.5-ounce "mini cans" and reducing added sugar across the company's portfolio.
Since joining Coke in 1996, Mr. Quincey has risen through Coke's international ranks, an increasingly important focus for the company. During his tenure, he has led Coke's presence in both Europe and Mexico.
Coke has posted solid results in the U.S. lately as it raises prices and shifts to smaller packaging, charging consumers more per ounce. But growth has stalled or reversed in many emerging markets including Russia, China and Brazil.
Mr. Kent has tried to boost profits by divesting manufacturing and distribution in the U.S. and elsewhere to focus on the higher-margin, less capital-intensive concentrate business. The company also has made a handful of acquisitions of juice and dairy companies; last year it bought a large minority stake in Monster Beverage Corp., a leading energy drink maker.
But many investors have soured on the company. Coke's share price is down 3.5% this year, compared with a 10% gain in the S&P 500. It is up 23% over the past five years, less than a third of the gain in the S&P 500. The stock rose 2% Friday morning to $41.84.
Mr. Kent won praise early in his tenure for boosting growth and stabilizing the U.S. market. Many credited his strong operational know-how, which he developed after starting with Coke in 1978 and riding red delivery trucks to towns like Lubbock, Texas. As CEO, he continued to focus on the smallest details, carrying a red paint chip in his wallet to make sure Coke trucks, packaging and store signs were Coke red.
He also helped expand Coke's presence in foreign markets. The son of a Turkish diplomat, he mingled easily with business leaders and heads of state. He was general manager in Central Asia, opened factories in the former Soviet Union and ran a major Coke bottler in Europe before becoming CEO in 2008.
Critics, though, said he became too involved in details and micromanaged, often shutting down debate inside the company. Some company insiders and trackers also have questioned whether Mr. Kent moved quickly enough to diversify Coke's soda-heavy portfolio and respond to shifting consumer tastes. Mr. Kent has long called the company's namesake cola the company's "oxygen."
--Austen Hufford contributed to this article.
Write to Mike Esterl at email@example.com