More bottlers to sue Coca-Cola in distribution dispute

By staff reporter

- Last updated on GMT

Related tags Coca-cola

More than 50 bottlers have now lined up to sue Coca-Cola in the US
in a move to stop the soft drinks group distributing its Powerade
sports drink directly to Wal-Mart supermarkets around the country.

Another nine independent bottlers contracted with Coca-Cola have joined approximately 50 others already signed up to the lawsuit against the soft drinks giant and its main bottling arm, Coca-Cola Enterprises, in the state of Montana.

Bottlers have filed a similar suit in Alabama and, together, those involved in the two lawsuits represent around a tenth of Coca-Cola's drinks volume in the US.

They have alleged that an agreement negotiated in 1994 between the bottlers and Coca-Cola specifically prohibits warehouse delivery of PowerAde to retailers like Wal-Mart.

The action was prompted by Coca-Cola Enterprises testing the feasibility of delivering Powerade directly to Wal-Mart stores from Coca-Cola's own warehouses.

The bottlers said their Direct Store Delivery System still offers retailers the most efficient and effective distribution of Coca-Cola products. Research shows the bottling system played a key role in the doubling of Powerade sales volume between 2000 and 2004, they said.

The lawsuits, the first major legal actions brought against Coca-Cola by a majority of its own bottlers in more than 80 years, are another example of how the increasing size and presence of retailers has caused tension further down the supply chain.

Coca-Cola said in a statement it was "extremely disappointed"​, and called litigation "completely inappropriate and unfounded"​.

The group said Wal-Mart approached it last summer, saying it wanted to expand the Powerade brand across its stores and asking if a direct distribution system from Coke's own warehouses would be possible.

The soft drinks firm said the trial had only taken place in CCE's exclusive distribution zones.

The Powerade sports drink was one of Coca-Cola's star performers across North America last year as consumers continued to switch away from carbonated beverages. Double-digit growth has given the brand an 18.6 per cent share of the US sports drink category, according to ACNielsen​.

"These lawsuits will only shut down for everyone what we believe to have been a productive business dialogue,"​ said Don Knauss, president of Coca-Cola North America.

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