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Jim Sinegal is the Chief Executive Officer of Costco, a chain of membership warehouse stores.
Sinegal and tobacco issues
On December 27, 1994 Philip Morris (PM) received notification from some Costco customers that Price/Costco had cigarettes intended for export for sale in their stores. PM opposes this practice of selling cigarettes destined for export because "export products" are not subject to domestic quality controls, may not carry U.S. government-mandated health warning labels and may have different tar and nicotine delivery levels than the same brands of domestic cigarettes.
PM checked five Costco stores in south Florida and found "export product" for sale in all of them. PM representatives contacted John Mullen, the Costco buyer in Virginia, who told them that Costco was selling export product in Florida "to get even for giving special deals to Sam's," (referring to Sam's Club, a competing membership warehouse market chain operated by Wal-Mart).
PM drafted a letter to Costco headquarters and held numerous meetings with Costco representatives about this situation. Costco ceased selling PM cigarettes destined for export as of January 18, 1995, but as punishment for selling export products, PM suspended Costco's account for 90 days.
A PM document describing the situation says that Costco CEO Jim Sinegal learned of this situation and decided to show PM "they're just a vendor." Sinegal sent a letter protesting the situation to PM CEO Geoffrey C. Bible and expressed his belief that as a big customer, Costco should be treated differently. Sinegal threatening to cut PM off from sales and apparently at that point entered into negotiations with PM over the situation. Details of the resolution to this dispute could not be found.
Resources and articles
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