ATLANTA -- Some of the distributors that helped turn Glaceau Vitaminwater into one of the fastest-growing U.S. drinks have a new target: The Coca-Cola Co., which acquired Glaceau in a $4.1 billion deal in June, said The Wall Street Journal.
Atlanta-based Coca-Cola aims to bump up sales of Glaceau brands by channeling as much as 65% of the drinks' estimated sales volume into its massive network of bottlers, which distributes Coca-Cola products nationwide.
A small distributor of Vitaminwater and other Glaceau drinks in Connecticut [image-nocss] has sued to block Coca-Cola from taking away its territory, said the report. Other Glaceau distributors, which played a key role in transforming Vitaminwater into a cult phenomenon, are complaining about Coca-Cola's plan, it added.
The lawsuit was filed by B&E Juices Inc., which distributes Glaceau brands in Fairfield County, Conn., the heart of Glaceau's Northeast stronghold. In the suit, filed August 31 in U.S. District Court in Bridgeport, Conn., B&E claims Energy Brands Inc., the Whitestone, N.Y., maker of Glaceau brands, does not have legal grounds to cancel its distribution contract under Connecticut franchise law, according to Gary Klein, a lawyer for B&E. Energy Brands became a unit of Coca-Cola after the sale.
Under the terms of the original franchise agreement, Energy Brands must buy out B&E's contract at $6 for each case sold over the past year, an amount distributors say is standard. Klein declined to comment on B&E's sales, and representatives for Coca-Cola and Energy Brands declined to comment on the case, the Journal said.
"It's a terrible situation that we're losing that brand," John Wetzonis, senior vice president of sales and marketing for Polar Beverages Inc., a large independent distributor in Worcester, Mass., told the newspaper. "You spend a lot of sweat equity to grow these brands and do the right things."
Glaceau brands make up as much as 40% of B&E's sales, according to the complaint cited by the paper. A hearing is scheduled for October 10. Termination of the contract is scheduled for November 2.
The dispute is more than an argument over contracts, said the report. Energy Brands assiduously courted so-called independent distributors, which persuade stores to stock beverages not made by Coke or PepsiCo Inc., and then deliver and help market the drinks, the Journal said.
Distributors selling Glaceau became famous in the industry for their scrappy approach, and Glaceau backed them up with aggressive sales efforts of its own, said the report. Now, most of the distributors are losing the drinks to the Coca-Cola bottlers against which they furiously competed in the past.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.