Coca-Cola makes its comeback to Costco's dining spots, as Pepsi bids farewell
Coca-Cola makes its comeback to Costco's dining spots, as Pepsi bids farewell
At the recent shareholders meeting, Costco CEO Ron Vachris announced that the company will revert to using Coca-Cola products for their food court fountain drinks. This shift in beverage providers had been a topic of rumors, and when a shareholder asked about the change, Vachris confirmed the news.
Pepsi had held the contract for Coca-Cola's fountain drink business at Costco food courts since 2013. The contract extended beyond just the machines and syrup, including cups, straws, and other related products. However, it appears that national sentiment has swayed back in favor of Coke, prompting this change.
Costco has a long-standing history with Coca-Cola, having been a primary provider for decades. However, commercial considerations led Costco to switch to Pepsi in 2013. At the time, the company claimed they were safeguarding the iconic $1.50 hot dog-soda combo, which has remained unchanged since 1985. Costco sells around 150 million of these combos annually.
Despite the historical significance and popularity of the $1.50 hot dog combo, Costco wasn't making a profit on it. Instead, they offset their losses by increasing prices on other food court items. This tactic may have been a controversial move, as Costco co-founder Jim Sinegal famously stated, "If you raise the effing hot dog, I will kill you. Figure it out."
It seems that inscrutable market dynamics and customer preferences have now encouraged Costco to return to Coca-Cola. The company's chief financial officer assuaged inflation-wary customers assuring them that the beloved $1.50 hot dog combo price would remain secure.
Sources indicate that customer dissatisfaction and market trends likely played a significant role in making the decision to reverse the 2013 switch from Coca-Cola to Pepsi. The exact motives behind the transition remain unclear, but it appears that a combination of market forces and changing consumer preferences dictated the shift back to Coca-Cola.
The switch back to Coca-Cola for Costco's food court fountain drinks is expected to impact their business relationships, as they will once again need to coordinate with Coca-Cola for supplies beyond just syrup. Costco's historical profits might see an uplift with the return of Coca-Cola, given the enduring popularity of their $1.50 hot dog-soda combo.