Saturday, February 4, 2012

Coca-Cola is UGA’s king of pop: Company owns exclusive rights to soft drink sales (w/contracts)

By on February 7, 2010

It’s everywhere.

It’s on the sidelines of Sanford Stadium. It’s in the dining halls. It’s on scoreboards and vending machines, at golf invitationals and in the Terry College of Business.

It’s always, Coca-Cola.

The Coca-Cola Refreshment Center in Sanford Hall is one of many indications that the University is a ‘Coke-exclusive’ campus. Photo by Michael Harris

“I would say that Coke has a huge presence on campus,” said J. Michael Floyd, executive director of Food Services. “To my recall, I can never remember a student asking for a non-Coke product.”

Floyd said Coca-Cola agrees to sell products to Food Services for a certain price — 74 cents for a 20-ounce bottle.

But Food Services operations are not the only places where Coke has made its mark on the University.

The Coca-Cola Refreshment Center in Sanford Hall, for example, was named following a private gift of $500,000 from the Coca-Cola Foundation given to support the building’s construction, said David Dodson, public relations coordinator for Terry.

Coca-Cola paid for a renovation and refurbishment of the lounge over the winter break, which included installing flat-panel screens for students to use with their laptops, allowing them to work on assignments on a larger scale, Dodson said.

“Coca-Cola Company was the logical corporation to approach for a gift naming the lounge,” he said, adding that the company’s CEO at the time was 1969 University graduate Doug Ivester.

Dodson said the gift was purely philanthropic, not business related.

“There’s no quid pro quo, no contingency of ‘if you do this for us, we’ll do this for you,’” he said.

But elsewhere on campus, both the University and Coca-Cola benefit from contractual agreements.

“UGA is a Coke-exclusive campus,” said Bobby Woodard, associate director of student affairs. “Exclusive means that corporations like Coca-Cola and Pepsi-Cola bid for the right to be the only beverage — soda and water — sold on a particular campus.”

He said Coca-Cola and Pepsi, the two major players, would bid based on the amount of money they would give the University in return for the University only selling its product.

Being “Coke-exclusive” also means the nearest place to buy directly competitive soft drinks not produced by the Coca-Cola Company is on Jackson

Street, the city-owned road where Walter Washington sells LaFonda Dawgs, snacks and a mixture of Coca-Cola, Pepsi and Dr. Pepper beverages.

Washington said he sells competitors’ products because not every student at the University grew up with Coca-Cola products, and he wants to cater to a wide range of customers.

“My first year, that’s all I did sell,” he said. “The reason I had to start selling Coke was I got tired of people coming up asking for it.”

So now, Washington says, he sells it all.

Although LaFonda Dawgs can sell directly competing products, such as Pepsi and Dr. Pepper, as well as Coke and Mr. Pibb, Jittery Joe’s at the Miller Learning Center can only sell soft drinks for which Coca-Cola is not a direct competitor.

Caleb Nipper, general manager for the location, said aside from Coca-Cola products, Jittery Joe’s has a contract with Sunbelt Beverages to sell Cheerwine and glass-bottled drinks.

Everywhere else on campus, however, Coca-Cola is the only soft drink company around.

Doug Ross, director of auxiliary services, said though he is unsure of whether Coca-Cola is an official sponsor of the University, the University is under contract to supply soft drinks and snacks produced by the company.

According to the Contract for Food, Beverage and Incidentals Vending Services, which the University put into place with Coca-Cola in June 2008, the estimated annual sales on this contract were listed to be nearly $1.7 million. The University’s commission rates on products ranged from 13 percent for CD-RWs to 48 percent for soft drinks.

The contract, which expired in June 2009, can be renewed a maximum of four times.

That’s $3.6 million to the University, if the contract is renewed all four times, according to the contract.

The contract requires Coca-Cola to make new vending machines Bulldog Bucks compatible, a service that costs $950 for the scanning units and $100 for installation. The contractor is also required to service all 474 vending machines on campus.

Alan Thomas, assistant athletic director for marketing, said Coke had probably been an official Athletic Association sponsor for anywhere between 50 and 100 years.

Thomas said when the Olympics came to Georgia, the University wanted a new scoreboard, which Coca-Cola was invited to continue to sponsor.

“They took what was originally a 10-year deal and extended it for another 10 years,” he said. “It’s basically become a 27-year deal.”

In the 1991 contract, the deal was primarily an advertising agreement that associated the University and the Coca-Cola Company. The 2005 contract, which ends in June, promises the Athletic Association $1.1 million in sponsorship fees over the period of the contract. The 1991 contract promised $1.8 million.

“Nothing in there says we will buy product from Coca-Cola at this price, it’s not that type of contract,” he said.

Coca-Cola products are the only soft drinks to be served in restaurants, locker rooms, press rooms, private clubs and the sideline benches associated with the Athletic Association.

The 1991 contract states that no restaurants or concession services owned or operated by anything associated with PepsiCo, Inc “shall be permitted or authorized by [the Athletic Association] to advertise, operate or transact business” in Athletic Association venues.

If another competing beverage company attempts to associate itself with the Bulldogs, the Athletic Association is required to stop the “ambush marketing” to protect the exclusive Coca-Cola advertising rights.

What does Coca-Cola get in return for aligning itself with the Athletic Association?

Free advertising, free tickets to sporting events — including “no less than 10” tickets to the Georgia-Florida football game — and free usage of University-related sports logos, a practice not even University student groups are allowed to do.

“The biggest part of their sponsorship is their right to associate with [University] marks and logos throughout the marketplace,” Thomas said.

The contract points out that during home games, opposing teams are to be encouraged to use Coca-Cola products. And for bowl games sponsored by Coca-Cola competitors, the Bulldogs must request non-branded sideline equipment.

The Athletic Association is not in charge of pricing the concessions at games. Aramark, the Athletic Association’s concessionaire, handles that.

“We’re certainly making dollars and cents when it comes to concession sales,” he said, though he added that only accounted for about one-eightieth of total revenue.

  • http://www.investorguide.com/article/6070/coca-cola-profit-up-strong-volume-in-china-india-and-brazil-ko/ Coca-Cola Profit Up, Strong Volume in China, India and Brazil (KO)

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