Coke: Wal-Mart Flexing Muscle in Sports Drink Delivery

Wal-Mart Stores Inc. (WMT) is shaking up Coca-Cola Co.'s (KO) bottling system. Wal-Mart told Coke it would double its purchases of Powerade if the sports drink is delivered to its stores through its own warehouses rather than through the bottler system, but said it could jump to a private label if it can't do what it wants, Coke said in a court filing.

Coke warns that a private-label competitor to Gatorade could prevent Powerade from any future growth opportunities in Wal-Mart stores.

The comments came in a June 1 response by Coke to a federal lawsuit filed by a group of bottlers who are challenging Coke's distribution of Powerade to Wal-Mart stores through Wal-Mart's warehouses.

Coca-Cola says an injunction sought by the bottlers would do more harm than good. The suit was originally filed in Springfield, Mo., but has been transferred to Atlanta.

The bottlers say an agreement negotiated in 1994 between the bottlers and the company prohibits warehouse delivery of Powerade to major retailers such as Bentonville, Ark.-based Wal-Mart.

But Coca-Cola says the Powerade contract allows a bottler to choose warehouse delivery within its own territory.

A call to Wal-Mart was not immediately returned.