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9-500-068
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500-068

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Coca-Cola's New Vending Machine (A): Pricing To Capture Value, or Not?

500-068

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500-068

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Source: Copyright 1999 by the New York Times Co. Reprinted by permission.

Coca-Cola's New Vending Machine (A): Pricing To Capture Value, or Not?

500-068

Exhibit 2%T;%T'60)"*%,F-%+UUU-%65"%/0'<E/0><%/0(1<;2%1096":%65"%@0>>0?3;4%1*"99%*">"<9"%0;%369
'0*10*<6"%?")936"$
$

STATEMENT ON VENDING MACHINE TECHNOLOGY

ATLANTA, October 28, 1999 - Contrary to some erroneous press reports, The
Coca-Cola Company is not introducing vending machines that raise the price of soft
drinks in hot weather.
We are exploring innovative technology and communication systems that can
actually improve product availability, promotional activity, and even offer consumers an
interactive experience when they purchase a soft drink from a vending machine.
Our commitment for 113 years has been to putting our products within an
arm's reach of desire. Offering the products that people want at affordable prices is
precisely why Coca-Cola is the favorite soft drink of people in nearly 200 countries
around the world.
The new technologies we're exploring will only enhance our ability to deliver on
that promise.

Source: Coca-Cola Company Website: http://www.coke.com

500-068

Coca-Cola's New Vending Machine (A): Pricing To Capture Value, or Not?

Exhibit 3%%B"[6%0@%65"%<*63'>"%65<6%<11"<*":%3;%The Philadelphia Inquirer%0;%T'60)"*%O+-%+UUU$

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?3>>%*<39"%1*3'"9%?5";%36e9%506$%%W9;e6%65<6%3((0*<>g%W%("<;-%3@%<%(<;%'*<?>9%3;%@*0(%65"%:"9"*6%:23;4%0@
653*96-%?0D>:%20D%:"(<;:%<%/E;06"%@0*%<%4><99%0@%?<6"*g
R0-% )D6% <% /0X"% $% $% $% 65<6e9% :3@@"*";6$% W6e9% `D96% <;% 3;:D>4";'"$% L0% ?5<6e9% ?*0;4% ?365% '5<*43;4
?5<6%65"%(<*X"6%?3>>%)"<*%E%(0*"%?5";%36e9%506-%>"99%?5";%36e9%'0>:g
W;% @<'6-% '0(1D6"*% '5319% (<2% 900;% ";<)>"% #";:3;4% (<'53;"9% 60% '0;96<;6>2% <:`D96% 1*3'"9
<''0*:3;4% 60% <;2% ;D()"*% 0@% @<'60*9% 65<6% '<D9"% (0(";6<*2% @>D'6D<630;9% 3;% 9D11>2% <;:% :"(<;:-% ;06
`D96%?"<65"*$
L0-% 90("% )D92% @<>>% "#";3;4% 3;% 65"% ;06E600E:396<;6% @D6D*"-% 20D% 93:>"% D1% 60% <% ?">>E>36% /0X"
(<'53;"%3;%L0D65%853>>2$%B5"%)0[%5<9%;0%)D660;9-%:0"9%;06%:391><2%<;2%1*3'"9$%N%9106>3456%953;"9%0;
20D*%@<'"%<9%9";90*9%]00(%3;%0;%20D*%#36<>%934;9$%N%5"<:E5345%#3:"0%9'*"";%@>3'X"*9%0;$
B5"%(<'53;"%9""9%20De*"%3;%`"<;9-%;06%<%9D36-%90%36% 9'<;9%369%>3)*<*2%0@%1"*90;<>363"9-% 9X3113;4
65"%"*D:36"%Y;4>395(<;%<;:%65"%9>3;X2%=*";'5%(0:">$%W6%:391><29%65"%400:E;<6D*":%@<'"%0@%L2>#"96"*
L6<>>0;"$
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dN%/0X"%/><993'-%1>"<9"$d
dR0%1*0)>"($%=0D*%)D'X9$d
df50<o%B5"2e*"%G.%'";69%<6%65"%9D1"*(<*X"6$d
B5"%(<'53;"%1<D9"9%?53>"%369%<''";6%<;<>2]"*%:"6"*(3;"9%20D%<*";e6%@*0(%65"%;"345)0*500:$
dh0D%9""%<%9D1"*(<*X"6%<*0D;:%5"*"gd%36%9<29$%d=0D*%:0>><*9$d
h0D%:"'3:"%60%)>D@@$%da00X-%65"%(<'53;"%<*0D;:%65"%'0*;"*%4<#"%("%<%8"193%@0*%5<>@%65<6$d
df5";gd
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9'*"";%95<X"9%@*0(%93:"%60%93:"%92(1<65"63'<>>2$%B5";%65"%*":%<;:%?536"%(<'53;"%40"9%93>";6-%>"663;4
6

Coca-Cola's New Vending Machine (A): Pricing To Capture Value, or Not?

