Cott Says Wal-Mart Will End Supply Pact

Cott Says Wal-Mart Will End Supply Pact

Cott Says Wal-Mart Will End Supply Pact

Store-brand-soda producer Cott Corp. said Wal-Mart Stores Inc. plans to phase out its exclusive supply agreement in the U.S.

Toronto-based Cott said the 10-year-old relationship is being terminated "without cause" but that it will continue as a supplier to Wal-Mart.

Almost a year ago Cott said it had received a notice from Wal-Mart, its biggest customer, concerning a reduction in shelf space and merchandising support for Wal-Mart's private-label carbonated soft drinks in the U.S.

Cott stock sank 29%, or 37 cents, to 92 cents at 4 p.m. Tuesday in composite trading on the New York Stock Exchange.

"While conversations with Wal-Mart are ongoing, and the impact on Cott's business is unclear at this time, the effect of this action is to phase out the exclusive nature of the relationship with Cott as the supplier of retailer brand carbonated soft drinks in the United States," Cott said.

The termination will be effective in late January 2012. In the first year following notification, Wal-Mart will be allowed, if it chooses, to use another beverage maker for as much as one-third of its private-label soft-drink requirements. In the second year, as much as two-thirds of its private-label soft drinks can be manufactured by a company other than Cott.