PURCHASE, N.Y. -- Indications of negotiations between PepsiCo, Purchase, N.Y., and McLane Co. Inc., Temple, Texas, over a new weight-based fee for packaged beverages have come to fruition.
P.J. Sinopoli, a spokesperson for PepsiCo's Chicago-based Quaker Tropicana Gatorade (QTG) operating division, confirmed that the company has come to a negotiated settlement with McLane over the new distribution fee the wholesaler recently announced to packaged-beverage suppliers.
In a January 19 letter to suppliers, McLane said the shift to [image-nocss] a weight-based fee was necessary due to the increasing distribution costs of the large-volume, heavy-weight packaged beverages. The original plan asked suppliers to pay 9.5 cents per pound shipped, with a minimum of $2.50 per case. Although she declined to discuss specifics, Sinopoli confirmed the settlement still includes a fee, and was negotiated from the original proposal.
This was a difficult situation but one that we're very happy to report we think resulted in a really mutually beneficial result, she told CSP Daily News.
Roger Grogman, corporate marketing vice president for McLane, would not comment on or confirm the settlement other than to say, McLane and QTG are both supporting the customers in their efforts to satisfy their customers' needs for Gatorade and Tropicana products.
Sinopoli said PepsiCo recognizes the profitability issue currently facing distributors such as McLane, a problem that has been exacerbated by healthy and growing sales of bottled water, energy drinks and other packaged beverages.
We have a philosophy that every partner in the distribution chain needs to be profitable, so the retailer, the distributor and supplier all need to find this to be profitable, or otherwise the entire channel is at risk, she said. We're definitely cognizant of the fact that they were looking for a better economic profile for that business and as partners, that's what we have to look at and have to find one that works for our business as well.
Sinopoli would not confirm whether PepsiCo is currently in negotiations with any other distributors over new fees. Last week, CSP Daily News reported documentation revealing that distributors Eby-Brown Co. and GSC Enterprises Inc. were leveraging identical price increases against packaged-beverage suppliers. Other distributors are also said to be considering a similar move.
I would suffice it to say that we're talking to all of them on an on-going basis, said Sinopoli of PepsiCo's some-200 distributors. Obviously this situation was very visible in the industry and as a result, it's certainly going to come to bear in other discussions, but we'll deal with each of those distributors on a case-by-case basis.
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