500-068

20D%9?"<6$%%B539%39%403;4%60%)"%60D45"*%65<;%20De:%650D456$%h0D%1D>>%0D6%20D*%8<>(%83>06%n-%>3;X%60
65"%W;6"*;"6-%<;:%40%60%90:<(<'53;"9$'0($
dB5"*"%<*"%+H%90:<%(<'53;"9%?3653;%@0D*%)>0'X9-d%20D% *"10*6-% 50>:3;4% D1% 65"% 8<>(% 83>06% @0*
65"%(<'53;"%60%9""$%dh0De*"%6">>3;4%("%W%'<;e6%)"<6%@0D*%:0>><*9gd
B5"% /0X"% (<'53;"% 6<>>3"9% 65"% U.% 9"'0;:9% 36% 5<9% "[1";:":% 0;% 6539% ;"4063<630;$% W69% (0630;
9";90*% :"6"'69% 6?0% 'D960("*9% (0#3;4% <*0D;:% 3(1<63";6>2% )"53;:% 20D$% W69% <60(3'% '>0'X% *"10*69% 65<6
*D95%50D*%39%?3;:3;4%:0?;$
dTX<2-%65*""%:0>><*9-d%36%0@@"*9-%1""#":$
dR0%?<2$d%h0D%96D@@%20D*%?<>>"6%3;60%20D*%1<;69%<;:%96"1%)<'X$
B5"%/0X"%(<'53;"%@0'D9"9%<;%3;@*<*":%9'<;;"*%0;%20D*%>319-%'<>3)*<63;4%20D*%653*96$%W6%'0D;69
369%3;#";60*2%<;:%@3;:9%<%9D*1>D9%0@%&3"6%/0X"$%W69%5<*:%:*3#"%?53*9%@0*%<%9"'0;:$
dWe>>%43#"%20D%<%/0X"%a36"%@0*%l,$G.-d%36%0@@"*9%*"9";6@D>>2$
dB"**3)>"%<@6"*6<96"-d%20D%9<2$
df365%<%)<4%0@%;D69$d
dR<5$d
da00X-%1<>-%3@%20De*"%;06%)D23;e%(0#"%<>0;4$d
B*<@@3'%39%4"663;4%>3456"*$%B5"%6?0%1"01>"%)"53;:%20D%43#"%D1%<;:%>"<#"$
dN>>%*3456-d%65"%)0[%4*D()>"9$
h0D%:"10936%6?0%:0>><*9-%4"6%20D*%'<;-%<;:%6D*;%60%40$
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!D95% 50D*$% L6<63963'9% 9D44"96% 20D% ?0*X% ;"<*)2$% h0De>>% )"% )<'X$% B5"% (<'53;"% <'63#<6"9% 369% 'D960("*
*"><630;9%90@6?<*"$
dA<#"%<%;3'"%"#";3;4-%)D:-d%36%'<>>9%<9%20D%6D*;%<?<2-%65"%@<'"%9(3>3;4%?3:">2$
dA"2od%36%'<>>9$%dWe(%<%90@6%60D'5%60:<2$%%jD96%406%(2%'3*'D369%'>"<;":$%%&0;e6%"[1"'6%<%:"<>%>3X"
6539%;"[6%63("od
N9% 20D% :39<11"<*% <*0D;:% 65"% '0*;"*-% 65"% (<'53;"% '0D;69% 369% *"(<3;3;4% '<;9-% <99"99"9% 65"
0::9%0@%(<X3;4%<%9<>"%6539%><6"%3;%65"%:<2-%<;:%>00X9%<6%50?%36e9%:03;4%0;%369%9<>"9%40<>%E%<%>366>"%)"53;:$
W6%'*<;X9%D1%65"%#0>D("%0;%369%!0'X2%#03'"%<;:%'<>>9%0D6%60%65"%;"<*>2%"(162%96*""6$
d/0X"%/><993'o%m"6%20D*%/0X"%/><993'%5"*"o
dT;>2%<%:0>><*od
Source: Reprinted with permission of the Philadelphia Inquirer.

