LOS ANGELES -- Coca-Cola Enterprises Inc. is testing a new method of delivering Coca-Cola drinks to 7-Eleven Inc. convenience stores in Southern California, using Costco Wholesale Corp as an intermediary, said a Reuters report.
The test was first disclosed by officials from the Teamsters labor union, which said it had the potential to eliminate hundreds of union jobs, since it involves the use of a third-party logistics company in addition to employees of Coca-Cola Enterprises, which produces, bottles and distributes Coke drinks.
Bob Phillips, a spokesperson for [image-nocss] the Coca-Cola bottling affiliate in Southern California, told the news agency that the pilot will result in the loss of 10 jobs and the addition of two, for a net loss of eight jobs. He declined to speculate on whether the test would expand to other markets.
David Laughton, director of the Teamsters' Brewery & Soft Drink Workers Conference, said on a conference call with reporters that Coke's plan is "dangerous. Although no one wants a work stoppage when the economy is in such terrible shape, we will fight for our jobs," he said.
Coca-Cola is planning to acquire the North American operations of Coca-Cola Enterprises (see related story in this issue of CSP Daily News) in a bid to have more control over its distribution, said the report, which would allow it to cut costs and be more flexible. PepsiCo Inc. recently completed a similar deal, the report added.
Analysts have speculated that once the soft drink makers control the bulk of their distribution, they may seek to distribute more products through warehouses, rather than directly to stores, which is currently how the bottlers operate.
Under Coca-Cola's current direct-store delivery (DSD) model, drinks are shipped from the bottling facility to an adjacent warehouse, where they await shipment to a distribution center. They are then shipped to individual stores.
Under the test program, according to Reuters, drinks will be shipped to a Costco business center, where a third-party logistics company will pick them up and deliver them to a warehouse. Then, when 7-Eleven stores need replenishment, the drinks will ship to the stores with other products, as well.
Officials from 7-Eleven and Costco did not return calls seeking comment to Reuters. A 7-Eleven spokesperson declined to comment to CSP Daily News pending further discussions with Coca-Cola.
The Teamsters said they are very concerned about the outcome of Coca-Cola acquiring its bottling operations. "It may appear on paper that it may decrease costs, but the risk of failure is too high as things get more and more complex," Laughton said.
A delegation of Teamster workers and representatives will attend Coca-Cola and Coca-Cola Enterprises annual meetings of shareowners in Atlanta this week to raise their concerns about mismanagement throughout the Coca-Cola system that they say "threatens to destroy good jobs, undermine workers' rights and create large-scale inefficiencies in its product distribution system," according to a press statement issued by the union.
"These ill-conceived changes could provoke work stoppages and service disruptions across the country," they added.
The statement continued, "During ongoing contract negotiations with Southern California bottling and distribution workers, CCE proposed plans to experiment with the way products are delivered to retailersusing 7-Eleven as a test case. The proposed system would introduce third- and fourth-party companies into the distribution process, complicating Coke's current direct delivery to stores. The plan will also eliminate Coke's front line workers from servicing retailers, thus requiring understaffed stores like 7-Eleven to handle all product placement, rotation and displays."
Laughton said in the statement, "Given the enormity of the task at hand for Coke's management and its board of directors, it is shocking that they would allow major and inefficient changes to the distribution system of their products. The proposed changes, which could provoke widespread work stoppages in key markets across the country, will only serve to destroy jobs, damage customer relations and put shareholder value at risk."
"As Coca-Cola seeks to integrate CCE's North American operations, it will become a more labor-intensive business, making good labor relations with employees more important," the statement added.
The International Brotherhood of Teamsters represents 1.4 million men and women throughout North American including about 15,000 employees involved in the production and distribution of Coca-Cola products.
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