Coca-Cola will pay up to $21.1 million to Burger King to help ease a dispute over Coca-Cola employees tampering with a Frozen Coke promotion at Burger King to boost results.
The soft drink giant will pay $6.4 million to Burger King, which the company will use for advertising, according to new reports citing a letter from Burger King CEO Brad Blum to BK restaurant operators. Coca-Cola will also pay $1,000 to each Burger King franchise that used a Frozen Coke machine, for a total of $8.4 million, and cover a $500 deductible for repair costs that could total $5.4 million.
Burger King, Miami, and Coca-Cola, Atlanta, appeared to have patched things up earlier this summer when Burger King reversed an announcement that it was dropping all frozen carbonated beverages, including Frozen Coke, from its menu
The rift began when Coca-Cola admitted that some of its employees had rigged a test promotion of Frozen Coke at Burger King restaurants in 2000. After a three-week trial went poorly, members of Coca-Cola’s fountain division offered a man $10,000 to bring children into Burger King to order value meals featuring Frozen Coke.
The allegations first appeared in a lawsuit filed May 19 by former Coca-Cola employee Matthew Whitley. Since then, the U.S. Attorney’s Office in Atlanta has begun an investigation of the allegations and the Securities and Exchange Commission has made an informal request for documents related to the accusations in the lawsuit.
Meanwhile, Coca-Cola, Atlanta, has tapped basketball star LeBron James as spokesperson for its Powerade and Sprite brands in a new six-year marketing deal. James will serve as spokesperson for Sprite’s “Obey Your Thirst” campaign. The deals with both Sprite and Powerade will include promotions, advertising, and live appearances. Terms of the agreement were not disclosed. Gatorade had been vying for rights to James, who as the number one NBA draft pick this year, could fill the gap Michael Jordan left, not only on the court but in the marketing arena. This spring, Nike beat out Reebok International and Adidas-Salomon for James, signing him to a seven-year, $90 million deal (July PROMO). Signing James was a timely catch for both Sprite and Nike, who had marketing agreements with NBA star Kobe Bryant, who is charged with sexual assault in Colorado. Sprite has shelved ads featuring Bryant, and Nike, which signed Bryant to a reported five-year, $45 million contract just days before the accusations were made public, released a statement saying they were “pleased to have a relationship with the five-time All-Star,” but have not used him in any promotions yet.
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