Dollar General, with 9,200 stores, becomes the latest retailer where Pepsi employees deliver the drink directly to the shelves or coolers at retailers, rather than have the product go through warehouses.
Direct-store [image-nocss] delivery gives Pepsi greater control of how its products are displayed at retailers. It also allows the company to control in-store promotions and merchandising strategies better than if the product was delivered from warehouses.
The change has been credited with boosting Gatorade sales at a time when it faces a stiff challenge from Coca-Cola Co.'s Powerade brand. Last quarter, Gatorade sales volume rose 20%, helped by the new distribution model and the addition of Gatorade's Pro Series lineup. Powerade sales volume was up 21%, meanwhile, in Coke's latest quarter.
In January, Pepsi shifted Gatorade to direct-store delivery at convenience stores in January, and last month started direct-store delivery to drug stores like Walgreen Co. and CVS Caremark Corp.
Tom Greco, Pepsi's chief commercial officer, said Wednesday that Gatorade saw a 20-percentage point improvement in sales at convenience stores since the change, and expects similarly strong results at Dollar General.
"We expect strong double digit-growth on this one," Greco told the news agency.
Pepsi last year announced Gatorade shift to direct-store delivery, part of changes it was making to its distribution system in the wake of the acquisition of its two biggest North American bottlers. The company said at the time that savings from changing the distribution method were part of projected cost savings from the deal, which now stands at $550 million a year once the integration is complete in 2012.
Purchase, N.Y.-based PepsiCo offers the world's largest portfolio of food and beverage brands, including Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade.
Goodlettsville, Tenn.-based Dollar General offers products that are frequently used and replenished, such as food, snacks, health and beauty aids, cleaning supplies, basic apparel, house wares and seasonal items at low everyday prices in convenient neighborhood locations. It has more than 9,200 stores in 35 states.
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