EU curbs Coca-Cola market dominance

Related tags Coca-cola

Coca-Cola can no longer negotiate exclusive supply deals for its
fizzy soft drinks in the EU and must open its coolers to rival
brands as the European Commission tries to improve competition,
reports Chris Mercer.

Coca-Cola, which controls about half of Europe's soft drinks market, has agreed to a Commission ruling that retailers, cafés and restaurants across the EU (plus Norway and Iceland) must remain free to sell the carbonated soft drinks of their choice.

Nor will Coke's customers be obliged to buy the firm's less popular brands such as Sprite or Vanilla Coke alongside the top brands, such as regular Coke and Fanta Orange.

Coca-Cola itself will be banned from offering rebates to suppliers who agree to buy its less popular brands or reserve their shelf space exclusively for the Coke family.

On top of this, outlets will be free to use a fifth of their Coca-Cola coolers for any product they like, as long as they have no other chilled beverage capacity and Coke has provided its cooler free of charge.

The new rules will last until 31 December 2010 and Coke could be fined 10 per cent of its worldwide turnover if found shirking its commitment. This would be around $2.2bn (€1.8bn) based on the group's 2004 results.

The Commission has been investigating Coca-Cola's market dominance for six years and heralded its decision as a vote for greater consumer choice.

Jeanette Bengtsson, analyst at market research group Euromonitor​, said that consumer choice may still remain fairly limited in some categories due to the dominance of PepsiCo and Coca-Cola in the carbonated drinks market.

For example, she said Coca-Cola has about a 62.5 per cent share of Western Europe's fizzy cola retail market, while Pepsi was number two with a 16.3 per cent. The third biggest player only had a 0.6 per cent stake.

Steve Leroy, Coca-Cola spokesperson, told​ that the group was not expecting a big hit on sales because it had planned for the ruling and had begun implementing some of its requirements already.

He said dialogue with the Commission had remained constructive throughout: "This is about the consumer and what the consumer wants."

Coca-Cola stopped demanding exclusive distribution deals to cafés and restaurants via its customers in Austria in 2003, and has worked closely with the Commission.

The bigger issues for Coca-Cola in Western Europe over the next year may be how to kick-start stuttering fizzy drink sales generally and tackle consumer trends towards healthier drinks.

Leroy said Diet Coke was generally expected to out-sell the group's regular Coke in the UK for the first time this year.

Last week the firm launched its Minute Maid juice brand on the fast-growing UK juice market as part of a push to increase its non-carbonated range in-line with the rising popularity of this category.

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