DATE: Wednesday, February 26, 1997          TAG: 9702260651

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 

                                            LENGTH:   54 lines

CONSUMERS MAY BE LOSER IN COKE-FARM FRESH BATTLE YOU'LL PAY MORE FOR A 12-PACK OF COKE BECAUSE OF A CONTRACT DISPUTE

Mary Orner's eyes widened when she spotted the price for a 12-can package of Diet Coke at a Virginia Beach Farm Fresh store. It was $5.69 - about 50 percent higher than the cost of a comparable Pepsi pack.

Surely, this must be a mistake, Orner thought.

It wasn't.

The eye-popping price is the result of a dispute between Norfolk-based Farm Fresh, Hampton Roads' largest grocer, and Coca-Cola, according to store managers and employees. At minimum, the fight impacts prices on all Coca-Cola soft drinks: Coke, Sprite, Fanta, Fresca and Tab.

It wasn't immediately clear how the spat translated into higher prices. But industry observers offered one likely explanation:

Coca-Cola gives money or discounts to grocers in exchange for exposure in advertisements, store displays and special promotions. Supermarkets, in turn, pass that savings on to customers.

In a tug-of-war, Coca-Cola may have upped the ante by yanking its promotional funds. Farm Fresh might have responded by saying, ``Fine. No money, no low prices.''

Neither side in the dispute will say what exactly is going on.

Ronald E. Johnson, Farm Fresh's new chief executive officer, would not comment on the details of the dispute. But he said the company, which has 50 stores under the Farm Fresh and Rack & Sack banners, wants to resolve the problem as soon as possible.

A spokeswoman for Coca-Cola Enterprises Northeast, based in Columbia, Md., was unable to provide information Tuesday.

The company distributes from its Mid-Atlantic Coca-Cola plant off Monticello Avenue in Norfolk.

Disagreements between retailers and distributors aren't rare. But what makes this fight unusual is that it has begun to impact customers' wallets, said Jeffrey Metzger, publisher of the industry publication Food World.

The Farm Fresh-Coca-Cola fight has consequences that neither company wants: Coke lovers who are steaming because they feel they're getting a bad deal.

Store managers say customers have pulled them aside to express their irritation at the Coca-Cola prices, which are up to 50 percent higher than those offered by major competitors in the soft-drink industry.

For example, a 2-liter bottle of Coke was marked $1.59 at two Farm Fresh stores, compared to Pepsi's $1.19. A 12-can pack of Pepsi was $3.79, while Coke cost $5.69.

``I love Coke,'' said one Farm Fresh manager who asked not to be identified. ```But even I said, `Why are the prices so high?' ''

Orner, a Norfolk postal worker, was asking the same question after her Sunday shopping trip to the Farm Fresh store off Diamond Springs Road in Virginia Beach. On Monday, she backtracked and returned the Diet Cokes.

``I don't usually return things,'' Orner said. ``For some reason, this got under my skin a little.''

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