Coke 3rd party..

[sprint54fan]

Ive been dealing with Coca Cola 3rd party for bout two years now. We never signed a contract with them as it was basically a verbal agreement on what was needed to get machines. Well a few months ago they tell us they can place machines but it has to meet a requirement now of 20 employees and 200 people a day foot traffic...I come from a small town so those locations are hard to find here. We have 19 Coke machines out in 17 locations. We recently were told we had to sign their FLO CMA third party agreement..which we did. Now we are gold members starting out and have to buy so much to stay there.. which the sales quarter ends in a couple weeks and I received a call the other day telling us we have met the goals..so far so good. However Coke is pulling a ton of their own accounts that have bottle/can equipment cause they say its lack of sales..Im worried now that they are going to start coming after us third party guys since now Im on paper now and used to be just a verbal agreement guy. They have requested an asset list from us now.. there excuse is they need the asset list to attach to our FLO CMA sales report..GREAT!

[AZVendor]

This is not unusual for the bottlers who provide free or inexpensive machines to vendors.  You have to remember that they are the ones who pay for the machines and own them, so giving them a list of where they are located and purchasing a minimum amount of product per machine is part of every third party agreement, whether enforced or not.  I wouldn't worry about them wanting to pickup your machines until they ask for the first one back.  This is a possibility that hangs over every third party vendor and as long as you are providing the information they ask for and making the required purchases, they will probably leave you alone.

 

Remember, too, that they have rules prohibiting foreign product in the machine as they have to protect their image, reputation and market share.  You get to utilize their equipment without making an investment which preserves your cash, and in return you have to follow their rules.  There is always a possibility of a bottler requesting their assets back and this has happened in various markets over the years. 

 

As long as they are sure you are placing their assets in locations with sufficient traffic to promote their product brands and then you follow all the other guidelines they are likely to leave you alone.  I think that you may have misunderstood their requirement for 20 employees and 200 people a day; I think that would be "either" as the bottlers want their brands in front of as many people as possible.  If your bottler is tightening up their equipment budget, they will want to ensure their assets are deployed efficiently, as would you, since a slow location won't even make you money with a free machine.  They are pulling their own slow machines for this very reason, I'm sure. 

 

I wouldn't worry about them trying to steal your locations by asking for a location list, as that would just burn a bridge with a customer.  They are usually satisfied with the products in front of the customers, no matter who operates the machine.  Vending is small potatoes for them, sales wise, and is used primarily for advertising.  So I don't think they are worried that you have locations that they want.

[VendingExperts]

1. What specific companies provide 3rd party agreements?

2. How do you get started with it?

3. What do they charge for product; can and bottle?

[AZVendor]

VE,

 

You can get third party machines from your local Coke and Pepsi distributors, IF they are taking on new vendors.  The best way to approach either one is to already have several locations lined up to put their machines into.  These can be new accounts or you can replace machines you already have on location.  They generally don't want vendors who will only start with 1 or 2 machines and then maybe never order another machine, that just makes paperwork for them.  They want to see a sign that you are serious and could become a major player that they can have a relationship with.  Remember, they use the machines for advertising and they want vendors who will pick up lots of quality accounts where their brands can be put in front of lots of people. 

 

When I started way back in 1985, Coke wouldn't touch me, but I put out 10 Pepsi machines within 6 months.  They didn't have all the rules that go along with it now.  I got used machines with no bill acceptors back then - validators were still pretty new to the industry.  It wasn't until 1990 when I picked up a major account that needed 50 soda machines and Coke couldn't get out of their own way fast enough to welcome me in. 

 

There are stipulations that go with this now such as no foreign product used, purchase a minimum number of cases per month (around 14 cases) from an approved supplier like Vistar or direct from the bottler.  And they need to know where their machines are.  They don't want you warehousing them to save them for a new account down the road.

 

The drawbacks to this arrangement are you have only one line of drinks in the machine, the minimums can be hard to make, though they will take care of major repairs they can be slow to react and you have to make minor repairs yourself.  You can cushion the minimums with purchases for your other machines.  I never had to worry about minimums as I was buying truckloads from both bottlers to use in my leased and owned machines.

 

Basically, if you don't want someone telling you what to do, buy your own machines.

[Action Vending]

7up does third party also. The kind of accounts coke has picked up in my area were accounts that did 20-50 cases per year. We were going to take all of them but some were dead trips that just dindt make sense. 

 

also 7up will let you run coke or pepsi products in the bottom two slots. that is how confident they are with their products. 

[mission vending]

7up does third party also. The kind of accounts coke has picked up in my area were accounts that did 20-50 cases per year. We were going to take all of them but some were dead trips that just dindt make sense. 

 

also 7up will let you run coke or pepsi products in the bottom two slots. that is how confident they are with their products. 

 

 

It not that they are that confident in their products, they have such a small market share its the only way they can get larger vending companies to put their product out.

