A group of 50 Coca-Cola Bottlers in the United States sued the Coca-Cola Company when it announced a plan to ship its powerade sports drink directly to Walmart warehouses, thus upsetting the established chain of distribution. Coa-Cola uses a distribution system called :direct-to-store delivery" that relies on the licensed bottlers to package and deliver Coca-Cola products to retailers. Bottlers also set up retail displays and stock the shelves. Rival Pepsi-Cola, which markets Gatorade, the competitor to Powerade, ships its products directly to retailers's warehouses. Coca-Cola says forcing them to distribute their products through bottlers will make them less competitive. from Walmart perspective, cutting the bottlers out of the channel of distribution could reduce their operating costs and therefor increase their profits. Walmart's margin on Gatrorade is 30%, but on Powerade it is only 20%.

Not all retailers have warehouses. Convenience stores and smaller independent grocery stores don’t have them. Assuming that the Coca-Cola bottlers deliver to these stores as well as Walmart, why were they so upset about the possibility of losing just one customer?

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The bottlers were upset about the possibility of losing one customer which is Walmart due to the b... View the full answer