No Coke, Pepsi!

November 8th, 2009 · 32 Comments

I was recently tipped off that Costco’s relationship with Coke is stormy, to say the least.  How bad is it?  So bad that Costco has decided that they’d rather not continue selling Coca-Cola products (soda, water, juice, anything) unless they can get better pricing for their customers.  That means you and me.

Coke may soon be a thing of the past at Costco

Coke may soon be a thing of the past at Costco

That’s right, Costco could soon have a wider selection of Pepsi products but no Coke products.  The people at my Costco tell me that while the supply might get a little thin in the stores, they expect to still be able to work things out with Coke eventually.  After all, Costco is the third largest retailer in the US, so it doesn’t seem like it would be wise for Coke to pass up the opportunity to keep selling their products in all of the Costco stores.  Supposedly, something like this also happened about 10 years ago, and they made up eventually or else there wouldn’t be any Coke in the stores right now.

So, you’re probably wondering what the story is behind Costco’s falling out with Coke.  It’s all about the customers, according to the people at my Costco.  For a long time now, Coke has been offering other retailers, chief amongst them is of course Walmart/Sam’s, better pricing and more notice regarding special sales and such.  So, it isn’t that Costco wants to have Coke sell them their soda and other products at some greatly reduced rate that is far below that of other retailers, they just want the same types of pricing so that they can continue to be competitive against other retailers.  Also, I don’t know if you’ve noticed it but at Costco the cases of Coke are much more expensive than the cases of Pepsi; a difference of somewhere around $0.07 per can, which is almost 30% more.  That certainly adds up when you’re talking about 32 or 36 cans.

As of today, there’s still plenty of Coke and all of their other soda varieties available at the Austin store that I shop at.   Also, I’ve heard that the issues with Coke in the warehouse does not necessarily impact the sale of Coke in the vending machines or the Food Court.

[If you’re wondering what’s up with the title of my post, it’s from a Saturday Night Live skit featuring John Belushi and Dan Akroyd from the 70s, which in turn is allegedly based on a place in Chicago called Billy Goat Tavern.  Cheeseburger, cheeseburger, cheeseburger!  No Coke, Pepsi!]

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32 Responses so far ↓

  1. 1 Jeanie // 2010.05.25 at 5:28 pm

    Diet Coke goes better with the hotdog. I want the coke back or thinking about not renewed my membership. \

  2. 2 David // 2010.05.21 at 6:04 pm

    But…. who would support such a horrible company such as Walmart or Sams Club? I’d pay any price for anything to stomp out Walmart and Sams club. You should really do some research on the compay ….. Just settled 27.6 million for environmental violations. Again and again they do whatever they want.

  3. 3 No Pepsi for me // 2010.05.21 at 9:42 am

    Costco made a big mistake with me when they replaced Coke products in the food court in Nevada with Pepsi, It is all about profits I have no problem paying more money for a better product. If they wanted a cheaper product that taste better than Pepsi they should have considered RC or something other than Pepsi! As for the comment that Costco is bigger than Sam’s club as far as buying power that is not true when you combine Sam’s club and it’s partner Walmart there buying power crushes Costco.

