Coca-Cola and Pepsico are in a fizz about an international pact that seeks to rid the world of excess aluminum supplies, but that they say is pushing up can prices.
It's not often the two soft-drink rivals find common cause. But the makers of Coke and Pepsi have joined other major U.S. soft-drink producers in protesting a deal that will add an estimated 2 cents to the cost of each aluminum beverage can they buy in 1995.Higher can costs mean higher production costs for soft-drink manufacturers, which inevitably will be passed on to consumers, thereby fueling U.S. price inflation, according to the National Soft Drinks Association, the industry's Washington-based trade body.
The industry bought 58 billion aluminum cans in 1994. Aluminum cans account for about 75 percent of unit sales of packaged soft drinks produced in the United States, the association said.
Jim Finkelstein, the association's senior vice president, told Knight- Ridder Financial News that the association wants other aluminum users and lawmakers to support its efforts to get relief from high aluminum prices.
After reaching a new 4 1/2-year high Thursday of $2,121 a metric ton, aluminum on the London Metal Exchange closed at $2,113 to $2,114, well above the $1,200-a-metric ton level of a year ago.
"We're talking to other aluminum users and some congressmen about what next steps should be taken to mitigate the very real cost of higher aluminum can prices," Mr. Finkelstein said.
He declined to say which aluminum users or lawmakers the association has contacted or to list the group's objectives. The United States, Australia, Canada, European Union, Norway and Russia finalized a memorandum of understanding in March 1994 designed to limit overcapacity.
An association effort to get U.S. Trade Representative Mickey Kantor to review the potential impact of the multilateral aluminum pact apparently failed to generate the response it wanted. And a U.S. Justice Department antitrust probe is dragging.
Association President William Ball wrote to Mr. Kantor in November saying the agreement spurred a jump in aluminum prices, which in turn threatens to hoist soft-drink manufacturers' production costs in coming months.
In his letter, Mr. Ball alleged that the U.S. government in effect sanctioned the formation of an aluminum producer cartel, an impression that the United States has strenuously sought to refute.
In his Dec. 22 reply, excerpts of which were obtained by Knight-Ridder, Mr. Kantor said the United States does not and would not support an aluminum cartel.
"The U.S. has no intention of permitting a world cartel in aluminum, nor did the MOU (memorandum of understanding) create one," he said.