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- Costco will switch back to Coca-Cola at its food courts this summer.
- The change ends Pepsi's decade-long contract, which began in 2013.
- Costco maintains its $1.50 hot dog-soda combo, a key marketing tool.
NEW YORK — Coca-Cola lovers for more than a decade were forced to wash down their $1.50 hot dogs at Costco's food courts with Pepsi. But Costco plans to bring back Coca-Coca at its food court soda fountains this summer and ditch its archrival.
"We will be converting our food court fountain business back over to Coca-Cola," Costco CEO Ron Vachris said Thursday at the company's annual shareholders meeting.
Rumors had been swirling that Costco planned to make the switch. A shareholder asked Vachris if the food court was "truly switching back to Coke products."
Costco solicits bids from companies for its fountain drink business at food courts, and Pepsi has been awarded the fountain soda contract since 2013. The deal is not just for the machines and syrup in the sodas, but cups, straws and other products.
Coke had been a mainstay of Costco food courts for decades, but Costco switched to Pepsi in 2013.
"It's a big shift," a Costco executive said in 2013 when the company made the change. Coke is the "only vendor we've ever had for the majority of the business locations."
At the time, Costco said it was making the switch to "preserve the integrity" of Costco's $1.50 hot-dog soda combination deal. The price has remained the same since 1985, and Costco sold around 150 million of the hot dog-soda combos last year.
The $1.50 hot dog price is a powerful marketing tool for Costco and has become synonymous with Costco's brand. Costco loses money on the deal, but the company offsets these losses by raising prices on other goods it sells. Costco has increased prices of pizzas and other items at its food courts.
"I know it sounds crazy making a big deal about a hot dog, but we spend a lot of time on it," Costco co-founder Jim Sinegal told the Seattle Times in 2009. "We're known for that hot dog. That's something you don't mess with."
Costco's chief financial officer reassured inflation-weary customers last year not to worry about the price of the combo, saying the $1.50 price was "safe."