  4. 4 Brian // 2010.05.17 at 8:31 pm

    I will reply to the person who called themselves, “costco investor”. You are correct with regards to Costco doing more sales than Sam’s club even when Sam’s has many more clubs. I have done business on the liquidation side with Costco for 20 years now and in that time have also dabbled with Sam’s club liquidation product. Here in Sacramento CA there is a brand new Sam’s that opened barely a mile from The South Sacramento Costco. Previously the Sam’s was located about a mile north of the same Costco. I was never in the old Sam’s but have been in the new one a couple of times. It is very, very interesting that on any given Saturday, the parking lot in this new Sam’s club is more than half empty, yet drive a mile north to Costco and you have to fight for a spot to park. In comparing the general product mix between the two warehouses there really isn’t much difference. Some items are a bit cheaper at Sam’s, where others are a bit cheaper at Costco. Costco however, has been able to entice people to shop their buildings over Sam’s being able to draw people into theirs, even though currently it is more expensive to become a Costco member than a Sam’s member.
    As a liquidator in the Sacramento area that sells Costco merchandise, along with Sam’s and others, when it comes to customers comparing pricing, Sam’s is NEVER brought up in the conversations I have with my customers. Costco ALWAYS is brought up when it comes to price comparisons. Even thought when I walk the two company’s and see that their TV pricing is virtually identical. At least in this area of the country, Costco is THE driving force and influence when it comes to customers perceptions of best pricing on pretty much everything that they sell and is interesting that Sam’s club seems to hold absolutely no weight in comparative influence.
    This shows in the level of salvage that a Costco will produce over a Sam’s club in the same region. Where the average pallet count that I receive from the current Costco clubs I do business with is around 10 palles per week, the Sam’s clubs will produc t 1-2 pallets per week. This is significant evidence that the average Costco warehouse blows the average Sam’s club right out of the water when it comes to sales.
    As for the business ethics of Costco. Especially in the executive and the higher warehouse management you can definately be confident in their business integrity. At times though it can be a challenge to hold the lower levels of day to day staff to the same level of fairness and business integrity.
    And their long over due Consierge program and limited return policy that too affect at the end of Feb. a few years ago in California and rolled out to the rest of the US and Canada later that year. That was the best thing they ever did except they grandfathered everyone in to the “forever abuse us” policy that was in place before the implimentation date. And that abuse continues to this day as 6 and 8 year old TV’s continue to get returned. How do I know this? I see them in the salvage every week. As a liquidator, it is a twe edged sword to complain about their return policy. If they tightened up then most liquidators would go out of business for lack of product. So, one must be able to negotiate with each club, the salvage standards that Costco themselves put in place to protect the liquidators from having all the abuse from their liberal return policy passed on to the liquidator.
    If the general public ever knew just how really bad Costco has been abused by those that take fraudulent advantage, they would be horrified. Especially those on this forum who are here specifically because of their love for this company called Costco.

  5. 5 jane // 2010.05.16 at 10:41 am

    Our Costco in N Nevada has change the concession to P!@#$, (I can’t bear to type that word). It has certainly changed by shopping experience. One of the joys of braving the expedition to a Costco was the reward of satisfying my Coke fix periodically. That aside, I can’t think that removing the product entirely is good for business. Even if the price is a bit higher, I do NOT want to do party shopping at one store and then have to go to Walmart to finish my out my drink purchases.

    • 6 Kimberly // 2010.05.18 at 1:14 am

      Costco will still be selling Coke in the rest of the warehouse, just not the Food Court.

  6. 7 scott // 2009.11.22 at 11:15 am

    I purchase some 30+ bottles of coke per week . No one at work drinks Pepsi products we just don’t like them. The point of having a club membership is to do all of your shopping in one place. Costco still could have carried coke at a higher price right next to Pepsi products. They will be spiting themselves. After I collect my next rewards check from costco and AMEX. I am done with them.

  7. 8 Will // 2009.11.20 at 9:57 am

    The fact that Costco decided NOT to carry Coke products just reinforces my faith in Costco that they strive to get the very best prices for their members. I trust them unequivocally. Costco members should be happy that Costco buyers are looking out for the best interest of their customers. Sure – it would have been more profitable for Costco to just accept the price that Coke gave them and raised their price a little – probably 95% of the members wouldn’t notice the price difference – but culturally Costco fights for their members to get the best price and a price that it is at least equal to what Coke offers their other large accounts. This is what Sol Price (founder of the warehouse concept and who Jim Sinegal worked for) used to call “an intelligent loss of sales”. Hats off to Costco!

    Message to Concession Queen: I too had accounts at Costco, Sam’s and BJ’s and my experiences have been much, much different than yours. As far as pricing, I’ve found Costco has at least equally if not better prices on like items and I’ve NEVER, EVER had an issue with returns at Costco. I would rate them in this order: #1] Costco – #2] BJ’s and a distant #3] Sam’s Club. As a matter of fact, their is a huge delta between #2 BJ’s and #3 Sam’s in my opinion – BJ’s, though regional, is much better than Sam’s as far as quality of goods and shopping experience. I wish that weren’t the case because Costco is a longer drive for me. I find Costco is the high-water mark for membership club stores and Sam’s is just a wannabe – they try to mimic everything that Costco does. I will give Sam’s credit for offering a much larger selection of eye-wear in their stores than Costco though. Just my opinion, for whatever it’s worth.

