Wal-Mart All Coked Up

The Alliance has worked on behalf of neighborhood food and beverage retailers for the past twenty five years. One of our first campaigns was waged on behalf of independent beer and soda distributors and it was designed to prevent the big guys-particularly Coke and Budweiser-from monopolizing the distribution system.

One of the things we learned early was how powerful Coca Cola was. In 1980 they had used their clout to get Jimmy Carter to push through a franchise territory law that preserved their hallowed three tier distribution network. Anyone who tried to "transship" Coke was going to have a major legal headache.

With Coke you had two choices: buy their product from the local route man or don't sell the stuff at all. How times have changed and guess who we have to thank? You guessed it-Wal-Mart. As CNN reported yesterday, "Coke caves under Wal-Mart pressure."

It seems that the beverage giant was being pushed to directly deliver its Powerade brand to the Wal-Mart warehouses instead of through the traditional store-door method. And, facing a freeze-out from the retailer, Coke caved and went direct prompting a lawsuit from 55 of its smaller bottlers (the same folks the franchise bill was designed to protect). In essence Wal-Mart, in effect, forced Coke to eat its own young.

Coke panicked because it was afraid that Wal-Mart would develop its own competing sports drink brand and Powerade would become toast. Talk about power! This is what the small retail and wholesale businesses of America are up against. If you can make Coke buckle, then everyone is at risk.