Coke and Pepsi
going to school.
By Anna White
Multinational Monitor, January 1999
[Originally posted here.]
Since last year, the two giant beverage companies have engaged in
a frenzied rush to sign deals with public school districts that give
them exclusive beverage selling rights in schools, plus an array of
special marketing opportunities.
In the process, the cola companies have expanded their presence and
role in public schools, far beyond the athletic scoreboards and vending
machines which have been commonplace for decades.
The new school deals with the cola companies have increased the dollars
at stake, encouraged greater soda consumption by younger children,
commercialized curricula and helped Big Cola strengthen its market
School districts, many crippled by massive budget cuts or referendum
failures, see exclusive rights cola deals as a quick and easy means
of tapping new financial resources. On the surface, the proposed "partnerships"
sound benign. They promise big bucks, lots of up-front cash and a
wide selection of "amenities," ranging from new athletic scoreboards
to computer software programs, without the hassle of involving a single
taxpayer. Plus, proponents note, everyone gets thirsty.
"Kids and teachers who spend hour after hour after hour in school
get thirsty," says Coca-Cola spokesperson Scott Jacobson. "Every time
they consume a beverage brought from home it’s a lost revenue opportunity
for the school. So it’s kind of a ‘win win win.’ It’s good for us.
Good for people who are thirsty who want our products. Good for schools."
Dave DeCecco, manager of public relations at Pepsico, focuses attention
on the company’s role in bailing out impoverished school districts.
"They’ll come to us and say, ‘You know, we need some money for the
school to run properly. What can you do to help?’ And we’ll say, ‘That’s
great! We will definitely provide you with X, Y, and Z [all promotional
items emblazoned with Pepsi logo].’ Pepsi’s a very youth-focused company
and we know that schools are struggling to meet rising costs and shrinking
budgets." He adds, "It’s good for us too. There’s no doubt about it
that we want to connect to young consumers."
Critics agree the deals are very good for Coca-Cola Co. and Pepsico,
but they argue that the beverage companies’ efforts to brand the "next
generation" of soft-drinkers comes at the expense of students’ allowances,
nutrition and school curricula.
Many school districts, say the growing legion of critics of cola-ized
classrooms, do not consider or care about the distinction between
"facilitating education" and "increasing commercialism" and its implications
for redefining educational spaces. After signing exclusive cola deals,
many school districts find themselves devoting valuable administrative
time to their management, taking on the role of soda promoter and
accepting advertising they had not realized was part of the deal.
But hefty up-front money is an effective bribe to stick to the contract;
few school districts are willing to dissolve contracts if it means
returning money already pocketed.
The large sums of money big companies promise are seductive, but they
add up to just $5 to $25 per student annually. Exclusive cola deals
are no more "innovative" than turning bake sale fundraisers into year-round
Coca-Cola and Pepsi-cola product drinkfests where schools get a commission
off the beverages the kids buy with their own pocket money.
Big Soft Drinks’ Invasion of Public Schools
Big Cola went to college before breaking into primary and secondary
Penn State University signed a $14 million, 10-year contract with
Pepsi-Cola in 1992, giving the beverage company exclusive vending
and advertising rights on each of 21 campuses collectively totaling
70,000 students. Never had an agreement been so all-encompassing,
combining athletics sponsorship, vending machines and fountain sales.
The executive vice president and provost of Penn State justified
the deal by pointing out the state legislature had cut the university’s
$250 million budget by 3.5 percent.
Others quickly followed. In the next two years, the University of
Cincinatti, the University of Oregon and Rutgers signed contracts.
By the time University of Maryland sought $25 million to "name"
its new field house and instead settled for an $8 million up-front,
$260,000-per-year-in-potential-commissions, 15-year deal with Coca-Cola
in December 1997, about 100 campuses and state higher education
systems nationwide had inked deals with one of the two soft drink
The University of Minnesota, with 37,000 students, has the record:
a $28 million (non-guaranteed) 10-year contract with Coca-Cola.
Each company has about 50 percent of the exclusivity business.
Exclusive rights deals with public school districts took off in
1994. Pennsylvania’s Shaler Area School District signed a 10-year
contract with Pepsi-Cola Co. of McKees Rocks worth close to $250,000.