500-068

Coca-Cola's New Vending Machine (A): Pricing To Capture Value, or Not?

Exhibit 4%Y['"*169%@*0(%<;%<*63'>"%65<6%<11"<*":%0;%65"%N)0D6$'0(%?")E936"%0;%R0#"()"*%O-%+UUU$

Mean Vending Machines

)2%j05;%L$%W*0;9
B539% 1<96% ?""X";:% 65"% ;"?9% ?3*"9% ?"*"% <>>% )D]]3;4% <)0D6% 65"% ><6"96% 3:"<% 60% '0("% @*0(% 65"
?0*>:% 0@% 90@6% :*3;X9$% /0'<E/0><% 39% <11<*";6>2% '0;93:"*3;4% '*"<63;4% <% ;"?% X3;:% 0@% #";:3;4% (<'53;"
65<6% ?0D>:% 6"96% 65"% 0D693:"% 6"(1"*<6D*"% <;:% <:`D96% 65"% 1*3'"% 0@% <% '<;% 0@% 90:<% D1?<*:9% ?5";% 36% 39
?<*("*%0D693:"$%A"*"e9%90("%0@%65"%6213'<>%*"<'630;9%60%65"%3:"<P

d<%'2;3'<>%1>02%60%"[1>036%65"%653*96%0@%@<365@D>%'D960("*9d%bL<;%=*<;'39'0%/5*0;3'>"c

d>D;XE5"<:":%3:"<d%bA0;0>D>D%L6<*EKD>>"63;c

dL0:<%`"*X9d%bM3<(3%A"*<>:c

d><6"96% "#3:";'"% 65<6% 65"% ?0*>:% 39% 403;4% 60% 5">>% 3;% <% 5<;:)<9X"6d% b853><:">153<
W;CD3*"*c

d63'X9%("%0@@d%bY:(0;60;%LD;c

f5<6% :3:% 65"2% 653;X% 65"% /0'<E/0><% '0(1<;2% ?<9% :03;4% <;2?<2g% L">@>"99>2% 1*0#3:3;4% 65"
?0*>:%?365%<%4>0*30D9%)"#"*<4"%60%@D*65"*%65"%40<>9%0@%<>>%(<;X3;:g%f52%950D>:%<>>%65"9"%1"01>"%)"
9D::";>2%0@@";:":%)2%<%'0(1<;2%6*23;4%60%(<[3(3]"%1*0@369g
d8*3'"%:39'*3(3;<630;d%39%65"%6"*(%"'0;0(3969%D9"%60%:"9'*3)"%65"%1*<'63'"%0@%9">>3;4%65"%9<("
400:% 60% :3@@"*";6% 4*0D19% 0@% )D2"*9% <6% :3@@"*";6% 1*3'"9$% W;% 65"% /0X"% '<9"-% 65"% 4*0D19% 0@% )D2"*9% <*"
9"4(";6":% )2% 65"% 0D693:"% 6"(1"*<6D*"% b3$"$% j3>>% ?5";% 36% 39% 506% 0D693:"% #9$% j3>>% ?5";% 36% 39% '0>:c$% W@
10993)>"-%<%'0(1<;2%?0D>:%>3X"%60%'5<*4"%<%5345%1*3'"%60%6509"%?50%1><'"%<%5345%#<>D"%0;%65"%400:?53>"%'5<*43;4%>"99%60%6509"%65<6%:0%;06$
L0-% <*"% 20D% 1"*90;<>>2% 0@@";:":% )2% /0X"e9% 1><;% 60% '5<*4"% (0*"% @0*% 90:<e9% ?5";% 36% 39% ?<*(
0D693:"g%f">>-%20D%5<:%)"66"*%4"6%0#"*%36%1*"662%CD3'X>2-%65"*"%39%<>*"<:2%1>";62%0@%1*3'"%:39'*3(3;<630;
0D6%65"*"-%<;:%65"*"%39%Mk/A%(0*"%60%'0("$

