Tuesday, November 17, 2009

Red store - Blue Store: Costco stops selling Coke products because of pricing dispute

Costco nixes Coke products over pricing dispute. Sodas are pretty high in the brand loyalty index. Lot of my friends are fanatical about their Coke. It is amazing to see Costco willing to play public hardball in that category.  Most probably, the Coke-Costco dust-up will get settled soon, but it is one more data point. The power shifting from the consumer goods companies to the retailers has been long in the making, but I think this a significant indicator of how far it has gone.

Price is not the only point of friction. Assortment is another point of friction. Just 9 months back, Delhaize group (owners of Food Lion and other chains) banished Unilever products temporarily when Unilever and Delhaize could not agree on the assortments that Delhaize stores carry. Consumer goods companies are already facing this same pressure from the biggest retailer in the US with their "Win-Play-Show" strategy.

Getting back to the Coke - Costco dust up: What's next? "Coke inside" in the advertisements? Blue Stores and Red Stores?

Karthik

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