The district had not seriously considered exclusive deal offers
by Coca-Cola and Pepsi-Cola until the school board voted to renovate
the high school’s track and football stadium and was seeking funding
for scoreboards. In addition to new athletic scoreboards and timing
devices to be used for football, basketball and swimming, Pepsi
promised a computer scholarship database, recycling revenue and
commissions of $144,000 based on sales of 4,000 cases of Pepsi.
Nearby North Allegheny School District soon signed a 10-year contract
with Cameron Coca-Cola worth approximately $330,000. The district’s
athletic director Tim O’Malley said that he initiated talks with
the soft drink companies following a school board refusal to provide
money for a state-of-the-art swimming scoreboard and new wrestling
From 1994 to 1997, the deals kept coming, and they kept getting
bigger and more elaborate. In November 1995, McKinney Independent
School District in Texas negotiated a 15-year Coca-Cola deal worth
In 1997, Madison, Wisconsin’s second largest school district, signed
a soft drink exclusive rights agreement. Coca-Cola’s contract with
Madison promises commissions of 40 percent or more, a $5,000 annual
"Teacher of the Year" scholarship, $5,000 to support students in
annual marketing competitions run by the Distributive Education
Clubs of America and funding for two $5 an hour Coca-Cola interns,
one of whom would get a full-time post-graduation summer internship
with Coca-Cola. The company has also committed to build back-to-school
displays at large retail outlets to promote cola sales — with a
percentage of revenues from each 24-pack sold in conjunction with
the displays going to programs such as drug awareness or middle
school athletics. David Kristal of the private consultancy Cum Laude,
which helped negotiate the deal for the school district, estimates
the deal will double the approximately 22,000 cases of products
sold annually to students, teachers and adults at district schools.
Also in 1997, Jefferson County School District in Colorado gained
national attention for setting a $10 million corporate sponsor goal,
targeting hospitals, fast-food franchises, banks, newspapers, grocery
stores and sporting good suppliers. In August 1997, the district
negotiated an exclusive rights deal worth $7.3 million, giving Pepsi
free reign in the district’s 140 schools. The deal included boosting
vending machine commissions to 50 percent, a $48,000-a-year scholarship
program, a student internship program and fund-raising opportunities
for schools, such as selling Pepsi product coupons door-to-door.
Then, in 1998, exclusive rights deals between public school districts
and cola companies skyrocketed, according to Andrew Hagelshaw, senior
program director at the Center for Commercial-Free Public Education
(CCFPE). Between June and December 1998, exclusive contracts tracked
by CCFPE more than doubled, from approximately 50 schools in June
to 110 in December. "They’ve increased exponentially," says Hagelshaw,
"happening so fast we can’t keep track of them."
Spokespersons for both Coke and Pepsi declined to comment on the
number of school districts they had cut deals with, their annual
expenditures on exclusive cola contracts, or their market share.
Nutritional Woes of the "Next Generation"
Many school officials never question why students drink so many
Coke and Pepsi products in the first place or whether their schools
should be curbing rather than further encouraging soft drink consumption.
According to the USDA 1994-96 Continuing Survey of Food Intakes
by Individuals, two-thirds of teenage boys drink nearly three 12-ounce
cans worth of soft-drinks per day, a three-fold increase since 1977-78.
Two-thirds of teenage girls drink nearly two cans daily. One of
the reasons for the rise is the increase in soda bottle and can
sizes from 6 to 12 to 20 ounces, and the introduction of much larger
servings at 7-11 and other convenience stores.
October 1998’s "Liquid Candy: How Soft Drinks are Harming Americans’
Health," by the Center for Science in the Public Interest, reports
that teen boys and girls meet USDA recommended sugar limits from
soft drinks alone.
The increase in soft drink consumption has been at the expense of
fruit and dairy products. With young people now drinking twice as
much soda as milk — a reversal from 20 years earlier — only 29 percent
of boys and 10 percent of girls consume the recommended amount of
dairy products. Only 11 percent of boys and 16 percent of girls
consume the recommended amount of fruit.
Soft drinks have many adverse health effects, and may be factors
in a wide range of ailments including obesity, osteoporosis, tooth
decay, heart disease, kidney stones and caffeine addiction.
The soft drink industry vigorously defends its products against
claims of unhealthfulness.
"Soft drinks have a place in [a balanced] diet," the National Soft
Drink Association wrote in a letter to the Center for Science in
the Public Interest. "Soft drinks are an enjoyable, inexpensive
refreshment product. They can help to provide the 64 ounces each
person requires daily for hydration. ... Scientific evidence showed
no link between soft drinks and health problems mentioned in your
report. ... Consumers are capable of making wise choices."
