CANADA: Canadian Coke suffers from grey market exports
Coca-Cola Enterprises has seen a significant drop in sales in north America, because of a crackdown on Canadian wholesalers who shipped up to 4 million cases of the drink to Europe to profit from differences in currency exchange rates. The wholesalers had also taken advantage of cola price wars between Coke, Pepsi and generic brand Cott, which had forced Coca-Cola to sell its brand cheaply in Canada.
As a result Coca Cola Enterprises, (CCE), jacked up prices of Coke to
Canadian retailers and wholesalers to reduce their incentives to re-export grey market consignments, especially to the EU.
In a web conference, John Downs, senior vice-president of public affairs for CCE said: "You had some extremely competitive pricing in the Canadian market. We have been trying to raise our prices to mitigate the product going out of the country."
In the United Kingdom, the weak Euro compared to the British pound has meant that CCE is dealing with a similar situation where wholesalers have gone to countries on the continent to buy cheaper Coke to sell in the British market.
CCE sold 3.8 billion unit cases of Coke in 1999. Every case contains 24 eight-ounce cans. The cola giant estimates that profits will increase 6 to 7% in 2001.
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