Unhand that vitamin water! Lawsuit seeks to keep distribution from Coke By ALEXANDER SOULE

Unhand that vitamin water!
Lawsuit seeks to keep distribution from Coke
By ALEXANDER SOULE

Following Coca-Cola Co.’s acquisition of New York City-based Energy Brands Inc. which does business as Glaceau a Bridgeport distributor has sued, alleging Coca-Cola violated the Connecticut Franchise Act after shifting Glaceau distribution to its captive Coca-Cola Enterprises bottling arm.

B&E Juices Inc. (BE) claims to hold an exclusive right to distribute Glaceau’s VitaminWater locally. The father-son beverage distribution company seeks an injunction and punitive damages, and says it has served a copy of the lawsuit with the Connecticut attorney general’s office. Completing the acquisition in June, Coca-Cola has set a November date to transfer distribution. A Bridgeport magistrate judge scheduled evidentiary hearings for mid-October.

Coca-Cola did not immediately file a response in court, and a spokesperson said the company does not comment on litigation.

BE’s lawsuit appears to be the first filed in federal court since Coca-Cola announced Aug. 30 it would take over Glaceau distribution. At the time, the Atlanta-based giant indicated 99 percent of its existing distributors had agreed to carry Glaceau drinks as well. Big Geyser Inc., an independent distributor in Maspeth, N.Y., reportedly will retain its Glaceau distribution rights.

The BE suit is not dipping into unprecedented waters, however in 2000, BE waged a spit fight with Sobe, the Norwalk drink vendor now owned by PepsiCo Inc. of Purchase, N.Y.

Besides Sobe, Fairfield County is home to a number of beverage and alcohol distributors, including Nestle Waters North America, which sells Poland Spring; Bigelow Tea of Fairfield; and Diageo North America, which sells spirits.

BE claims it was already successful selling soft drinks in Fairfield County when it took on VitaminWater early in the decade. The company says the Glaceau account represented a risk due to commitments BE made to buy 40,000 cases by the second year, with 10 percent escalators for each year thereafter; and the time needed to establish the drink’s market base. At the time, a case of 24 beverages sold for between $12.50 and $16 each, depending on the brand.

BE claims its “sweat equity” is largely responsible for Glaceau’s success in Fairfield County, despite stating that Glaceau controlled most aspects of the relationship, including:

• defining the sales territory;

• setting prices, sales quotas and inventory levels;

• auditing financial reports and business plans;

• inspecting BE facilities; and

• imposing marketing obligations.

Today, VitaminWater, Smartwatersport and other Glaceau drinks ring up between 30 percent and 40 percent of BE’s business.

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