NEW YORK (
) -- As you likely know by now,
are engaged in a price war of sorts -- and as the two duke it out, the membership warehouse club says it has terminated all new orders of Coke products.
This, of course, is not exactly good for Coca-Cola.
The beverage giant believes its prices are fair, but Costco says they are not wallet-friendly. The brands in question include Coke Classic, Cherry Coke, Black Cherry Vanilla Coke, Diet Coke, Coke Zero, Sprite, Squirt, Dasani Water and Vitamin Water.
In light of this, we asked you: Who do you think will be the first to blink, Costco or Coca-Cola?
Before we get to your responses, it might be worth visiting the background: With an economy in turmoil, it is not unusual for product makers and wholesale club operators to squabble over prices; disputes like those of Costco and Coca-Cola are nothing new these days.
While product makers like Coca-Cola aggressively squeeze as much as they can into their profit margins while meeting retailer demands, retailers want to win over recession-wary consumers with the lowest prices possible.
Wholesale operators like Costco, in particular, have business models that depend on keeping prices on brand-name merchandise low. They strive to wield their power in negotiating prices with product makers.
"Beneath this surface of harmony, it's a dogfight out there," Gerry Khermouch, editor of
Beverage Business Insights,
said at an investor meeting held by the soft-drink maker at its hometown of Atlanta.
In most cases, retailers and product makers are able to maintain a cordial relationship, at least in the public eye. Thus, what has been unusual in the price war between Coca-Cola and Costco is that it has been one of the rare instances where such disputes have thrust themselves onto the world stage.
A media frenzy erupted when Costco posted a notice on its Web site, specifically pointing the finger at Coca-Cola: "Costco is committed to carrying name brand merchandise at the best possible prices. At this time, Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve." The message was labeled "Price Alert!"
Coca-Cola has already said that it will commit itself to working with Costco in a spirit of fairness. Beyond that, the company isn't commenting further. Costco has said as much as it feels comfortable with for now. But it seems clear that both sides will eventually have to sign a peace treaty. It would, after all, be foolish for Costco to sever itself from the worlds largest soft-drink maker, and unwise for Coca-Cola to drop a customer as large and valuable as Costco.
Given all this, most of you, 65.7%, think that Coca-Cola will eventually make a concession and lower its prices. The other 34.3% don't see Coca-Cola yielding to Costco's demands.
On Friday, the market seemed to find no winners in the conflict. Coca-Cola stock prices ended down 0.9% to $57.20 at Fridays close. Coke's soft drink rival
Dr. Pepple Snapple
was also down, by 2.8%, and closed at $26.30. Costco ended down 1.4% to close at $60.
BJs Wholesale Club
, another discount store, finished the week at 0.9% lower at $35.
-- Reported by Andrea Tse in New York
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