ATLANTA -- The Coca-Cola Co. and its largest bottler began shipping some Minute Maid drinks last month to a Texas warehouse run by a major convenience store chain, deepening a split with other Coke bottlers that sued to block a similar delivery method at Wal-Mart, reported the Wall Street Journal.
Coca-Cola and the big bottler, Coca-Cola Enterprises Inc. (CCE) said they agreed to switch to warehouse delivery in CCE's Texas territory after receiving a request earlier this year from Valero Energy Corp., San Antonio, the largest North American refiner, [image-nocss] which has more than 5,000 gas station/c-stores.
Warehouse deliveries break with a century-old tradition of independent Coke bottlers delivering drinks directly to stores and stacking them on the shelves in their exclusive territories, said the report. In February, 55 Coke bottlers sued Coca-Cola and CCE and alleged that they breached their distribution contracts by agreeing to ship Powerade sports drinks to Wal-Mart's warehouses. Those shipments began in April in CCE's territory and the lawsuit is pending in U.S. District Court in Atlanta, where both beverage companies are based.
Last week, the plaintiff bottlers, which handle less than 10% of Coke's U.S. volume, filed a subpoena on Valero seeking a deposition and documents about the Minute Maid deliveries. Valero said it will comply with the request.
As recently as last month, Coca-Cola had said there were no plans to expand warehouse delivery to other retailers or to other drinks beyond Powerade at Wal-Mart. Coca-Cola spokesperson Dan Schafer told the newspaper that the statement was true at the time, and that the market environment continues to change. This happened pretty quickly.
Laura Asman, a spokesperson for CCE, told the paper, Valero is an important customer in Texas, and they came to us asking if we would consider warehouse deliveries. Both Coke and CCE say warehouse deliveries are permitted and needed in some cases to better serve stores.
Valero sought the change to supply its stores faster and more frequently, said spokesperson Mary Rose Brown. The company said it would like to expand warehouse deliveries to other Coca-Cola drinks and areas outside Texas. Valero has stores in 42 states.
We believe the more products we can deliver through the [regional distribution center], the more efficient our logistics system will be and the better we can serve the stores and, ultimately, our customers, Brown told the Journal.
Coke bottlers primarily distribute sodas and carry only a portion of the Minute Maid product line on their trucks; chilled juices are often picked up by retailers from a Coca-Cola plant, the report said.
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