[mission vending]

Ive been dealing with Coca Cola 3rd party for bout two years now. We never signed a contract with them as it was basically a verbal agreement on what was needed to get machines. Well a few months ago they tell us they can place machines but it has to meet a requirement now of 20 employees and 200 people a day foot traffic...I come from a small town so those locations are hard to find here. We have 19 Coke machines out in 17 locations. We recently were told we had to sign their FLO CMA third party agreement..which we did. Now we are gold members starting out and have to buy so much to stay there.. which the sales quarter ends in a couple weeks and I received a call the other day telling us we have met the goals..so far so good. However Coke is pulling a ton of their own accounts that have bottle/can equipment cause they say its lack of sales..Im worried now that they are going to start coming after us third party guys since now Im on paper now and used to be just a verbal agreement guy. They have requested an asset list from us now.. there excuse is they need the asset list to attach to our FLO CMA sales report..GREAT!

 

I've made a number of comments about third party programs over the last few years in general and specifically Coke's program.

 

1. As CCE has acquired virtually all of the Coke branded bottlers their policies have gotten more uniform across the country beginning with the FLO contract and also including a minimum case stipulation. They are also, in general, becoming a lot more restrictive and picky in who they let into the program. Some of this is due to the guys out there that get started in the business with a few machines and then give it up and abandon the machines. Then we have another vending newbie coming around asking if this is a good find on CL, which of course is one of those abandoned bottler machines that somebody else picked up. Not blaming the new guys, they don't know any better.

 

2. Third party programs with any bottler can be a great way to accelerate your business growth by reducing your capital outlay to grow. I have used the third party programs with both Coke and Pepsi for over 15 years now and am glad that I have. I have also said several times that, IMO, it is not a good idea to be overly reliant on them for your growth. If you let them that deep into your business you are at their mercy on pricing and what if the unlikely event they decide to pull their machines comes what will you do? Doing business with the bottlers in a third party program is kind of like dancing with the devil, you better have a good exit strategy in your back pocket.

[Vending How Chris]

I also wouldn't worry about them taking your machines. What I would worry abou is them changing their product minimums or pricing tiers. In the past couple of years, Coke has been squeezing out vendors that are too small.

To, as mission said, have a strategy in your back pocket, I recommend pooling your buying power into a co-op like structure. Get together with other smaller vendors and order all their product. (Only if its within the bounds of your contract!) This way, you can still meet minimums and help out newbies who have no way of starting a 3rd party contract anyway.

[moondog]

I looked into third party vending a couple of years ago and passed on it for a couple of reasons.  One, I can buy product for 10 to 15% less elsewhere and two, I have no minimum ordering requirements and can increase my sales by not being forced to sell only certain products.  For me,  the cost of a good used stacker was preferable to the cost of dealing with the bottlers.

 

I suspect that CCE is considering taking over all the outside vending.  This will be interesting as they don't do snacks, their service is crappy and they'll want to shut down the smaller locations.  Could be some good opportunities down the road as that led balloon slowly crashes.

 

If I could find a supplier that would deliver a mixed lot of 200 cases once a month,  I'd be set - I'm spending about eight hours a month right now picking up drinks from three different sources.

[AZVendor]

Not to worry, CCE isn't going to eliminate 3rd party operators and run all Coke machines themselves - they'd lose more than 1/2 those accounts in the first month and they know it.  CCE uses the 3rd party program to get their name out in front of the public.  They use vendors as an extension of their sales force to get their brand into locations that CCE can't or couldn't get into.  In return for loaning out the nice, refurbished and sometimes new machines they simply require a minimum purchase of their products from them or their preferred sources to guarantee that the revenue from the product sales is high enough to cover the depreciation on the loaned machine.  Third party vending is too entrenched in the business model of CCE that they would have to have a major overhaul of their marketing before they scrapped the 3rd party programs.

 

There have always been regional Coke bottlers, Pepsi too, that have also been full line vending companies.  Those have mostly been divested at the request of CCE and PBG or as the regionals have been bought out by the corporate parents over the years.  As the bottling industry got larger and soda became a staple of the US diet they learned that doing other vending was detrimental to their primary objective of producing beverages.

[moondog]

Not to worry, CCE isn't going to eliminate 3rd party operators and run all Coke machines themselves - they'd lose more than 1/2 those accounts in the first month and they know it.  CCE uses the 3rd party program to get their name out in front of the public.  They use vendors as an extension of their sales force to get their brand into locations that CCE can't or couldn't get into.  In return for loaning out the nice, refurbished and sometimes new machines they simply require a minimum purchase of their products from them or their preferred sources to guarantee that the revenue from the product sales is high enough to cover the depreciation on the loaned machine.  Third party vending is too entrenched in the business model of CCE that they would have to have a major overhaul of their marketing before they scrapped the 3rd party programs.

 

There have always been regional Coke bottlers, Pepsi too, that have also been full line vending companies.  Those have mostly been divested at the request of CCE and PBG or as the regionals have been bought out by the corporate parents over the years.  As the bottling industry got larger and soda became a staple of the US diet they learned that doing other vending was detrimental to their primary objective of producing beverages.

