An agreement has been struck by Coca-Cola with Burger King – its second-biggest US fountain customer after McDonald’s – in a dispute over a rigged joint promo for a Coke sub-brand in 2000.
Coke conceded two months ago that that certain of its employees “improperly influenced” the results of a pilot promotion for Frozen Coke at BK locations in Richmond, Virginia, where Coke-employed consultants posed as customers to buy meals offering Frozen Coke coupons. As a result of the Richmond trial, the promo was rolled-out nationally later that year.
The scam came to light after Matthew Whitley, a former Coke fountains division executive, blew the whistle [WAMN: 21-May-03], leading to a confrontation between the two companies. However, all is now sunshine and roses after reaching a “fair and equitable financial outcome” – egalitarian, it is said, to the tune of $10 million (€8.85m; £6.20m).
According to Coke spoke Dan Schafer, the company is “now focused on strengthening the relationship” with BK, such relationship having already thawed to the extent of the latter reversing its planned phase-out of Frozen Coke, now renamed Icee.
Coke was desperate to retain the Burger King business despite its minimal profitability. Not only would its loss have opened the door to deadly rival Pepsi-Cola, but the chain’s 8,000-plus US restaurants are a highly visible, big volume outlet for several Coke brands.
But though the faked promo may now be ancient history for the two protagonists, Coke’s alleged misdemeanour (along with the accounting practices of its fountains division) are seen very much as current affairs by a federal grand jury and the Department of Justice – both of which are actively probing the charges [WAMN: 14-Jul-03].
Data sourced from: The Wall Street Journal Online; additional content by WARC staff