Industry Issuses

March 1, 2006
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Battle Brews Over Powerade
The dispute over how to distribute Powerade to Wal-Mart stores has reached a fever pitch as about 60 Coca-Cola bottlers have filed suit against The Coca-Cola Co. and Coca-Cola Enterprises over their decision to test delivery of the sports drink to Wal-Mart stores via the retailer’s warehouse system rather than direct store delivery. The suit attempts to block the test, which the bottlers say could infringe on their exclusive territories and potentially could lead Wal-Mart, the world’s largest retailer, to expand its warehouse delivery requests to other products.
The Coca-Cola Co. and Coca-Cola Enterprises each filed motions to dismiss the lawsuit. “The core issue here is an attempt by one group of bottlers to block another group of bottlers from making a change to better serve customers and consumers,” said Don Knauss, president of Coca-Cola North America, in a statement. “Our Powerade contract clearly allows a bottler to choose warehouse delivery in its own territory. This is a question of how our system creates growth by serving our customers and consumers; it is not a legal issue.”
A hearing on the lawsuit is scheduled for March 29-30.
Coca-Cola names new international group
In other Coca-Cola news, the company announced assignments for its newly formed Coca-Cola International organization. Muhtar Kent recently was named president of the international group, and Glenn Jordan, executive vice president and director of operations for the Latin America group, has been named president of the East, South Asia and Pacific Rim group. Patrick Siewert will take on a senior consulting role, reporting to Kent, and will focus on significant strategic projects.
The China and Japan divisions will continue to be led by Paul Etchells and Masahiko Uotani, respectively. The Eurasia and Middle East Division will continue to be led by Ahmet Bozer and be expanded to include the additional markets of Israel, Albania and the Palestinian territory, as well as Russia, Ukraine and Belarus. Africa, European Union and Latin America groups will be led by Alex Cummings, Dominique Reiniche and José Octavio Reyes, respectively. BI
Anheuser-Busch adds Grolsch to lineup
Anheuser-Busch will import Dutch Grolsch beer products in the United States beginning April 1, nine months ahead of schedule. The new distribution agreement will include Grolsch Lager, Grolsch Amber Ale, Grolsch Light Lager and Grolsch Blonde Lager.
United States Beverage, Stamford, Conn., and Grolsch International ended their agreement early to make the change ahead of the summer selling season.
“United States Beverage and our distributor network have done a terrific job building Grolsch during the past four years,” said Joseph Fisch, chief executive officer at USB. “…United States Beverage created a much more contemporary brand position with updated packaging while enhancing the Grolsch distribution network that has been providing double-digit growth.
“For United States Beverage this change allows us to open our doors for additional imported and craft beers,” he added. “Over the past four years we have focused exclusively on Grolsch in the import sector. Moving forward, we will be able to apply our efforts and competencies toward several premium brands.” BI
Mott’s picks up sports drink
Mott’s Inc. has added the Accelerade and Endurox R4 brands from PacificHealth Laboratories Inc. to its portfolio. The purchase includes trademarks, technology and patents for the brands. PacificHealth Labs says it received a $4 million upfront payment, plus royalty based on sales for a defined period. It also retained exclusive license to use the intellectual property and trademarks for the continued manufacture, distribution and marketing of Accelerade and Endurox R4 brands in powder and gel forms. BI
Premier comes out on top
Premier Beverage Co.’s Orlando, Fla., division was named E&J Gallo Winery’s “Distributor of the Year” among wine and spirits distributors in 16 southeastern states. At off-premise retail outlets, Premier-Orlando increased sales by as much as 119 percent over the previous year, with an average sales increase of more than 55 percent for eight Gallo brands. For product sold to on-premise hotels and restaurants, Premier-Orlando increased sales by as much as 213 percent over the previous year and achieved an average sales increase of more than 75 percent for seven Gallo brands. BI
GO FIGURE
Percent volume growth achieved by craft brewers in 2005, according to the Brewers Association. That makes it the fastest-growing segment of the U.S. beverage alcohol industry for the second year in a row.
40
Percent return on prepared foods, coffee and fountain drinks for convenience store operators, according to an article in the Tampa Bay Tribune. That compares to less than 10 percent margin on gas and tobacco products.
45
Percent of respondents who said they choose a fountain beverage when given a choice at a restaurant, according to a survey conducted by Chicago-based Technomic Inc. Thirty-five percent of respondents said they choose bottled beverages, and 20 percent had no preference.
123
Dollars per week baby boomers spend on groceries and food, according to Packaged Facts. That compares to $102 for 25- to 34-year-olds, and $75 for 65- to 74-year-olds.

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