Coke Plans New Distribution

Coca-Cola Enterprises Inc. is testing a new method of delivering beverages to 7-Eleven stores in Southern California, using Costco Wholesale Corp. as an intermediary, Reuters reported.

Currently, under Coke’s direct-store delivery model, beverages are sent from the bottling facility to a warehouse and then to a distribution center, which distributes the drinks to individual stores. Under the test program, Coca-Cola will ship its drinks to a Costco business center, where a third-party logistics company collect and deliver them to a warehouse. Then, when 7-Eleven stores need more stock, the drinks will be shipped to the stores with other products.

Officials from the Teamsters labor union fear the move could eliminate hundreds of union jobs, especially if the pilot program is picked up in other markets.

The pilot program will cut 10 jobs but add two, for a total loss of eight jobs, Bob Phillips, a spokesman for the Coca-Cola bottling affiliate in Southern California told Reuters. He declined to speculate on whether the test would expand to other markets.

David Laughton, director of the Teamsters’ Brewery and Soft Drink Workers Conference, however, thinks the plan is “dangerous.”

“Although no one wants a work stoppage when the economy is in such terrible shape, we will fight for our jobs,” Laughton said.

Coca-Cola plans to acquire the North American operations of Coke Enterprises, which will give the company more control over its distribution, cutting costs and allowing it to be more flexible. PepsiCo Inc. recently completed a similar deal.

Reuters noted that analysts have previously speculated that once soft drink makers control the bulk of their distribution, they may seek to distribute more products through warehouses, rather than directly to stores. 

 

 

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