Coke NY Seeks $90+ Mil from Dr Pepper/Seven Up

From Beverage Digest 5/9/97

Coke NY Seeks $90+ Mil From Dr Pepper/Seven Up
in A&W Case. Says Termination 'Unjustified'.

On 5/6/97 Coke NY files complaint in NY Supreme Court against Dr Pepper/Seven Up (DPSU) re termination of A&W franchise. Action technically started 3/20/97 (BD 4/11/97) by summons without detailed allegations. Coke NY claims DPSU's termination of A&W agreements with bottler "willful and unjustified." Backdrop. Coke NY was major A&W bottler; ranked #3 by volume in 1996 (BD 12/13/96). In early 1997 Coke NY announces roll-out of Coca-Cola Co's Barq's starting 4/14/97 (BD 2/21/97). Coke NY claims addition of Barq's involves strategy of "promoting complementary products." In suit, Coke NY seeks damages of "not less than $90 mil."

A&W vs Barq's. Coke NY maintains: 1) A&W Root Beer "has not achieved substantial acceptance in certain demographically important consumer groups." 2) "Barq's Root Beer and A&W Root Beer are pointedly different products." 3) A&W is "traditional, classic root beer ... with low carbonation, no caffeine (and) expected root beer head." In contrast Barq's is "highly carbonated, caffeinated with no head." 4) Coke NY "concluded that it could increase overall (root beer) sales" by "adding Barq's to its roster of leading branded products while continuing to emphasize A&W." 5) Coke NY's A&W agreements "contain no prohibition against (Coke NY) manufacturing, selling or distributing other products within the root beer or cream soda categories." 6) DPSU has right to terminate "if and only if (it) determines Coke NY has engaged in the manufacture, distribution and sale of a competitive product and that such activities had caused a breach, default or failure of condition or performance by Coke NY" re A&W. 7) "By arbitrarily terminating Coke NY's license without cause, (DPSU) breached" agreements with Coke NY. Response. DPSU executive says: "It is the policy of the Dr Pepper/Seven Up company not to comment on pending litigation."

NY territory change. Separately, Coke NY's former A&W rights go to: Canada Dry Honickman, Pepsi Newburgh Tenney, Polar Beverages.

RETURN to 5/9/97 Headlines.

This and all past issues of Beverage Digest are for sale.
Please call (914) 244-0700 for more information.
Can't find the article you're looking for?
Click here to e-mail inquiries to our editors.