Costco Gives Coca-Cola the Boot Over Pricing Dispute

JULIE GALLAGHER

ISSAQUAH, Wash. — Costco Wholesale Corp. won't replenish current inventories of Coca-Cola carbonated soft drinks, Dasani Water, Vitamin Water and several energy drinks until Coca-Cola agrees to lower prices, according to published reports citing a statement that appeared on Costco’s website.

“Costco is committed to carrying name-brand merchandise at the best possible prices,” the statement reads. “At this time, Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve.”

The wholesale club helps keep prices down by averaging a relatively low 8% to 10% profit margin on national-brand sales, according to Patty Edwards, a research analyst for Seattle-based Storehouse Partners. She's not surprised by the retailer's decision.

"Costco holds at most 4,500 items in its store and if they can't offer it to members for an exceptional, or at least a competitive price, then they're not going to carry it," she said. "Coke is a big name but if they pull its products they'll find something else to fill that space."

Earlier this year, Brussels-based Delhaize SA pulled more than half of the 500 Unilever products carried in its 775 stores in Belgium due to a pricing dispute. Unilever, in turn, published ads in newspapers leading shoppers to supermarkets that continued to merchandise the products no longer carried by the retailer, according to reports. The issue was resolved weeks later.

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