Following a move beyond its basic distribution method, Coca-Cola Co. is facing a lawsuit brought by dozens of its bottlers.
The consortium of bottlers have filed suit against the Coca-Cola Co. to prevent it and Coca-Cola Enterprises, Inc. (CCE) from shipping PowerAde directly to Wal-Mart warehouses instead of delivering the product to individual stores.
The suit, filed Tuesday in U.S. District Court in Springfield, MO, included 50 bottlers. It charges that an agreement negotiated in 1994 between the bottlers and the company prohibits warehouse delivery of PowerAde to the warehouses of retailers such as Wal-Mart.
Coca-Cola said that “the customer” approached Coca-Cola and its bottlers last summer, saying it wanted to increase availability of PowerAde in its stores and grow the brand even faster.
Claude Nielsen, president and CEO of Coca-Cola United Bottling Co. in Birmingham, AL, said the two sides had unsuccessfully worked for months to resolve the issue.
“Unfortunately, despite our best efforts, we have not been able to reach a solution with either the company or the CCE and we are left with no alternative but to initiate legal action,” Nielsen said in a statement.
Coca-Cola said that it was “extremely disappointed” by the filing and said that the bottlers represent about 10% of the company’s U.S. volume. Coca-Cola termed the direct delivery to warehouses a “test” of a new delivery system for PowerAde.
Another lawsuit was expected to be filed, which would bring the number of bottlers involved to about 60.
“Litigation is completely inappropriate and unfounded in light of the ongoing discussions between the company and all our bottlers to respond to a major customer’s request for the benefit of everyone,” said Don Knauss, president of Coca-Cola North America. “We are extremely disappointed that a few individuals are attempting to hijack those discussions.”
U.S. PowerAde volume growth was in the double digits last year, hitting 18.6 share in the sports drink category, Coca-Cola said.
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