Consumers might be capable of making wise choices, but it is hard
to see how advertising, promotions and exclusive marketing deals
help. Beverage companies far outspend all advertising and public
service campaigns promoting fruit, vegetables, low-fat milk and
healthy diets, notes "Liquid Candy."
According to Beverage Digest, the four largest companies spent a
total of $631 million on advertising in the United States in 1997.
"Our advertising is really to create a hip, younger, more cutting
edge, more fashionable [image]," says Pepsi public relations manager
David DeCecco. "It all goes back to entertainment and that kind
of thing — and fun — it’s really about having fun."
Similarly, Coke spokesperson Scott Jacobson emphasizes Coke’s desires
to appeal to a young people,
"It is true that Coke is classic but it’s also authentic, genuine,
real," Jacobson says. "It’s very youth focused. The current generation
of young people is very savvy — they appreciate things that are
Both Coke and Pepsi decline to comment on whether or not there should
be a limit to how much soda and juice children should drink during
the school day.
The cola marketing juggernaut is bad for public health, concludes
Howell Wechsler, health scientist at the CDC Division of Adolescents
and Health, which lumps anything that’s not 100 percent juice together
with carbonated beverages, "If they were pushing 100 percent juice
we wouldn’t raise too much objection for that — from a public health
perspective you couldn’t. When they go the extra step, when they’re
actually pressuring or just facilitating children to consume things
they don’t need and that are probably harming them, it’s totally
Schools on Commission
Underlying the exclusive cola deals is an explicit assumption that
students will drink soft drinks no matter what, so schools might
as well make money off of it. But the notion that corporations’
massive investment in advertisements only affects market share is
supported by neither common sense nor evidence. Moreover, many of
the exclusive deals pay schools, in part, by commission, meaning
the schools have an incentive to promote soft drink consumption.
Early indicators are that this incentive structure may encourage
startlingly aggressive salesmanship by school districts.
Colorado Springs District 11 signed a $8.1 million 10-year contract
with Coca-Cola in August 1997 with an additional $3 million guaranteed
if the district sells 70,000 cases of Coke products during one of
the first three years.
A year into the contract, the district had only sold 21,000 cases
of Coke products, less than 30 percent of the goal. With only two
years to more than triple sales, John Bushey, the district’s executive
director of school leadership and point person on the Coca-Cola
deal, sent out a desperate two-page letter in September 1998 to
the districts’ principals, urging them to do everything possible
to boost sales.
"If 35,493 staff and students bought one Coke product every other
day for a school year (176 days)," Bushey wrote, "we would double
(130,141) the required quota needed. We only need to beat the 70,000
case once in the next two years."
Bushey offered seven ideas for how to boost sales, including:
• Circumventing rules prohibiting carbonated vending machines being
on during lunchtime by moving such machines "outside the meal service
• Allowing students to purchase and consume vended products throughout
the day except for the hour before and after lunch, and recommending
that teachers consider allowing juices, teas and water in case that
soft drinks are not allowed in the classroom.
• Locating machines where they are accessible all day. "Research
shows that vender purchases are closely linked to availability,"
Bushey wrote. "Location, location, location is the key. You may
have as many machines as you can handle. Pueblo Central High School
tripled their volume by placing vending machines on all 3 levels
of their schools. The Coke people have surveyed the middle and high
schools this summer and have suggestions on where to place additional
Bushey concluded with an enthusiastic, "If we all work together,
we can guarantee our future," and signed the letter, "The Coke Dude."
In an interview, Bushey acknowledged that he had been unaware of
the magnitude of selling 70,000 cases. He failed to answer directly
whether or not anyone negotiating the contract had grasped its sheer
volume, relative to pre-contract sales.
According to Bushey, the Coke contract was intended to consolidate
the individual contracts of the district’s 53 schools to allow volume
buying. The district, faced with a $45 million cut in state funding,
solicited bids for exclusive contracts and received offers from
Coca-Cola, Pepsi-Cola and 7-Up.
"Bidders came in with different proposals and ways they wanted to
partner up with the school district, to emphasize education," says
Bushey. "It had nothing to do with pushing soda."
