[Peace-discuss] NG on Pepsi contract

Sat Aug 4 15:06:42 CDT 2007

 [image: The News-Gazette.com]   State gives Pepsi pouring rights By Christine
Des Garennes <http://www.news-gazette.com/news/reporter/cgarenne/> Saturday
August 4, 2007

So long, Coke.

Hello, Pepsi.

A new state contract with PepsiAmericas Inc. means those Coke machines at
rest stops and on some university campuses will eventually be replaced with
Pepsi ones.

The Illinois Department of Revenue recently awarded a contract with Pepsi to
supply drinks to 2,374 vending machines and 29 pouring facilities across the
state.

The 10-year deal could bring up to $64 million for the state, and a little
more than $27 million for the University of Illinois.

In return for being the exclusive vendor in the state, Pepsi will pay the
state 45 percent to 50 percent of the price of every drink purchased at the
state's designated locations.

For example, if you buy a bottle of Pepsi for $1.25 at one of the state's
rest stops, the state will receive about 56 to 62 cents.

The money will go into the state's General Revenue Fund and will be
appropriated by the General Assembly, said Mike Klemens, spokesman for the
Illinois Department of Revenue.

The University of Illinois and Northeastern University are the two
universities that joined in on the bid.

Each campus will create its own contract with Pepsi, and the revenue
generated will go back to campus as a local fund, said Mike Bass, executive
assistant vice president for business and finance at the UI.

Over the 10-year period, the Urbana-Champaign campus is projected to receive
$15.4 million from the deal, Chicago will bring in $10 million and the
Springfield campus will receive about $1.8 million.

Exactly how the money will be spent is "under review," Bass said.

The bid may have been awarded to Pepsi, but it may be a few months before
the Coke machines are taken out and the new Pepsi machines are brought in.

Before the contract can be finalized, it must be reviewed by the state's
procurement policy board, Klemens said. The board has 30 days to do so.

Once the board gives its approval, a transition schedule will be set, he
said.

"The reality is there's always a transition when you're shifting vendors. In
this case, the Urbana campus of the University of Illinois system is the
only campus that really is going through a total change of vender," Bass
said.

Before this current deal, Coca-Cola was the exclusive beverage vendor on the
Urbana-Champaign campus, and Pepsi was the exclusive vendor on the Chicago
campus. The Springfield campus sold both companies' products, Bass said.

Even under the new deal, people will be able to find some Coca-Cola products
on campus. Some facilities, such as the Krannert Center for the Performing
Arts and the Quad Shop, will be excluded from the contract because those
places are considered retail shops and the managers there will decide what
they sell, Bass said.

The university's 10-year contract with Coke ended June 30.

For several years, some students and staff on campus have been lobbying
university administrators to drop its relationship with the Coca-Cola
company due to concerns about alleged anti-union activity at the company's
plants in Colombia and alleged water supply and pollution issues in India.
The Illinois Student Senate in 2005 passed a resolution asking the
university not to renew its agreement with Coca-Cola unless the company
invites an independent, third-party to review the allegations. Also in 2005,
UI Chancellor Richard Herman wrote a letter to Coca-Cola outlining the
concerns raised.

Spokesmen for the campus group Coalition Against Coke Contracts declined to
comment about the new contract.

Klemens said the state's decision to go with Pepsi was a financial one.

The contract was awarded in two steps, he said. First, the bidders (Coke and
Pepsi were the only beverage companies to put in bids) needed to provide the
state with information such as who would run the operation and how it would
be run, and they needed to meet a set of service standards. After that, it
came down to money.

"In that step of the process, Coke didn't qualify," Klemens said.

In other words, Pepsi offered more of a commission to the state.

"It definitely was a financial decision, but that wasn't the only criteria
we looked at," added Bass, who sat on the state selection committee that
granted the contract.

Several municipalities around the country, most notably New York City, have
exclusive beverage vending contracts with companies, but Illinois is the
first state to go this route, Klemens said.

Snapple, for example, was dubbed the official drink of New York City, but
Pepsi is not being referred to as the official soda of Illinois, Klemens
said.
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http://www.news-gazette.com/news/2007/08/04/state_gives_pepsi_pouring_rights
Comments

[image: The News-Gazette.com, The East Central Illinios Online source for
news and advertising] <http://www.news-gazette.com/>

-- 
Brian Dolinar, Ph.D.
303 W. Locust St.
Urbana, IL 61801
briandolinar at gmail.com
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