Gates, Yellen and CEOs of Coca-Cola, Morgan Stanley and Airbnb speak at WSJ CEO Council Summit

Coca-Cola Co. is working to increase the resilience of its supply chain and build buffer stocks as the beverage giant navigates an increasingly unstable world, chief executive James Quincey said Wednesday.

Like many of its peers, Coca-Cola is grappling with a host of major economic and geopolitical events that have come together in recent months, including inflation, supply chain grunts, new Covid-19 lockdowns and Russia’s invasion of Ukraine.

In the face of all this, Mr Quincey told the Wall Street Journal’s Council of CEOs Summit in London that the company felt little pressure to de-globalise. It has, however, been scrambling to build up buffer stocks of crucial ingredients, in part to protect against possible future disruption if China’s lockdowns lead to port closures, affecting exports.

“Resilience is more important now,” he said. “We need more of that.”

Asked about leaked Supreme Court draft opinion indicating court may prepare to overturn Roe v. Wade, the 1973 precedent that established a constitutional right to abortion, the CEO called the situation “unfortunate,” noting that it complicates deliberations.

In response to a question about whether Coca-Cola would follow in the footsteps of Amazon.com Inc. and pay for employees to travel out of state for abortions, should it become necessary, Quincey said the problem was currently not the case. t affect the beverage company. “The vast majority of our employees are in Atlanta, Georgia, and that’s not on the table right now,” he said.

On Russia, Quincey said Coca-Cola could see its operations in the country “completely disappear at some point” if the war in Ukraine drags on. The company said in March it would stop selling its beverage base to franchisees in Russia.

Coca-Cola had drawn criticism from consumers for not suspending sales in the country sooner after the invasion of Ukraine. But Mr Quincey questioned how much influence the decisions of companies like Coca-Cola could have on the pressure on governments.

“The symbolism is important but it won’t be the deciding factor,” Mr Quincey said.

Mr. Quincey said that environmental, social and governance, or ESG, issues are the top issues for investors today. However, he said if Coca-Cola’s financial results had been weaker, shareholders would likely focus on that instead.

Coca-Cola recently announced first-quarter results showing a jump in organic sales, driven in part by strong price increases. Mr Quincey said consumers, so far, have continued to be receptive to price increases. “We haven’t reached the critical point yet,” he said.

Still, he warned things were likely to get tougher. “Inflation is rising faster than wages,” he said. “It tends to end badly.”

For its part, Coca-Cola has had to raise hourly wages for staff in areas like logistics and warehousing where the company is experiencing significant shortages of employees like truck drivers, Quincey said. He described driver shortages as structural, saying they were accelerated by the pandemic but also preceded it, due to issues such as tighter regulations and an aging workforce. In response, Coca-Cola has donated money to the state of Georgia to set up instructor schools to try to solve this problem, while a supplier recently ran an advertisement for driver positions in the Super Bowl.

In Shanghai and other cities affected by lockdowns in China, Quincey said Coca-Cola volumes were negative. Coca-Cola is not alone in trying to build buffer stocks to protect against disruptions, he said, adding that the rush is only exacerbating supply chain problems. “The logic is to want those buffer stocks even if it’s just a small pebble in a huge pile of problems.”