The winning Coke contract guarantees elementary schools $3,000 a
year irrespective of whether they generate any sales, an eight-to-tenfold
increase from pre-contract days. Middle school income jumped more
than 15 times, to $15,000; high schools earn $25,000, more than
eight times more than prior arrangements.
The Coke revenue goes into principals’ discretionary funds. Some
schools used the money to upgrade student desks, buy cafeteria tables
and purchases instruments, according to Bushey. One principal put
the money toward plane tickets so that a student from a single income
family was able to travel to Washington, D.C. with her mother and
teacher to accept a national science award. "I find no reason for
myself or the school district or anyone else to apologize or be
apologetic for doing good things for kids," Bushey says.
"If you’re saying, ‘Geez, you know we shouldn’t have advertising
— the last bastion of sanctity should be the schools,’ then we should
be meeting the students at the front door and not allowing them
to wear Tommy Hilfiger jackets, their Nike swoosh t-shirts, Reebok,
Levi jeans. Kids are walking billboards."
The case for exclusive deals is simple: They bring in new money
to underfunded school systems. In practice, however, money from
cola contracts sometimes seems to go to new programs, such as Coke
interns, which directly benefit the Coca-Cola company, rather than
identified school needs.
"The contract was not screened for educational value even though
it affects curricula" says Matt Nelson, a student teacher in the
Madison School District, of the school system’s deal with Coke.
"It’s shocking to hear school board members think so short term
— ‘Here’s the money now’ — when education is about cultivating young
people to be citizens throughout life."
In March 1998 the student government of Greenbriar High School in
Evans, Georgia sponsored "Coke in Education Day" to compete for
a $500 prize offered by the Augusta-based Coca-Cola Bottling Co.
and a $10,000 national "Team Up With Coca- Cola" award. Students
and teachers created an entire curriculum revolving around Coke.
A Coke marketing executive discussed his profession with economics
students. Chemistry classes measured the sugar content of a can
of Coke. Social studies teachers lectured on overseas Coke markets.
The culmination of the day saw the entire student body, all clad
in red and white Coke t-shirts, spelling out the word "Coke" for
a school photo.
It was at this moment that student Mike Cameron chose to pull off
his shirt to reveal a Pepsi work shirt. For this act of "rebellion,"
Cameron was suspended for one day. Greenbriar Principal Gloria Hamilton
did not return repeated phone calls to discuss her decision. While
Greenbriar High School does not have an exclusive rights contract,
its actions highlight the tremendous influence cola companies can
have on curricula and student speech.
"If we end up having this sort of corporate involvement in schools,"
warns Wisconsin State Representative Marlin Schneider, D-Wisconsin
Rapids, "we will end up with schools controlled by corporations.
One sees more and more of that occurring and the potentialities
for advertising effecting young minds with name products, I think
is detrimental and unfair — to teachers in terms of academic freedom
and to young people who are virtual captives to the pollution of
corporate influence and advertising."
Independent Firms Join the Frenzy
Independent firms are the new element in the cola-bidding scene.
Consultants such as the Minnesota-based Cum Laude and Colorado-based
DD Marketing offer school districts advice in negotiating and managing
exclusive rights deals in exchange for flat fees or a percentage
of the deals.
The "marketing firms that promote these contracts," says Alex Molnar,
professor of education at the University of Wisconsin-Milwaukee
and author of Giving Kids the Business: The Commercialization of
America’s Schools, "have set up a situation where bottlers feel
that if they don’t enter a contract, they will be at competitive
disadvantage, and if schools don’t, they’ll lose a chance at free
money. The firms exploit that dynamic."
Sixty school districts have hired DD Marketing, run by Dan DeRose,
former athletic director at the University of Southern Colorado,
to pursue corporate dollars in the past three years — dozens of
them resulting in exclusive public school soft drink contracts.
DeRose declined to answer questions for this article. Similarly,
the director of Cum Laude did not return phone calls.
Critics of commercialism in schools who call the DeRose’s business
"parasitic," have a surprising ally: cola companies. Pepsi’s guidelines
for structuring relationships with school programs specifically
state that the company will avoid third-party brokers when possible.
Coke and Pepsi have both publicly stated that brokered deals divert
funds which could otherwise have gone to schools.
"Here’s an area where there’s a lot of revenue involved," notes
Coke spokesperson Scott Jacobson, "and folks not in the business
of working out five- and ten-year deals with suppliers have people
preying on them — taking 20 to 30 percent. We think money should
go to the school district, not the broker."
