Costco Cuts Off Vendor Following Fax Receipt

Aug 05, 2002

Costco has ended its 18-year business relationship with Michael Angelo’s Gourmet Foods according to the Austin Business Journal.

According to the report, Costco received a fax that offered better pricing of Michael Angelo products to another retailer. Michael Angelo’s denies having sent the memo.

The loss of Costco’s business means a $50 million a year hit for Michael Angelo’s. To offset the loss, the company plans to expand its offering of products that previously were exclusive to Costco. Michael Angelo’s products are sold at as HEB, Randall’s, Albertson’s and Sam’s Club among others. Michael Angelo’s is also launching an aggressive ad campaign to expand its profile with consumers.

Michael Angelo’s has managed to deal with account losses in the past largely
because of the brand’s loyal consumer base. Price Club pulled Michael Angelo’s
products from its shelves when it began selling to Costco. A petition circulated
by club members unhappy with the warehouse club’s decision caused Price Club
to reverse its decision.

Moderator’s Comment: Does Robinson-Patman have any
teeth? What’s the answer to guaranteeing equitable pricing for all retailers?

Michael Angelo Renna says that his company never sent
the incriminating memo to Costco. The warehouse club, based on its action, obviously
isn’t buying it.

As consumers, we consider ourselves fortunate to be card-carrying
members of BJ’s. They still carry Michael Angelo’s products. If BJ’s discontinued
the brand (for the same reasons as Costco), we would not be happy. We’d expect
the retailer and manufacturer to work it out and remember that the consumer
is the one that is supposed to be served here.[George
Anderson – Moderator

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