Ties likely will be mended
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Like a couple of runaway teenagers proclaiming they “don’t need nobody!” Coke and Costco are sticking to their respective guns. The result is that Costco won’t restock Coke products until the companies reach an agreement. Costco and Coke couldn’t agree on pricing, so Costco said it won’t order Coke products unless the Coca-Cola Company comes down on prices. This is a financial situation that payday loans can’t fix.
Though Costco is one of the largest wholesale retailers in the U.S., Coca-Cola Company is definitely the Goliath of this fight. Coke is the largest soft drink maker in the world, and let’s not forget the Coca-Cola Company owns several non-soft-drink brands, too. The outcome of this feud will likely depend on whether the absence of the Coca-Cola Company’s many beverage brands puts a dent in Costco’s profits.
Coca-Cola brand recognition
It’s tough to predict how much of an effect not carrying Coke products will have on Costco. For every person who will gladly drink any cola flavored beverage at hand, there’s a person who says “just water” after a restaurant server says they carry Pepsi. For every office employee who uses whatever vending machine is available, there’s one who will walk across the street to buy his or her favorite brand of soda.
The cola wars have successfully created a large group of people who are vehemently loyal in each camp, but Costco will just have to do the math to find out whether paying the price for Coke is worth it. My gut tells me that Costco customers are more concerned with saving money than they are with brand loyalty. However…
Coke is more than Coke
We must bear in mind that it isn’t just cola at stake here. The Coca-Cola Company owns many beverage brands, including Sprite and Barq’s rootbeer. It also makes Vitamin Water, Minute Maid products, Odwalla, Powerade and Dasani bottled water, just to name a few.
Costco does carry substitues for most Coca-Cola Company products, but there are definitely customers who will opt to buy their favorite beverages elsewhere rather than buying another brand of orange juice or Vitarain instead of Vitaminwater. The question is how many.
well Pepsi will be a welcome porduct if you ask me at thier snack bar, I prefer Pepsi over coke anyway.
Costco has been in business for more than two decades now. They were named the fifth largest retailer in the United States in 2008 and sits at #29 on Fortune 500. I'm more than certain they know what they need to do in terms of business. However, Coca Cola is the largest bottler – in the world! Of course, Costco will have to thoroughly analyze how much money they could actually lose in the long run without the help of the world's most valuable brand. Nonetheless, I have a pretty good feeling they will stick by Coca Cola.