But many schools which lack negotiating expertise welcome third
parties with open arms, convinced they help divert money to schools
that companies would otherwise keep for themselves.
More and more school districts actively solicit firms to take on
this role. In May 1998, for instance, the Cedar Rapids Community
School District, Iowa’s second largest, placed an ad in Education
Week in which it solicited "proposals from nationally known consultants
with proven expertise in assisting school districts in the development
of exclusive supplier soft drink requests for proposal, (RFP) and
negotiating multi-year exclusive soft drink contracts."
A growing movement, including students, parents, teachers, politicians
and independent bottlers, is emerging to oppose the exclusive cola
deals for public schools. CCFPE has worked with 12 school districts
that have considered but then rejected cola deals. The Center has
contacted 40 to 50 additional school districts about setting commercialism
guidelines before corporations come along. It also hopes to find
a dissatisfied school district, such as Madison, willing to break
its contract and set a precedent for other school districts to follow.
In Portland, Oregon, high school students rose up against the school
board when it formed a committee to consider the best cola deal
offers. In response to the petition the students circulated to the
public, the school board disbanded the committee and is currently
not seeking a contract.
In Berkeley, California, the sophomore awareness committee organized
a debate about the role of big business on their campus in response
to a potential Pepsi deal which would bring $100,000 to the high
school. Over 150 people attended, mostly students.
Sarah Church, 16, very vocal at school board meetings and with the
press, said she opposed the contract, "I think that any sort of
commercial deal is a slippery slope that leads to more and more
dependence on corporations for public funding for schools, and that’s
a very dangerous place to go. It could have an effect on what is
taught — on things they don’t want us to know." The school district
eventually rejected the deal and is now working to develop guidelines
on corporate sponsorship.
The movement may have an unlikely ally in independent bottling companies
that cannot match the bidding power of Coke and Pepsi, the companies
that supply them with much of their product. In Wisconsin and elsewhere,
bottlers are now considering legal action to challenge the exclusive
deals, on the grounds that they are monopolistic.
The movement is also gaining support from state legislators. In
January 1998 Wisconsin, Representative Marlin Schneider introduced
a bill to stop school districts from signing exclusive marketing
and advertising contracts with soft drink companies and any private
business. The state’s largest teachers union, the Wisconsin Education
Association Council, endorsed the bill, but it was opposed by the
Wisconsin Association of School Boards. The bill did not pass, but
bipartisan agreement emerged on the need to limit commercialism
In January 1999, Democratic California Assembly Member Kerry Mazzoni
introduced a bill to prohibit the governing board of any school
district from entering into a contract that grants exclusive advertising
rights within the district to a person, business or corporation.
If passed, it would make any corporate exclusive rights public school
deal illegal and abolish already existing deals.
But while resistance is growing, it is often overwhelmed by school
administrators who are eager to take cola dollars, and willing to
circumvent or manipulate democratically elected school boards to
In Seattle, a huge battle erupted after the school district secretly
negotiated a 10-year exclusive rights soft drink deal with Coca-Cola
in 1998. The deal promises revenues of more than $6 million, based
on a commission rate of 55 percent and cash payments of $2.5 million
— more than double the current rate. Disclosed to the school board
in August, the proposal came just as school board subcommittees
had concluded that the district should lessen commercialism in schools.
Opponents of the deal mobilized an aggressive campaign against the
deal, but despite a major organizing effort and introducing lots
of expert opinion on the harms of commercialization into the debate,
they could not override the influence of the school administration.
In Madison, champions of the district’s deal with Coke tried but
failed to bypass the school board by letting school principals decide
on details of their own arrangements with Coke. A valiant organizing
attempt to block the district’s deal with Coke succeeded in defeating
a wide-ranging Coke promotional proposal, but failed to to stop
the exclusive pouring rights arrangement.
"If we go into completely derailing what education is for and turning
schools into malls," says Brita Butler-Wall, a professor of education
at Seattle University, mother of two children in Seattle public
schools and a leading opponent of Seattle’s Coke deal, "I would
like to think that this is a decision that people made consciously
with their eyes wide open — as opposed to what is currently happening,
which is the back room deals, corrupt school boards, euphemisms,
calling things partnerships when what they really are sales mechanisms."
Resource: Center for Commercial-Free Public Education www.commercialfree.org