Rampant Price Discrimination

8*3'"%:39'*3(3;<630;%39%CD36"%'0((0;$%Y#"*%?0;:"*%?52%5<*:'0#"*%)00X9%<*"%1*0:D'":%@3*96
<;:%<*"%90%(D'5%(0*"%"[1";93#"%65<;%1<1"*)<'X%)00X9g%T*-%?52%36%39%90%(D'5%'5"<1"*%60%)D2%<3*>3;"
63'X"69%@<*%3;%<:#<;'"g%T*-%?52%65"*"%<*"%96D:";6%:39'0D;69g%T*-%?52%(<63;""%1*3'"9%<*"%'5"<1"*%@0*
(0#3"9g%Y#"*%6*3":%60%)D2%<%90:<%@*0(%<%#";:3;4%(<'53;"%<6%<%506">%0*%<6%<%(0#3"%65"<6"*g
N>>%65"9"%"[<(1>"9%<*"%<66"(169%)2%9">>"*9%60%'5<*4"%:3@@"*";6%1"01>"%:3@@"*";6%1*3'"9%@0*%65"
9<("%400:$
MD'5%0@%65"%1*3'"%:39'*3(3;<630;%3;%65"%"'0;0(2%(<2%3;%@<'6%)"%CD36"%53::";$%A0?%:0%20D
X;0?%65<6%65"%/*<6"%<;:%K<**">%'<6<>04D"%20D%`D96%*"'"3#":%5<9%65"%9<("%1*3'"%@0*%20D%<9%@0*%90("0;"
>3#3;4%3;%<;065"*%]31%'0:"g%B509"%?365%<%U.,+.%]31%'0:"%9""%5345"*%1*3'"9%0;%65"3*%'<6<>04D"9$

Coca-Cola's New Vending Machine (A): Pricing To Capture Value, or Not?

500-068

Why is the Vending Machine different?

