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Wendy's Renews Coca-Cola Contract, Will Ban Pepsi

August 25, 1998| From Bloomberg News

ATLANTA — Wendy's International Inc. renewed its soft drink agreement with Coca-Cola Co. for 10 years and said it will force franchisees serving PepsiCo Inc.'s drinks to switch once their agreements end, the hamburger chain said Monday.

Terms of the contract weren't disclosed, but Coca-Cola will provide $100 million to Wendy's national advertising campaign during the next decade. Coca-Cola, the maker of Diet Coke and Sprite sodas, had already provided soft drinks to about 4,400 of Wendy's 5,207 locations.

The contract hurts PepsiCo's efforts to build its business of selling drinks at restaurants and other locations that serve beverages from fountain machines. Pepsi filed an antitrust lawsuit against Coca-Cola in May, accusing its Atlanta-based rival of pressuring restaurants and retailers to carry only Coca-Cola products.

Dublin, Ohio-based Wendy's did not consider an offer from Pepsi, said Denny Lynch, spokesman for the fast-food company.

Pepsi spokesman Brad Shaw said, "We told them we had a great offer that will exceed anything they have on the table."

Pepsi has been making inroads in the restaurant business. Among its successes in the past year, the Purchase, N.Y.-based company had convinced hundreds of Wendy's franchisees to switch from Coca-Cola. More than 700 Wendy's locations now serve Pepsi products.

They will have to switch back when the contracts expire, Lynch said. Some of those contracts don't expire for another two years.

Coca-Cola controls about 65% of all soft drink sales from fountain machines, while Pepsi controls about 25%.

On the New York Stock Exchange, PepsiCo shares fell $1.06 to close at $33.56, Coca-Cola edged up 31 cents to close at $79.63, and Wendy's rose 88 cents to $22.38.

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