View Full Version : EU & Coke in Europe

06-22-2005, 07:33 PM
I just pulled this off of Yahoo:

EU, Coke Reach Deal on Sales Practices By HARRY R. WEBER, AP Business Writer

The Coca-Cola Co.'s perceived stranglehold on soft drink competition in Europe has been loosened under a plan with European regulators announced Wednesday restricting Coke's business agreements with merchants.

But while PepsiCo Inc. celebrates the boon, Coke says it will continue to thrive in a region that accounts for a third of its revenue.

The European Union's legally binding agreement with Atlanta-based Coca-Cola allows the world's largest beverage maker to escape a fine but requires it to open up more shelf and cooler space to rivals in Europe.

Under the deal, Coca-Cola will not be able to strike exclusive arrangements with stores and cafes in Europe that stop them from serving rival brands, or offer them rebates for buying more of its brands.

The company also will not be allowed to force retailers to stock its less popular brands alongside Coke. And in some cases, it will have to allow retailers to stock coolers issued by Coca-Cola with rival brands.

A Coke filing with U.S. regulators says that any agreement Coke reaches with a European vendor to sell its products will not exceed five years and will give the customer an annual option to end the agreement without penalty after an initial term of no more than three years.

The agreement applies to 27 countries in Europe, in all distribution channels where Coke's carbonated soft drinks account for over 40 percent of national sales and twice the nearest competitor's share.

A s****sman for Purchase, N.Y.-based Pepsi, Dick Detwiler, said his company is glad Coke has agreed to change what Pepsi believed was anticompetitive behavior.

"Now, retailers across Europe will be free to stock a choice of soft drinks, which is great news for consumers," Detwiler said.

Pepsi complained in the 1990s that Coke's distribution deals in Europe unfairly restricted access for competing products to store shelves, coolers and soda fountains.

Coke has roughly half the European market, compared with about 10 percent for Pepsi. In the United States, Coke's lead over Pepsi is smaller.

The settlement with European regulators is significant given how much business Coke does in that region.

In 2004, $7.1 billion of Coke's $21.9 billion in total revenue came from its Europe, Eurasia and Middle East group. That compares to $6.6 billion in revenue for its North America group. Twenty-two percent of Coke's unit case sales in 2004 were generated by the group that includes Europe, while 29 percent of Coke's unit case sales were generated in North America.

Coke officials would not specifically say how the company's business agreements in North America compare to the agreements in Europe, though s****sman Ben Deutsch said "the competitive landscape is different in North America."

"Retail agreements can vary and are negotiated on a customer-by-customer basis," Deutsch said.

Asked how the agreement with European regulators will affect Coke's business, Deutsch indicated the company is not concerned.

"We have used the past several years to prepare for potential outcomes, and we think we are well prepared to implement the changes, where needed," he said.

If Coca-Cola violates the agreement it could face fines of up to 10 percent of global sales, the EU warned.

The agreement, which runs until the end of 2010, formalizes commitments presented by Coca-Cola chief executive Neville Isdell in talks with EU regulators in October.

Coke shares fell 25 cents to close at $43.43 in Wednesday trading on the New York Stock Exchange, while Pepsi shares fell 65 cents to close at $55.22 on the NYSE.

06-22-2005, 07:55 PM
i just read that too. kinda interesting.

Also noticed that, in Michigan, McDonald's has switched all of it's Barq's fountain heads to Dr Pepper. This probably reflects the poor sales of Barq's in the last few years.

As Coke has more and more flavor extensions (there's what, 20?!) Barq's gets pushed off of displays in favor of Coke with Lime.

06-22-2005, 09:31 PM
Same old Pepsi behavior. Get beat in the marketplace and comlain its all unfair.

06-22-2005, 10:57 PM
My main beef is that they are going to let non-Coke products into Coke coolers. If Pepsi or anyone else wants to sell their beverages, let them buy their own coolers!

06-22-2005, 11:04 PM
Well, I'm a Coke fan, but competition should be fair. And Coke shouldn't be able to payoff restaurants/stores, etc. That's just how the free market works.

Coke doesn't seem to worried about it.

06-23-2005, 01:20 AM
they do it all the time in america.

damn socialists don't know how to sell sugar-water, but they sure can sell trade secrets, bootleg dvd's and loose women.

we shoulda taken the french back in '45