Coke caves under Wal-Mart pressure

NEW YORK (CNNMoney.com) - Coca-Cola, fearing Wal-Mart would launch its own sports drink to rival the beverage giant's Powerade if it didn't agree to the retailer's new distribution terms, caved under the pressure and altered its own century-old supply system, a published report said Thursday.

Wal-Mart, the world's largest retailer, asked Coke last year to switch to the straight-to-warehouse delivery method, and Coke's largest bottler, Coca-Cola Enterprises (Research) (CCE), began doing so across much of the U.S. in April, the Wall Street Journal said.

But according to June 1 court filing by Coke, the company stated that it faced a "serious risk" of a Wal-Mart-branded rival to Powerade unless it abided by Wal-Mart's demands of direct distribution instead of having Coke (Research) bottlers deliver drinks to individual stores within their exclusive territories and stack those drinks on store shelves.

The disclosure was made in a lawsuit filed in U.S. District Court in Atlanta against Coke and its largest bottler by 55 smaller bottlers, the paper said.

The smaller bottlers who brought the suit claim the distribution change violates their distribution contracts with Coke, but the beverage giant and CCE have argued that the plaintiffs aren't entitled to "claim nationwide veto rights" over how another bottler serves its territories, the paper said.

Internal CCE documents filed as part of the suit show that Wal-Mart officials criticized the traditional Coke distribution system for failing to keep Powerade in stock on store shelves and for taking too long to introduce products throughout the Wal-Mart chain, the paper said.

Personally, I will sacrifice price for someone who can tell me what isle the hardware is on.

IN my local WalMart, not only do I get someone who can tell me that, I get someone who will take me there and find what I'm looking for.

And will willingly pay a few cents extra for 3 extra cash registers being opened to reduce lines with 10 people in them.

In my local WM more registers are openned as soon as there are more than 3 people in any line, including sending people to the garden center or automotive when the store is really crowded.

Now, the customer isn't first, the bottom line is first at the expense of servicing the customer.

I believe it all hinges on the local management. I've been in poorly managed stores and in well managed stores. The management in my local WM puts the customer first at all times. I generaly dislike shopping and so avoid places when others are normally there. But I have been in the local WM on Christmas Eve and the day before school started....never had a problem.

Hello, I am a big fan of Wal-Marts. I own some of their stock and I am hoping that they get much bigger and even more powerful. I believe that Wal-Marts has done a great thing for our economy. Never before has the unemployment rate been so low and never before has household products been so cheap (relative to cost of living index). And if you do happen to be unemployed, why you can always get a job at the Wal-Marts because the Wal-Marts is always hiring.

As for all this fuss over Coca-Cola, what a bunch of hoo-hah over nothing. Everybody is yip-yip-yapping because local truckers can no longer deliver and stock the shelves at Wal-Marts with soda pop and energy drinks. Well so what? What is wrong with making Coca-Cola deliver their product directly to the Wal-Marts distribution centers? Is this not more efficient? Will this not lower the price of Coca-Cola products to the consumer?

And some here have pooh-poohed the notion that Wal-Marts can make their own brand of sports drink. Well why not? Do some here doubt the power of Wal-Marts? They can stock their shelves with nothing but Wal-Marts brand of sports drink and nobody will want to drink Powerade ever again. Wal-Marts has the capability to put Coca-Cola out of business and Coca-Cola knows it which is why they caved like they did.

What is the deal with Powerade anyhow? I don't like Powerade. I like Gatorade and Gatorade's Propel much better than I like Powerade. But I digress.

So anyway, some here are saying that Wal-Marts has reached the limits of their growth potential. They say they already have too many stores. But I say they do not have nearly enough stores. For example, when I want to go to Wal-Marts, I have to drive nearly 5 miles. This is not good. There should be Wal-Marts closer. I say that Wal-Marts can put 65,000 full-size stores in the USA easy along with 271,000 "convenience-store sized" Wal-Marts. Yes, I think Wal-Marts is getting ready to get into the convenience store business. It is the next logical step.

This is based on U.S. population of 300,000,000.

Obviously Wal-Marts can open far more stores in the rest of the world. For example, in China alone, Wal-Marts can build 310,000 full-size stores and 1.1 million convenience stores.

I just wish Wal-Marts had a better selection of books. Perhap they could open their own chain of bookstores.

Wal mart used awful underhanded tactics to undermine and bankrupt the Bradlees discount chain in my area. True that company was run ineptly, but they still were helped by Wal Mart to accelerate their demise.

Gee, I'm so broken-hearted over Bradlees. I remember the Bradlees chain and they were godawful. Kudos to Wal-Marts for hastening their demise. Same for Caldors, Ann & Hope and Almys. Three other pathetic chains that got steamrollered and put out of their misery by the Wal-Marts juggernaut.

You are there!!!

I'm a strange type woman - I really don't like shopping, but I dislike the attacks on WM even more than I dislike shopping.

I'm also a major proponent of supporting local small business and I have been amazed at the number that have told me to go to WM for something I am looking for that they don't have, but know WM does.

Local management of the WM makes all the diference. I've been directed to more local small businesses by staff at the local WM than I would have found on my own.

Are all WM's as good as the one I shop, of course not, but I'm very happy with the one I've got!!!

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