Small Firms Hurt in Soft-Drink Battle : AmeriCola Looks for Some Space on Shelf

AmeriCola Beverage Co. is the official soft drink of the United States Football League, but its 25-foot-long stadium banner has been relegated to the company’s Carson warehouse--barred from the Los Angeles Coliseum because of Coca-Cola’s exclusive licensing deal.

“We have an obligation to protect our sponsors,” said Glenn Mon, assistant Coliseum manager, adding that Coke paid $3 million in 1982 for its 15-year licensing pact with the stadium. AmeriCola’s “sign contravenes the terms of our agreement (with Coke) and therefore is not permissible.”

The war among beverage makers may seem gentlemanly enough on television, but on the front lines of the battle--supermarket soft-drink aisles, sports arenas and restaurants--the competition is ferocious.

Andrew Manley, a former sales executive for General Mills’ Delimatic Refreshment Services unit, learned quickly how tough the business is after putting up $66,000 in January, 1982, to start AmeriCola--the nation’s only black-owned beverage company.

Shunned by Chains

Shunned by many grocery chains because his product is not well known, and surprised by periodic price wars among major brands, Manley’s company grossed less than $400,000 last year despite his USFL licensing agreement, a spate of radio ads and an infusion of about $375,000 in venture capital from a group of investors.

“He’s got a very attractive product. . . . It has sold well in our market,” said Morrie Notrica, owner of the 32nd Street Market near the University of Southern California. “But he’s suffering from the pains of getting established. You’ve got brands like Coke and Pepsi trying to hog all the shelf space they can.”

Although AmeriCola’s three brands--regular, sugar-free and “natural” cola--are sold in 141 stores--primarily in Southern California and Hawaii--and priced about $1 per six-pack below Coke and Pepsi, Manley says he is having trouble getting his product to consumers.

“The beverage industry has a philosophy that . . . it doesn’t matter how you win,” Manley, 38, said. “I’ve experienced situations where (a grocer) said to me, ‘Andrew, I’d like to take AmeriCola but I can’t. These guys are literally coming in and buying up space.’ They are that brazen.”

Protecting Products

Officials of Coca-Cola USA and Coca-Cola Bottling Co. in Los Angeles declined comment. But Pepsi spokeswoman Becky Madeira said, “Obviously, you are going to protect your products and do the best you can.”

However, she disputes Manley’s claim that supermarket chains or major soft-drink companies are out to sabotage small bottlers, noting that Coke and Pepsi distribute many small regional brands that compete with the two giants’ products.

Added Gary Edwards, merchandiser for Vons Grocery Stores: “We allocate space (in Vons) based on sales and need. I don’t think Coke and Pepsi are involved in keeping the little guy out. They don’t even worry about the little guy. They worry about each other.”

Yet, some small bottlers have raised allegations similar to Manley’s in court.

Last August, Beverage Management Inc., which distributes Seven Up in Cincinnati, went into U.S. District Court seeking a preliminary injunction against Coke. It claimed that Coke had hurt its ability to compete by preventing Kroger supermarkets from featuring certain sizes of a competing soft drink during the same week it promoted Coke.

Coke disputed the allegations and claimed that Beverage Management filed the suit because it was “losing the game” of selling soft drinks in Cincinnati, where Coke’s share of the market is about 35% and Beverage Management’s about 10%. In October, the judge denied Beverage Management’s motion for a preliminary injunction. A hearing on the merits is to be held.

“It’s a combination of large food chains and large soft-drink manufacturers that are putting the squeeze on the small bottler,” said Michael Yarbrough, Beverage Management’s lawyer. Stores, he said, “are asking (bottlers), ‘How much are you willing to pay for shelf space and ads?’ . . . Coke and Pepsi (therefore) dominate because they have the bucks.”

AmeriCola, whose products are manufactured under an agreement with the Seven-Up Bottling Co.’s Westinghouse Group, says it, too, may have to fight back.

“If I can get Coke and Pepsi off my back, I can do $15 million in sales this year,” said Manley. “If not, I’ll be out of business.”