Coke Returns To Costco With Its Dignity Intact

Posted by Sara Zucker on December 11, 2009 03:20 PM

It took Coca-Cola and Costco less than a month to settle their differences.

According to Costco CFO Richard Galanti, the two companies have resolved their issues and Coke will return to the warehouse-like stores this upcoming Monday.

Costco's original issue stemmed from the beverage maker's refusal to change its pricing requirements in an effort to accommodate consumers in today's recession.

Only a few weeks ago, Costco made the dispute public -- something that is rarely done -- announcing on its website that the company "... is committed to carrying name brand merchandise at the best possible prices. At this time, Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve."

Though no details on the agreement have been released, it is more than likely that Coke finally saw the light and agreed to the retailer's demands. It is also possible that Coke lost a significant amount of money in the process.

Oftentimes, disputes over price are kept behind closed doors, but Costco's decision to go public suggests that desperate times call for desperate measures; the rules of negotiation in business deals between producers and retailers are clearly changing.

What's next? Fight Club?

More about: Coca-Cola, Costco, Beverages

Stephen Denny says:

Sara:

Coke did more than return "with its dignity intact." Regardless of what actually happened behind closed doors, they emerged as the only winner in the comic farce that just played out at Costco.

Pepsi, apparently the prom date you bring when you're fighting with your real girlfriend, was summarily kicked to the curb once things were made up. Said another way, if Pepsi had performed at retail and matched Coke's sell-through, it would have stayed for the next decade. Costco is known to hold a grudge when things get ugly - you mentioned Fight Club, but do you remember the company's relationship with Sony 10-15 years ago? The Costco and Sony CEO's of the time had *a fist fight*, so we were told, at a CES show, which stopped any Sony products from being sold for years.

No question that Coke emerged the winner here, and no question who lost.

Regards,
Stephen Denny
@Note_to_CMO
(New post on Note to CMO: Coke, Costco and Winning the War)

December 14, 2009 01:26 PM #

cheap replica handbags says:

Said another way, if Pepsi had performed at retail and matched Coke's sell-through, it would have stayed for the next decade. Costco is known to hold a grudge when things get ugly - you mentioned Fight Club,

April 12, 2010 11:13 PM #