Coke Responds to Lawsuits Filed By Bottlers

15/02/06 The Coca-Cola Company said it is "extremely disappointed" with lawsuits filed by bottlers representing approximately 10% of the Company's U.S. volume, attempting to block the test by Coca-Cola Enterprises of a new delivery system for Powerade.

"These suits are actions against our consumers and our customers - they would prevent the Coca-Cola system from strengthening its competitive position in this category and meeting consumer demand for lower cost, more efficient access to our popular Powerade sports drinks," said Don Knauss, president of Coca-Cola North America. "The actions by bottlers who represent approximately 10% of our Company's U.S. volume would greatly hamper the Coca-Cola system from competing with other sports drink brands, and that does a great disservice to the system, its people and its consumers.

"We want to work with all our bottlers to create growth in all channels and with all customers," he said. "Litigation is completely inappropriate and unfounded in light of the ongoing discussions between the Company and all our bottlers to respond to a major customer's request for the benefit of everyone. We are extremely disappointed that a few individuals are attempting to hijack those discussions."

Powerade volume growth was in double digits in the U.S. in 2005, reaching an 18.6 share in the sports drink category (FY 2005 Nielsen Measured Channels). The customer approached the Company and its bottlers last summer, saying it wanted to increase availability of Powerade in its stores and grow the brand even faster, if the system would allow it to deliver the product to its stores through its own warehouses. In response, CCE decided to conduct a test of that proposal in some of its exclusive territories, which it is allowed to do under its contract with the Company.

"When a customer comes to our system with an idea, we want to consider it as a system for the benefit of our consumers and our entire system, which is how we have handled this request," said Knauss. "We are currently reviewing a complex and unrealistic proposal from the Coca-Cola Bottlers Association and have committed to responding to it by February 22. These lawsuits will only shut down for everyone what we believe had been a productive business dialogue."