Changes in distribution

[CitrusCola]

With both Pepsi and Coke buying up large portions of their bottling networks, I've heard about how they want to make some changes in the way some of their products are distributed. As I understand it, they want to have new and "niche" products put into store distribution systems instead of having them distributed by their bottlers. Has anyone else heard this?

While in SW Virginia last week, I visited a grocery store called Food City that had a section of beverages that was apart from the major soft drink companies and seemed to be a part of the store's distribution system. In that section, they had several different drinks: Dad's Root Beers, Frostie Root Beer and Cherry Limade, Red Rock Cola, Green River, Sioux City Sarsaparilla, Bubble Up, Dr Wells, etc.

On the plus side, this could give customers more choices, but on the down side, I could see a day where Coke and Pepsi look to cut costs by distributing all of their drinks this way. That would put a lot of folks out of work.

[fusion]

Coke is already using alternative methods to distribute niche products. The Illy Issimo coffee drinks were offered to two non-Coke distributors who are good at building brands. The Coke bottling system has had little luck with coffee drinks.

Soda is a very labor intensive business. Are the stores going to want to have to devote their people to stocking the aisle, when they get the free labor from the bottlers? How about the space on their grocery delivery trailers, and the space in their warehouses?

[CitrusCola]

I could see this sort of arrangement working up to a point. If, for example, a store wanted to stop selling Coke and/or Pepsi products that haven't been selling well, they might want to trade out the shelf space for a different drink that they think would sell better -- even if they had to distribute and stock the replacement themselves.

However, I think Coke and Pepsi would be wise to continue stocking stores with their top-of-the-line products themselves.

[RunWithDaLilGuy]

On the beer side of things, there is massive consolidation going on that could potentially result in beer, liquor and wine all being on the same truck. Generally, Bud and MillerCoors are separately distributed by independent companies. There's also talk of mergers in big cities and all the brands being on one truck.

At some point it seems to turn homogenous and commoditized when you think of it like that. I never have interest or much respect for brands like gatorade and arizona because they are sold through so many outlets. They seem more like soup or laundry detergent than beverage brands built and sold by teams of people.