Costco and Coke Battle over Pricing

Costco has taken the unusual step of throwing one of the world’s most popular brands out of their stores.

Costco customers may have to look elsewhere for Coca-Cola products now that the retailer has stopped carrying them because the pair are fighting over prices.

The public squabble between one of the nation's largest wholesale club operators and the world's largest soft drink maker is likely to fizzle quickly. But it reveals real tensions as retailers and product makers square off on prices.

As shoppers continue to grapple with the recession, retailers want to win their favor by giving them low prices. However, this has been creating tension between product makers like Coca-Cola Co., who are working hard to maintain profit margins while meeting retailer demands.

We don’t know the details of the dispute, of course, but it must be pretty serious to go public with it. As the article notes, the matter will be settled reasonably quickly; the two sides need each other. The interesting question for onlookers is who will blink.

There was a time when my money would have been firmly on Coke to win such a battle – it has long been an absolute ‘must-have’ brand for any grocer. Few Costco customers will stop shopping there over Coke’s absence from the shelf, but some will make an extra stop on the way home to get their 12-pack of Coke. Others, however, will substitute a Pepsi, RC, or private label product and may never return to Coke.

I’m not sure anymore which needs the other more – the iconic brand or the behemoth retailer.