Tuesday, September 24, 2013

Non Amended & Amended Bottlers

If It Seems To Good To Be True...It Probably Is!

Anyone who has been around long enough may recall about 7 years ago, SFS published an article describing the disparity in the pricing of a gallon on Coca-Cola Classic between our non-amended bottlers (Cleveland & Lehigh) and our amended bottlers (Buffalo & Chester).

Basically, the story went like this.  In the 1970’s, the Coca-Cola Company had persuaded bottlers that it would be in their financial interest to amend their bottling contracts.  The new (amended) contract would allow bottlers to use fructose (as opposed to sucrose) as their sweetener.   Fructose was going to save bottlers so much money in the long term that they also wanted bottlers to agree to allow the Coca-Cola Company to adjust their base price, just marginally, each year to keep up with inflation.  In the original contract, the base price remained fixed at .88 cents per gallon and could not be changed.

So how did this look in 2006?

  •    The base element had climbed from .88/gal to $3.34/gal in 2006…Approximately a 280% increase.
  •    The cost for a gallon of classic syrup was 38% higher for an amended bottler  (1 gallon of syrup produces approximately 3 cases of 24 pack cans).

How’s it look today, in 2013?

  •    A non-amended bottler is still paying a base price of .88 while an amended bottler is now paying $3.88 or 341% more.
  •    Today, an amended bottler is paying 74% more for a gallon of classic syrup than a non-amended bottler.

The morale of this story… If it seems too good to be true, it probably is!

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