W;%1*3;'31>"-%65"%6"(1"*<6D*"%9";9363#"%#";:3;4%(<'53;"%39%;0%:3@@"*";6%@*0(%<;2%065"*%@0*(
0@%1*3'"%:39'*3(3;<630;$
N>650D45-% W% :0% 653;X% 65"% 3:"<% 65<6% 65"% 1*0'"99% 39% <D60(<63'% 4";"*<6"9% 90("% <::3630;<>
:39'0(@0*6% E% 36% 39% 65"% 3:"<% 65<6% 6"'5;0>042% '<;% "@@"'63#">2% 4<D4"% 0D*% )D23;4% 3;6"*"969$% B5"% 5"<6
9";9363#"%(<'53;"%39%<%9(<>>%96"1%60?<*:%<11>23;4%(<'53;"%d3;6">>34";'"d%60%1*0@36%(<[3(3]<630;$
W@%20D%653;X%65<6%65"%#";:3;4%(<'53;"%3:"<%39%?0**390("-%`D96%?<36%E%65"%3;6"*;"6%?3>>%)"%65"
(096%90153963'<6":%1*3'"%:39'*3(3;<60*%65"%?0*>:%5<9%"#"*%9"";$%L(<*6%#";:3;4%(<'53;"9%?3>>%)"%65"
>"<96%0@%20D*%?0**3"9$% T;>3;"%#";:0*9%9D'5%<9%N(<]0;$'0(% (<2%X;0?% CD36"%<%>06%<)0D6% 20D%E%20D*
1<96%1D*'5<93;4%5<)369-%20D*%3;6"*;"6%1*"@"*";'"9-%20D*%]31%'0:"-%"6'-%E%<;:%65"2%(<2%?<;6%60%D9"%6539
3;@0*(<630;%60%<:`D96%1*3'"9$%&3:%20D%)D2%<%L6"15";%p3;4%)00X%><96%(0;65g%M<2)"%20De:%>3X"%60%)D2
<;065"*-%(0*"%"[1";93#"-%m*395<(%;0#">%6539%(0;65%?365%<%9(<>>"*%d:39'0D;6d%'509";%`D96%@0*%20D$
B5"% 3;6"*;"6% 39% (D'5% )"66"*% 65<;% 65"% d*"<>% ?0*>:d% <6% 1*3'"% :39'*3(3;<630;-% )"'<D9"% 36% 39% 90
(D'5%"<93"*%60%'5<;4"%1*3'"9$%W;%@<'6%65"2%'<;%9"6%<%1*3'"%`D96%@0*%20D$%W6e9%5<*:%60%3(<43;"%<%6*<:3630;<>
960*"%:03;4%6539%bdA"2-%5"*"%'0("9%j05;$%qD3'X-%*<39"%65"%1*3'"%0@%65"%;"?%p*D4(<;%K00X$dc$%KD6%@0*
<;%0;E>3;"%"E'0(("*'"%960*"-%6539%39%@"<93)>"%<;:-%?365%<%'>"#"*%1*04*<(("*%0;%65"%1<2*0>>-%CD36"%"<92$
R06% <>>% )<:P% &39'*3(3;<630;% ("<;9% 3;'*"<9":% "@@3'3";'2$% N'6D<>>2-% 1*3'"% :39'*3(3;<630;% '<;
<'6D<>>2%3;'*"<9"%65"%0#"*<>>%"@@3'3";'2%0@%<%(<*X"6$
N%>099%0@%"'0;0(3'%"@@3'3";'2%(<2%0''D*%?5";%<%'0(1<;2%5<9%90("%<)3>362%60%9"6%1*3'"9%<;:
65"*"%39%;0%:39'*3(3;<630;$%B5"%9">>"*%(D96%13'X%<%1*3'"%65<6%)<><;'"9%65"3*%:"93*"%60%'5<*4"%<%5345%1*3'"
60%6509"%65<6%*"<>>2%?<;6%<%1*0:D'6-%?365%65"3*%:"93*"%60%9">>%<%5345"*%0#"*<>>%CD<;6362%60%6509"%65<6%<*"
;06%?3>>3;4%60%1<2%#"*2%(D'5%@0*%36$%K"'<D9"%0@%6539-%65"*"%<*"%6*<:"9%?53'5%?0D>:%)";"@36%)065%)D2"*
<;:%9">>"*%65<6%:0%;06%5<11";%E%65"%*"9D>63;4%1*3'"%39%d600%5345d%<;:%65"%606<>%CD<;6362%6*<:":%39%d600
>0?d$
K2% 3:";63@23;4% 3;:3#3:D<>% 4*0D19% 0@% '0;9D("*9-% <% 9">>"*% '<;% 1*0#3:"% <;% <::3630;<>% D;36% <6% <
>0?"*%1*3'"%60%90("0;"%?50%)"@0*"%?0D>:%5<#"%)"";%1*3'":%0D6%0@%65"%(<*X"6$%B5"%'0(1<;2%?0D>:
;0?% )"% ?3>>3;4% 60% :0% 6539% 93;'"% 65"2% ?0D>:% ;06% 5<#"% 60% 9<'*3@3'"% 1*0@369% )2% >0?"*3;4% 1*3'"9% @0*% 65"
5345E:"(<;:%4*0D1$
W;%65"%/0X"%'<9"-%90("%'0;9D("*9%E%6509"%?50%:*3;X%/0X"9%0;% 506%:<29%E%?3>>%)"%?0*9"%0@@
93;'"%65"2%(D96%1<2%<%5345"*%1*3'"-%?53>"%90("%'0;9D("*9%E%6509"%?50%:*3;X%/0X"%0;%'0>:%:<29%E%?3>>
)"%)"66"*%0@@%93;'"%65"2%?3>>%*"'"3#"%<%>0?"*%1*3'"$%B5"%/0'<E/0><%'0(1<;2-%0@%'0D*9"-%?3>>%)"%)"66"*
0@@$%B5"%9D(%606<>%?3>>%)"%109363#"%b13'X%20D*%@<#0*36"%W;6*0:D'630;%60%Y'0;0(3'9%6"[6)00X%60%9""%?52c$
f0D>:%20D%*"<>>2%)"%<9%0@@";:":%3@%36%?<9%:"9'*3)":%<9%<%:39'0D;6%0;%'0>:%:<29g
L0-%3@%20D%<*"%963>>%96"?3;4%<)0D6%65"%106";63<>%0@%5345"*%/0X"%1*3'"9-%W%9D44"96%20D%960'X%D1
65"%*"@*34"*<60*%<;:%1D6%90("%0@%65<6%*"63*"(";6%(0;"2%3;60%/0'<E/0><%960'X$
Source: 1999 by John S. Irons (economics.about.com), licensed to About.com. Used by permission of About.com Inc., which
can be found on the Web at www.about.com. All rights reserved.