Coke Agrees $21m BK Payout to Heal Rigged Promo Rift

14 August 2003

The marketing experiment reputedly rigged by Coca-Cola executives will cost the beverage behemoth far more than originally thought.

A document made public by Burger King, which conducted the promotion in March 2000, reveals that Coke will pay the burger chain over $21 million (€18.5m; £13.0m) – more than double the figure of $10m reported earlier this month [WAMN: 05-Aug-03].

Relations between the two firms soured when the scandal came to light earlier this year [WAMN: 19-Jun-03]. The experiment involved BK’s Richmond (Virginia) outlets giving away coupons with value meals for a free slushy drink called Frozen Coke. Executives from the drinks titan allegedly paid an external consultant to buy thousands of value meals and make the experiment appear successful.

Now BK has revealed the scale of the compensation by releasing a 'term sheet' signed on July 30 by the burger company’s ceo Brad Blum and Coke president Steven Heyer.

According to this document, the payout includes: up to $8.4m for operators of BK restaurants which had frozen-drinks dispensers as of May 2000; up to $5.4m for repairs to equipment; around $0.9m to compensate franchisees that lost money selling Frozen Coke; and a $6.4m payment to BK itself, to be poured into the chain’s advertising fund.

In return, the burger chain will continue to sell Icee (as Frozen Coke is now known). The agreement requires the support of 80% of BK franchisees to come into force.

However, the $21m payment may not be the end of the matter for Coke – a federal investigation into the matter is already underway [WAMN: 07-Aug-03].

Data sourced from: The Wall Street Journal Online; additional content by WARC staff