That's good for the larger vendors doing third party AZ,  but I've been told that they are pulling all of their machines from the smaller to mid sized accounts.  I'm not too interested in the small accounts, but some of those mid sized ones would be right down my alley.

[AZVendor]

Are they pulling small to midsize accounts or machines from small to midsize vendors?  I don't think Coke would be able to determine how good an account is simply by calling it small or midsize.  Or is this what's happening in So Cal?  I could see them deciding to cull the ranks of vendors by clearing out all the small time operators with less than, say, 10 machines or vendors that haven't exhibited an ability to grow the number of machines they have.

[Vending How Chris]

In recent years they haven't been just been pulling out machines based on the size of the accounts, they've also been increasing the minimum purchase order for their product for a 3rd party program, thus doing the same basic thing to the small business vendor. However, that same vendor does stand to profit by absorbing jettisoned smaller locations if they form a good relationship with the bottler in the first place.

[moondog]

Are they pulling small to midsize accounts or machines from small to midsize vendors?  I don't think Coke would be able to determine how good an account is simply by calling it small or midsize.  Or is this what's happening in So Cal?  I could see them deciding to cull the ranks of vendors by clearing out all the small time operators with less than, say, 10 machines or vendors that haven't exhibited an ability to grow the number of machines they have.

I think it's a bit of both AZ.  Cajun tells me that they're closing down their own small accounts in the New Orleans area and I was speaking to another vendor here yesterday that has some third party Coke machines and they're getting selective about who keeps machines.  In addition,  I've heard that bottlers aren't buying new machines at the rate that they used to.  From what Mission said,  it sounds like they're finally getting serious about their missing assets. (About time)

 

The part that will affect me is the new policy to scrap machines rather than sell them - I'm not seeing many Royals for sale anymore.

[mission vending]

They have also opened a number of reman centers to rehab servicable machines that otherwise would be sold. I've been told by my rep they can reman 8000 machines a year here in SA. Don't know if its true or not but they have a very large building and literally hundreds of machines outside stacked three high waiting their turn.

[moondog]

They have also opened a number of reman centers to rehab servicable machines that otherwise would be sold. I've been told by my rep they can reman 8000 machines a year here in SA. Don't know if its true or not but they have a very large building and literally hundreds of machines outside stacked three high waiting their turn.

So instead of buying new machines, they're refurbishing their older machines - I'm assuming these are Stacker/Bubblefronts if they're being stored outside three high,  which explains why I don't see them around anymore.

 

What do you think that they're planning for all those machines Mike?

[Poplady1]

At one time they would sell those machines to places like Vendors Exchange or Vending World in very large bundles.  They got such large tax breaks when they turned those machines into off asset equipment.  Maybe new IRS rules have prevented that from happening. 

[AZVendor]

The same dried up source of soda machines has happened here, too.  Coke hasn't sold off old equipment in years here because they have been CCE-owned for a long time.  They used to rebuild their own here and had stacks of machines on their back lot. Now we don't know where they send their old stuff to.  Pepsi has for years been selling off their old stuff locally up until last year.  They used to seek bids for each quarter and the winner had to buy anything they wanted to get rid of for a set price per unit.  That included vandalized machines, glass door coolers, newer stuff, older junk.  A different guy would win the bid each quarter so the supplier of used Pepsi machines here changed every 3 months.  Now they ship all their machines off to a rebuilder, used to be Denver,  but now it's in California somewhere.  Maybe they don't go to a rebuilder but to someone like Vending World, we just don't know.

 

We do have a Royal factory rebuilding depot here in town that does mostly Coke stuff, but also other bottlers, so likely the local CCE guys get their Royals done there.  They rebuild them and send them back to the bottlers to reuse.

[moondog]

The same dried up source of soda machines has happened here, too.  Coke hasn't sold off old equipment in years here because they have been CCE-owned for a long time.  They used to rebuild their own here and had stacks of machines on their back lot. Now we don't know where they send their old stuff to.  Pepsi has for years been selling off their old stuff locally up until last year.  They used to seek bids for each quarter and the winner had to buy anything they wanted to get rid of for a set price per unit.  That included vandalized machines, glass door coolers, newer stuff, older junk.  A different guy would win the bid each quarter so the supplier of used Pepsi machines here changed every 3 months.  Now they ship all their machines off to a rebuilder, used to be Denver,  but now it's in California somewhere.  Maybe they don't go to a rebuilder but to someone like Vending World, we just don't know.

 

We do have a Royal factory rebuilding depot here in town that does mostly Coke stuff, but also other bottlers, so likely the local CCE guys get their Royals done there.  They rebuild them and send them back to the bottlers to reuse.

Yep,

 

Randy over at Vending World gets a lot of those big lots and he resells many of them to other refurbishers and keeps the specific models he wants (he knows his machines)  Randy hates Royals so I doubt it's him or I'd see some of them in circulation as I know most of the other refurbishers around here that buy from Vending World.