Posted on 06/08/2006 12:27:13 PM PDT by RWR8189
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.
(Excerpt) Read more at money.cnn.com ...
If the drivers for Coke in your area are not union that is simply an anomaly.
They are probably more out-of-work or less able to pay their bills, than disgruntled.
Are you one of those "the economy sucks" people?
The employment rate has never been higher then under this president, more people own their own homes then ever before, consumers debt is actually shrinking and average personal wealth is at an all time record high.
Stop watching the alphabet networks for the news.
I'll defer to one of the lawyers on this issue but I think Robinson-Pattman would find Coke is giving a "continuing" price discount to Wal Mart.
Sounds like a win win situation.
No, I'm more of one of those look around and listen to others, people.
I can't tell the difference among Coke, Pepsi or Walmart cola brands. I know many can. I do like that these behemoths have to actually negotiate every once in a while. There was a recent TV report about a lawn mower company that said no to Walmart on going with them because they would have to make a new, cheap, flimsy model. They refused, and sell through Home Depot, I think. Good for them.
The headline had me envisioning a cave full of coke that caved in from the weight of the Wal*Mart built atop it.
Sort of true in a way.
When I worked at a grocery store in mid-Michigan, the grocery workers were not union, and the United Food and Commercial Workers Union (UFCW) was trying desperately to unionize us, which included some rather unsavory tactics.
The drivers who delivered to our store (Coke, Pepsi, etc. as well as the Kroger drivers who were Teamsters) didn't bug us much about it.
Sometimes the Kroger drivers were noticably late with the twice a week frozen food delivery, which meant I had to stay very late to stock (as I was the store's frozen food person as well as the one day a week morning delivery door person). We assumed it might have had something to do with the union issue, but it might have just meant that the delivery guys were lollygaggers.
Wal-Mart strong-arming businesses again.
The long-term effect?
Eventually, Wal-Mart will force Coca-Cola to distribute their other products straight to the Wal-Mart warehouse and by-pass the local bottlers.
End result? Wal-mart slowly gains a financial advantage over the local bottlers and puts them out of business.
The price of Coca-Cola to the consumer is not the issue right now. What is at issue here will be the ability of the local bottlers to match pace with Wal-Mart's aggressive pricing.
Eventually, Wal-Mart will put all of the local bottlers out of business and will then corner the market on the distribution of Coca-Cola products.
Maybe Coke didn't get bluffed but are making Walmart wear the black hat for something they wanted...
You are EXACTLY right, this is the first shot in Coca-Cola shafting their distributors.
Companies routinely discount their products to volume buyers.
And if they can't do it, China can.
"consumers debt is actually shrinking"
Not according to USAToday
http://www.usatoday.com/money/perfi/general/2004-03-17-debtcover_x.htm
Yeah, I celebrate that lower price everytime I go into Wal-mart and wait in line 20 minutes to check out. EVERY time.
Wal-Mart may have the lowest prices but their service has become the biggest joke on the planet.
Creative destruction is a by-product of capitalism. New and innovative business models flourish while old business models die out. The success of Amazon.com destroys traditional book sellers. The success of Expedia.com puts traditional travel agents out of business. This sucks if you are a book seller or a travel agent, but in time we refer to these events as 'progress'.
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