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Retail news: Coke cowers before Wal-Mart
Coca-cola has claimed that it was forced to make significant changes to its US distribution system after Wal-Mart threatened to withdraw its support for Coke’s PowerAde sports drink brand.
Historically Coca-Cola used a network of regional bottlers to deliver direct to individual Wal-Mart stores. However this changed in April when Coke and its largest bottler Coca-Cola Enterprises (CCE), began delivering PowerAde direct to Wal-Mart warehouses, so that the retailer could supply individual stores itself.
Smaller bottlers saw this as an infringement of their role in Coke’s supply chain and as a result 50 bottlers sued Coke and CCE for breach of contract. Legal documents filed by Coke in response to the lawsuit revealed that it feared Wal-Mart would launch a rival private-label brand if Coca-Cola refused to change its delivery system.
© db July 2006