Budget & Finance

Coca-Cola Cans Exclusive Contracts

By Mark Walsh — March 21, 2001 2 min read
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The Coca-Cola Co. is taking some of the fizz out of its school marketing program.

The Atlanta-based soft drink giant announced last week that it will no longer require districts to sign exclusive beverage contracts that shut out the sale of competing brands on school premises.

Such contracts have proliferated in the past five years. Districts typically receive a cut of soft drink sales, sometimes in the millions of dollars, depending on the size of the school system and length of the contract. In exchange, the producers, particularly Coke, the Pepsi-Cola Co., and the Dr Pepper Co., gain exclusive access to schools for machine and fountain sales. (“Schools Are Latest Front in Cola Wars,” April 8, 1998.)

But the contracts have been heavily criticized for putting schools in the position of promoting and profiting from the sale of non-nutritious soft drinks. There are rumblings in Congress about giving the federal government more power to restrict such sales in schools, and a bill under consideration in Maryland would prohibit exclusive soft drink contracts.

Pursuit of the best deal has “diverted educators from their primary mission,” Jeffrey T. Dunn, the president of Coca-Cola North America, said March 14 in announcing the shift.

Coke will encourage its bottlers, which are independent companies, to seek nonexclusive agreements that still provide a percentage of sales to schools. Coke will also tone down the signs on its in-school machines, company officials said. Instead of large Coke logos, the machines will feature graphics of students or athletics.

“Schools are a special environment,” Mr. Dunn said. “The pendulum, from a commercialism standpoint, has swung too far.”

More Choices

The company also will encourage making more juices and bottled water available for sale, although “we believe carbonated beverages can be part of a healthy diet,” Mr. Dunn said.

He added that Coke wouldn’t be removing its logos from the many high school scoreboards that bear them. “Coke scoreboards go back about 60 years,” Mr. Dunn said.

Pepsi indicated last week that it also would encourage nonexclusive contracts.

Alex Molnar, an education professor at the University of Wisconsin-Milwaukee who has criticized the beverage contracts, said Coke was acting in its own interests.

“What we’re seeing with the change by Coca-Cola is a recognition that a growing segment of the public is disgusted by these deals,” he said.

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A version of this article appeared in the March 21, 2001 edition of Education Week as Coca-Cola Cans Exclusive Contracts

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