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US: Bottlers sue Coke over Powerade distribution

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A group of around 50 Coca-Cola bottlers has filed a lawsuit in the US District Court in Missouri to prevent The Coca-Cola Company and Coca-Cola Enterprises Inc. from shipping the sports drinks brand Powerade to customer warehouses instead of directly to individual stores. Coca-Cola is testing a new distribution system for Powerade to Wal-Mart outlets.

The bottlers said they would also seek a preliminary injunction to stop CCE's Powerade warehouse delivery plans until the legal action is resolved. A further suit is expected to be filed by another group of bottlers in Alabama, which would bring the total number of bottlers involved in the dispute to 60.

The bottlers are concerned that the warehouse delivery of Powerade violates the principles that underlie the bottlers' perpetual contracts with The Coca-Cola Company. They have been negotiating for months to settle the dispute and said they were left with no alternative but to go to court.

"The plans for a large-scale rollout of warehouse delivery of Powerade fundamentally alters the system that has made Coca-Cola the most recognised global icon and one of the world's most valuable brands," said Claude B. Nielsen chairman, president and CEO of the Alabama bottler Coca-Cola United Bottling Company.

Coca-Cola said it was "extremely disappointed" that the lawsuits had been filed.

"These suits are actions against our consumers and our customers," said Don Knauss, president of Coca-Cola North America. "They would prevent the Coca-Cola system from strengthening its competitive position in this category and meeting consumer demand for lower cost, more efficient access to our popular Powerade sports drinks.

"The actions by bottlers who represent approximately 10% of our company's US volume would greatly hamper the Coca-Cola system from competing with other sports drink brands, and that does a great disservice to the system, its people and its consumers."

Knauss added that the company wanted to "work with all our bottlers to create growth in all channels and with all customers", and that litigation was "completely inappropriate and unfounded in light of the ongoing discussions between the company and all our bottlers to respond to a major customer's request for the benefit of everyone".


Sectors: Soft drinks

Companies: Coca-Cola Enterprises

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