Here is a little information that I read in the Times-Picayune newspaper in New Orleans. Rite Aid Corporation (RAD) just bought out one of the biggest drug store chains in the New Orleans area. The article mentioned that they have been acquiring other chains around the country and now have stores in 31 states and the District of Columbia. They are the nation's largest drug store. The reason that I write this and for which I am pissed off is that they do not sell Coke products. Rite Aid has an exclusive agreement to sell only Pepsi. Since there are Rite Aids in 31 states, I urge my fellow KO shareholders not to do business with Rite Aid. On a positive note, Coke is the number 1 seller in nine out of ten drugstore outlets. The missing 10th is Rite Aid. I am interested to hear what you other KO fanatics think about this.
The explanation for what you are seeing in the Rite Aid stores is really very simple. Pepsi chose to offer Rite aid a marketing plan that gives these stores a price per case that is so low as to be unprofitable for Pepsi. Coke wisely choose not to sell cases for no profit. Pepsi is already finding that this move will hurt them with their other customers who have begun to sream about paying a much higher price for the same product. Many of those customers are now going to buy their product at rite aid which will hurt their profits even more. They will find that instead of these customers bying direct from the bottler they are now going to go to Rite aid and pepsi will make no profit on the cases they buy. True Coke will lose some case volume but when you understand that those were low profit margin cases Coke can easily gain back some of those cases from some of Pepsi's angry customers and at a higher profit per case. In the end Coke will easily sell enough higher profit cases to more than offset any loss to the bottom line. You should see the deal Pepsi offered just to get in these stores. It makes me wonder what they are mixing in their drinks !!! This will turn out to be good for Coke and bas for Pepsi.