  8. 9 Costco Investor // 2009.11.19 at 5:07 pm

    As an investor in Costco for a very long time, I would like to clarify a few things that others have said here. First and foremost, Sam’s is much smaller than Costco. Costco’s volume this year will exceed $68 Billion, and Sam’s, with about 150 more locations in the US, will only do $50 Billion. Sam’s annual volume with Coke is lower than Costco even though Sam’s carries more items. As a company Costco is VERY ethical. I have never, in 25 years of Costco watching, seen them behave any other way. They only call vendors to the carpet who are clearly not being equitable.
    As for the return policy, it has only changed once in 25 years. that change was to keep people (unscrupulous people) from returning two year old computers to “upgrade” to new technology at Costco’s expense. Again, in 25 years of shopping at Costco, Sam’s, Wal-Mart, Target, etc.. I have NEVER seen an easier return policy than that at Costco. The only way they would question a return is if the person returning the product is a known abuser of the very open return policy. In which case, these returns cost ALL members money in the long run, as they increase the cost of doing business because a few people abuse the return policy.

  9. 10 Concession Queen // 2009.11.18 at 10:35 pm

    I have memberships at Costco, Sam’s and BJ’s. Sam’s has the best prices of any of the clubs. Why??? Because they are bigger and most likely buy larger quantities than the other clubs. Both Pepsi and Coke are volume based businesses. The larger the purchase volume the lower the case price. It is the same in most businesses. I do find this amusing from a consumer standpoint because Costco’s fee to join are higer than both Sam’s and BJ’s. Why is this? Can someone explain this? Are they that much different than Coke or Pepsi in what they are doing? As a Coke drinker and a concessionaire, I have spent thousands of dollars a year at Costco. I have done so because of the AMEX card and rebates, but have recently had a issue with their return policies. Sam’s will take any product or over purchases without a question and give refunds, Costco does not, they’d rather argue with a longtime customer and threaten to cancel my membership. After all of this, I may need to re-think where I purchase my concession products as well as my personal purchases.

  10. 11 Dave // 2009.11.18 at 1:28 pm

    @Mike In case you didn’t realize, the point of Costco’s change is that they’re sick of not getting better prices on coke products for their customers. That is, they’d rather not sell a product at all then have their members pay higher prices than are necessary. They want you to go buy your Coke at Smart N Final or whereever. I applaud them for such a stand, and it certainly makes me feel more comfortable buying other things at Costco.

    If the membership fee isn’t worth it to you, then by all means shop elsewhere. In my case, the value and the savings way overcome the membership fee so I’ll stick with Costco.

  11. 12 Omar // 2009.11.17 at 3:45 pm

    It’s sad the all these big companies can dictate over consumers, I just hope some day they will have awake up call, and us as customers get together and send them a message that at the end we are the ones which choose what to buy.
    Here in central California there a good territory that Coke has lost great amount of sales and Pepsi has grown stronger.
    As far as the Coke from Mexico it does taste better with sugar cane and that is why the growing popularity.

  12. 13 umbriago // 2009.11.17 at 11:53 am

    Apparently it is true, now.

  13. 14 Mike // 2009.11.17 at 9:57 am

    For someone who left Costco for Smart N Final 5 years ago because there is no membership fees and the prices are not much different to get rid of Coke to this Pepsi hater will surely keep me away I do not like Pepsi or it’s products I will not even eat at a restaurant that carries only Pepsi, I am diabetic and drink Iced tea but my wife HATES Pepsi Wake up Costo there are MILLIONS of coke lovers that will be cashing in their membership card Heck you can find at Food 4 Less prices better than Costco and again Smart N Finals prices are very competitive and NO Membership fee

  14. 15 liljohnny51 // 2009.11.15 at 1:19 pm

    i work at a costco and it is true we are not selling coke anymore. we are having a so called price war with coke. either on tue or wed of this week we have to take all of our coke products out of the store. everything coke is gone!

