Coke invests millions at U

This is the first in a series of five stories that examines how corporations influence the University. See Tuesday’s edition for a story about Aramark.

Jason Juno

The drinks of choice on campus – or rather the only choices – are Coca-Cola products.

The University has a contract with Coca-Cola requiring that no other soft drink products be sold on any University property.

As part of the contract, the University has already received $21 million from Coca-Cola, said Leslie Bowman, the director of the University Dining Services Contract Administration.

Having a contract with The Ohio State University, also a Big Ten university, and the University of Minnesota, means Coca-Cola has exclusive contracts with the country’s two largest universities.

However, some Big Ten universities allow more than one beverage company on campus. The University of Michigan, Michigan State University and Northwestern University all lack exclusive contracts.

The exclusive contract is a way for Coca-Cola to make its products accessible, said University of Minnesota journalism professor John Eighmey.

College students are a good market for companies, but a company such as Coca-Cola has a broad appeal across ages, Eighmey said.

With college students, advertisers can establish their loyalty to a brand, which means there are many years of consumption ahead of them, he said.

The University’s contract

The 10-year contract with Coca-Cola expires June 30, 2006. The contract covers every University of Minnesota-owned building, Bowman said. Only Coca-Cola products can be sold or served in those buildings.

The contract covers all beverages but milk, she said. Even if Coca-Cola does not make a type of beverage, it cannot be sold.

Any property on campus that is not owned by the University of Minnesota can sell what it wants, Bowman said. That includes the McNamara alumni center and such private businesses as Stub & Herbs. Even a piece of sidewalk that the University of Minnesota owns is not available for anything other than Coca-Cola, she said.

But students are free to bring whatever soft drink they want to campus, she said.

Bowman said there is more value to an exclusive contract for companies such as Coca-Cola.

Six initiatives are meant to help student life receive funding from commission on Coca-Cola sales: athletic, isotonic beverage, beverage marketing, academic, campus life and community.

Those totals are guaranteed to be $240,000 per year, Bowman said.

The University of Minnesota received $4.9 million up front from Coca-Cola for student development, athletics and more, she said. It received another $1.1 million for women’s intercollegiate athletics, including help with Title IX programs. Women’s hockey also got help when it started, Bowman said.

Coca-Cola supplies vending machines used around campus and services them at no cost to the University of Minnesota. Those funds are a part of the contract, Bowman said. The price difference for cheaper drinks sold on campus is also part of the contract, she said.

The contract’s funds will continue to add up in the next two years, but that figure will not rise very much because the University of Minnesota already got a portion of the contract money up front, Bowman said. She said money from the contract provides ways for student groups to get additional funds for activities.

Other colleges

While the University of Minnesota has one contract, Michigan State University signed five separate contracts for supplying beverages, said Marta Mittermaier, manager of MSU Food Stores.

For example, Coca-Cola is the only drink available in the residence halls because of space issues. But Coca-Cola, Pepsi and Faygo are available at convenience stores, she said. There is no exclusive contract, and Michigan State does not get any money from the beverage companies because the university buys the beverages.

“We find it to be much more competitive and much more to our advantage,” Mittermaier said.

Northwestern University used to have an exclusive contract with Pepsi, but the school polled students and decided to go with Pepsi and Coca-Cola because that was what students said they wanted, said Paul Komelasky, district manager for food services operations at the university.

He said the students’ choice outweighed having an exclusive contract and Northwestern University made no money off Pepsi in the exclusive deals.

“We went and surveyed our students. For us, we felt that was more important to us, to meet student needs,” Komelasky said. “Dollars weren’t the important part.”

Penn State University was one of the first universities in the country to sign an exclusive contract, said Bill Mahon, spokesman for Penn State University. The university’s contracts with Pepsi provided the school with millions of dollars for student activities, he said.

The school realized that millions of dollars could be made for student activities if a beverage contract were made available for bids, he said.

Among other things, the money funded a big expansion of its student union building and scholarships, Mahon said.

“Students can still walk off campus if they want to get a Coke product,” he said. “There’s no soft drink police or anything silly like that.

“We’re talking about a soft drink here,” he said. “This isn’t rocket science, this is a soft drink. Anybody who has concerns really ought to lighten up.”

Mahon said that he has not heard a complaint in approximately a decade on the issue.

“It really is a no-brainer to bring in the income to the university for student purposes,” he said.

Law: Deal with it

Even though some might want a choice between Pepsi and Coke, University of Minnesota law professor Fred Morrison said it is legal to allow availability of just one.

“It’s not a legal problem – it’s a University policy problem that students should take up with purchasing and student affairs,” Morrison said.

He said Northwest Airlines, for example, is a company that serves only Pepsi.

“The University is behaving this way like an ordinary merchant,” Morrison said, referring to financial incentive.

Pepsi does not pursue exclusive contracts, said Pepsi Bottling Group spokesman Michael Goodwin.

“If we feel we can add value with a partner, we’ll take a look and see if that is something that we’d like to be a part of,” he said.

Schools are approximately 1 percent of Pepsi’s business, Goodwin said.

He said each account is different, regardless of whether Pepsi benefits more from an exclusive contract.

One part of Coca-Cola’s business is giving back to communities, wrote Kari Bjorhus, an employee of worldwide public affairs and communications for The Coca-Cola Company, in an e-mail.

Initiatives

Amelious Whyte Jr., associate to the associate vice provost for student affairs, said a lot of students or student groups at the University of Minnesota apply for Coca-Cola-sponsored grants, but not everyone gets the money.

The six initiatives for helping student life usually fund groups, he said. But although the money funds a project, it never fully covers it, he said.

Some people or groups are given money from the Coca-Cola- sponsored grants to go to conferences, unless the money is found to be better spent on campus, he said.

Whyte said those getting money must fill out applications, meet with committees and present the cases.

Each grant can be worth as much as $1,000, he said. It can mean the difference between a group hosting an event or not hosting one, he said.

An example of Coca-Cola promoting student life includes columnist Harlan Cohen speaking at Hillel, the Jewish student center, Friday to discuss dating and relationships.