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 ...
Coke probably can't afford to lose the Wal-mart market.
Wal-mart can promote the competitors, Coke has no other recourse.
Wal-Mart is going to save $$$ for Coke with this the way I see it.
Most of the drivers for bottlers are just kids in college barely making $12.00 an hour.
Wal-Mart is like hiring someone to Mow your 1 acre yard for 5 dollars. They agree to mow it once a week rain or shine.
They show up and mow your yard with a huge tractor and bushhog. They cut down every sprig of grass in sight. And they leave huge ruts in your yard.
You would use someone else, but they've torn up the yard so bad that no else will mow it. So, you are stuck with them.
That article was written over 2 years ago.
Coke prices in Wal-Mart are just the same as any other grocery stores, except that Wal-Mart honors competitors' prices and there's no limits on quanitity. Coke had plenty of recourses here. They could have told Wal-Mart to get bent and pulled their products out of their stores, which would have hurt some grocery sales at Wal-Mart because people buy soda in addition to other things too.
Coke passed up a good chance to fire a shot across Wal-Mart's bow, IMO. Don't get me wrong I love Wal-Mart but I like it when businesses stand up to them like the Snapper dealer and how Netflix ate Wally's lunch in DVD rentals.
That's a stretch of an analogy. I think I can still waltz into Wawa or a hundred other places and buy Coke any time I want some.
"American consumer wins... "
Eventually, Wal-Mart will force Coca-Cola to stop using distributors for their products and ship direct to Wal-Mart.
When that happens, some of the distributors will go out of business. Then, Coca-Cola becomes harder to find. Coke will lose market share.
If Coke tries to buck Wal-Mart, they yank their product off their shelves.
Coca-Cola is the loser in this.
Two different things. Wal-Mart already makes soda through their Sam's Choice brand anyway.
"That article was written over 2 years ago."
It still wasn't true 2 years ago.
Oh, it won't happen immediately. But if Wal-Mart continues their predatory strong-arm tactics unchecked, it will.
Exactly. Coke will evolve to be sure any business who wants to buy their product can continue to do so, or they will become a smaller company. Their choice.
You have to think Pepsi is next, or they've already changed to do this already.
Maybe somewhere.
Most places they’re Teamsters and make significantly more than $12. That’s why the Teamsters have an entire conference devoted ONLY to brewery and soft drink and allied industry drivers.
From the title I was thinking this was about Columbia.
What do you want, a world in which Wal-Mart is the only retail store?
Better yet, do you want Wal-Mart = Microsoft? They are already getting there fast with their horrendous service and store management.
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