  15. 16 Dez // 2009.11.14 at 8:38 pm

    Soft drinks have gone up in price a lot the last couple of years. We’re gradually switching over to stuff that Costco doesn’t carry at all- Diet Gingerale. Trying to drink less colas because of caffeine. Rarely see regular gingerale and never see diet.

  16. 17 pja48142 // 2009.11.14 at 12:26 pm

    My local grocery does better on pricing for both Coke and Pepsi products. It’s been that way for years. I don’t even look at the price at Costco anymore. I hope they can convince Coke to find a way to offer similar pricing at Costco.

  17. 18 Greg // 2009.11.12 at 8:30 pm

    All else being equal, I prefer Coke to Pepsi as a product. That said, Coke as a business is much more difficult to deal with in my experience. I used to buy soda by the pallet for a medium sized business, and Pepsi was much more flexible on pricing and willing to help their customers. Coke’s popularity and larger market share has given them the attitude that theirs is a superior brand and they will price it that way. It’s kind of a ‘screw you’ approach, and so far they’ve gotten away with it. Talking to other people who own businesses who’ve used both products has reinforced my views on how these companies treat their customers.

    Regular Coke runs around $10 per case in my local Costco, when you can buy nearly any other product for $6-$7 and store brands (the Cott beverages) for $5. Even Wal-Mart in my area typically has “everyday high” prices on Coke products. Occasionally they will have a promo on full cases, but that’s few and far between.

    If Costco is squeezing Coke regarding pricing, my hat’s off to them.

  18. 19 Kimberly // 2009.11.10 at 9:10 am

    Meesha, I’m going to try to get that plug-in installed this week!

  19. 20 Robin // 2009.11.09 at 10:11 pm

    It’s funny how one’s response to a post can change as you finishing reading the entry.

    At first I was a bit peeved that Costco would stop selling Coke until I saw why. I have to wonder if Costco’s profit varies much between the two prices, as it appears their main objective in this incident is looking out for their members.

    This week I’m visiting family in the NY Metro area and am introducing Costco to various friends and family and in turn checking out the local stores.

    I just love supporting a business that I actually respect!

  20. 21 Lori // 2009.11.09 at 2:30 pm

    I think the same thing happened a few years ago at least in my local Costco. I went to purchase Coke product for my office and there was none. I asked about it and they said that Coke was not willing to give Costco the best price so they were no longer selling Coke but as we all know that changed and I bet it will change again.

  21. 22 Clue // 2009.11.09 at 3:16 am

    Wanna bet that Coke is being put in the middle of a nasty pricing tug-o-war between Hellmart/Blam’s and Costco? It will all come down to which one Coke is willing to kow-tow to the most…or which one they are afraid off ticking off the most.

    >> posted by meesha.v “Costco’s here in KS and MO sell bottled “Mexican” Coke for about $17/case which was a surprise to me when I firs saw it.” <<

    Coca-Cola produced in Mexico is in increasing demand here in the states, because they still use pure can sugar there to sweeten Coke, instead the increasingly demonized High Fructose Corn Syrup (or HFCS) like they use in the US produced Cokes.

  22. 23 michael // 2009.11.08 at 6:21 pm

    The vending machines are managed by Coke, not Costco, the only one that Costco takes care of is the water bottle machine.

  23. 24 H. // 2009.11.08 at 5:20 pm

    Should I feel old since I knew exactly what the “No Coke. Pepsi” reference was? 🙂 Ah for the early days of SNL……

  24. 25 JustinS // 2009.11.08 at 3:55 pm

    Will Costco start selling Pepsi products in the food courts now, too?

  25. 26 meesha.v // 2009.11.08 at 3:55 pm

    Costco’s here in KS and MO sell bottled “Mexican” Coke for about $17/case which was a surprise to me when I firs saw it.
    On an unrelated note, would you mind installing a subscribe-to-comments plugin for WordPress. I’ve been using it for years and commenters can be notified if someone else left a comment without having to come back to the site every time to see if there is a reply.
    http://wordpress.org/extend/plugins/subscribe-to-comments/

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