BOTTLER BANKRUPTCY CAUSES SODA SHORTAGES

DAN ALAIMO

PORTLAND, Ore. -- Pacific Northwest retailers were left with partially empty beverage shelves after supplies of 7-UP and other soft drink brands were interrupted when Portland Bottling Co. here went out of business recently.

The problem was especially acute in the Portland metropolitan area, where the bankrupt bottler has exclusive rights to the popular Seven Up Co. brands.

Besides 7-UP, Portland Bottling handled most other soft drink brands from Dr Pepper/Seven Up and its corporate parent, Cadbury Schweppes, London, and a few other independents. However, it did not have the rights to distribute Dr Pepper and to handle 7-UP in most of Washington.

The former executives of Portland Bottling could not be reached for comment.

"We are all in the same boat, in the region served by Portland Bottling," said Bridget Flanagan, spokeswoman for the Safeway Portland division based in Clackamas, Ore. "Like other retailers, we are trying to secure product from other locations."

The bottler bankruptcy affected about 35% to 40% of the division's stores, mostly in the Portland metro area, she said.

An employee at Albertson's Portland division, who asked not to be identified, said the retailer saw shortages of product in the two weeks following the mid-December shut down. But now, "it is being shipped in from elsewhere," and the parent company of 7-UP is coordinating the shipments, he told SN.

Retailers more distant from Portland felt less of an impact. "We were affected to an extremely limited extent," said Dan Cepeda, marketing coordinator/grocery buyer, C&K Markets, Brookings, Ore. "Pretty much, the impact was not significant enough for us to worry about."

It is unusual for soft drink bottlers to go out of business, noted Gary Hemphill, senior vice president, Beverage Marketing Corp., New York. Soft drink franchise agreements are so valuable, most of these companies have little trouble selling them if they run into financial difficulty, he said.

"It is challenging for an independent bottler without Coke or Pepsi in its portfolio to survive today. Many do survive and even thrive, but in a mass market category like soft drinks, scale is vital," he said. Cadbury Schweppes has been trying to set up a third network of bottlers to serve brands other than those of Coke and Pepsi, Hemphill added.

"Our preference is to have a third-tier system in all major markets available to us," said Michael Martin, spokesman for Dr Pepper/Seven Up.

Martin said franchise executives at the company were working "night and day" to resolve the Portland situation. "We are as anxious as anyone to get the products back into the marketplace as quickly as possible," he said.

The Portland Bottling bankruptcy also posed a challenge to independent manufacturers like Langer Juice Co., City of Industry, Calif. "We were definitely affected with the receivables," said Tom Bottiaux, national sales manager. Langer had perceived trouble at the bottler in mid-2001 and had minimized Portland Bottling's receivables. "So we didn't get burned as much as some others did."