On a conference call with analysts yesterday, Costco CFO Richard Gallanti pronounced an end to the pricing standoff between his company and the Coca-Cola Co. that I covered last month. In that controversial standoff, Costco halted shipments of Coca-Cola products and publicly chastised Coca-Cola for its inflexibility in pricing. Coca-Cola products will return to Costco shelves on Monday December 14.
Who blinked? Neither party will say, although the quote from a Coke spokesperson in the above-linked Reuters article seems to suggest that the Coca-Cola Co. may have bent a little bit.
Now, one can’t help but wonder if other large retailers (Walmart, Kmart, etc.) will think that beating up on the Coca-Cola Co. may help them reduce cost. Or if they believe that Costco hurt itself by straining the relationship in the way that it did.
Whatever the result, my earlier prediction that “this situation will be resolved soon and the relationship will continue as if this squabble never happened” appears to be spot on. Going forward, this negotiation will be a great case study to determine if negotiation brinkmanship does leave a lasting scar on supplier relationships or if it can be relegated to “distant memory status” when a contract is signed and the parties settle into business as usual.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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