Coca-Cola attacks bottlers in Powerade dispute

By staff reporter

- Last updated on GMT

Related tags Coca-cola Pepsico

Coca-Cola said it would fight to put down a lawsuit filed against
it by more than 50 of its own bottlers over the distribution of
sports drink Powerade to Wal-Mart stores.

Coca-Cola said it had filed separate motions to dismiss a lawsuit, brought by a group of its own bottlers, attempting to block Coca-Cola Enterprises from trialling direct warehouse delivery of Powerade to Wal-Mart stores.

Coke said the lawsuit was flawed because trials had only taken place in delivery territories belonging exclusively to its main bottling arm Coca-Cola Enterprises (CCE).

"They have no right to dictate how CCE conducts its business within its territory,"​ CCE said.

"The core issue here is an attempt by one group of bottlers to block another group of bottlers from making a change to better serve customers and consumers,"​ said Don Knauss, president of Coca-Cola North America.

Those not willing to consider change threatened to hamper the company's growth, he warned.

Around 50 bottlers had filed a lawsuit against Coke and CCE, alleging that an agreement negotiated in 1994 between the bottlers and Coca-Cola specifically prohibits warehouse delivery of PowerAde to retailers like Wal-Mart.

The biggest of the group, Sacramento Coca-Cola Bottling Company, has now pulled out - meaning those remaining account for roughly five per cent of Coca-Cola's North American volumes.

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

Coca-Cola 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.

Yet, the bottlers said research shows the current delivery system played a key role in the doubling of Powerade sales volume between 2000 and 2004.

A first hearing for the lawsuit is expected at the end of March.

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