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New dollars bubble up from larger sodas

By Clifton B. Parker on April 16, 2004 in University

Soda machines on steroids? Or a smart way to fund student-oriented services?

Bigger drink sizes are popping out all over campus from gleaming new vending machines. The university recently switched to dispensers that carry resealable 20-ounce Coca-Cola containers, a giant gulp up from the 12-ounce pull-tab variety.

For some creatures of habit, it's been a "jolt"-- like the caffeine-loaded soft drink. They say 20 ounces of soda may be too much beverage and cost too much. The new sizes sell for $1.25, compared to 75 cents for 12-ounce containers. Still, the 6.25 cents-per-ounce price did not change.

Campus officials say the switch is a sign of the times in higher education, where state budget cuts have forced universities nationwide to look for alternative ways to support important student services.

Student Affairs Associate Vice Chancellor Bob Franks said that the new contract pays the university more than the prior one and the revenues will help support student housing, a planned multi-use stadium and the Memorial Union.

"We're trying to find a balance between giving people choice in their beverages while also increasing revenue streams for critical campus services," Franks said.

"This is the inevitable consequence of the decline of state funding. If the state were adequately funding higher education, we wouldn't have to seek alternative funding sources."

On Jan. 3, the university signed an agreement with the Sacramento Coca-Cola Bottling Co. for the rights to sell soft drinks in campus vending machines for the next 10 years.

In return, the campus receives $150,000 each year or $1.5 million total in direct payments from Coca-Cola over the duration of the contract. In addition, the company may pay the university up to $200,000 a year in commissions based on current sales projections.

The contract calls for several units within the Office of Student Affairs to receive the beverage funds -- Intercollegiate Athletics and Memorial Union auxiliary services, which includes the bookstore, coffeehouse and food services for students. It allocates about $50,000 for student housing in the first year as well as a significant portion toward the $29.75-million multi-use stadium complex.

Franks noted that the new contract still gives the campus flexibility in that it is not an exclusive pouring rights contract for Coca-Cola throughout campus. The new contract only gives Coca-Cola the exclusive rights to campus vending machine sales, athletic events and some special events -- not the rights to all beverage sales on campus, which include those at food counters.

Franks noted that many universities across the country opted for the more lucrative exclusive pouring rights contracts -- UC Davis did not.

For those concerned about soda's obesity factor, he added that Coca-Cola also offers bottled water and diet drinks. Fruit juices are available as well in vending machines for those preferring that option.

Why the larger containers? Franks said Coca-Cola made the case that college age youth prefer larger sized beverage containers that are resealable and therefore mobile.

As for the price, Franks said the price-per-ounce did not change and the prior price of 75 cents has stayed the same for more than 20 years by his recollection. "Can you think of anything else that has remained unchanged in price for that long?" he said.

The supersizing has some critics.

"Suddenly these new machines appeared and now it strikes me as a little odd," said Mont Hubbard, an engineering professor. "It looks like yet another extra surcharge put on faculty, staff and students. Besides, how can we encourage people to drink more soda when we have an obesity epidemic in the nation? Twenty ounces is a bit excessive."

John Slate, an employment assistant in human resources, said, "We're upsizing our soft drinks but downsizing everywhere else."

He's now buying his soda from convenience stores instead of on campus.

Tom Compton, executive director of campus recreation and Memorial Union auxiliary services, said the campus agreed to this contract with Coca-Cola after an RFP process.

"Both major bidders offered significant statistical evidence that these beverages represent a trend among consumers, particularly in the college market," Compton said.

He said the university can always renegotiate the contract if evidence warrants an adjustment. "If an adjustment is necessary, it would be in everybody's best interest to do it. If we have to switch back to 12-ounces, we can do it," Compton said.

According to the National Soft Drink Association, one of every four beverages consumed in America today is a carbonated soft drink. In the 1950s the standard Coca-Cola serving -- the nostalgia-inducing 6-1/2-ounce bottle -- contained only about 75 calories. Today, many vending machines sell nothing smaller than 20-ounce bottles, which contain 250 calories worth of soda. And while the label says that's 2 1/2 servings, most people don't stop drinking until the bottle's empty.

The campus has witnessed a decrease -- no exact figures yet -- in soft drink sales with the new machines, said Gina Rios, general manager for retail dining services for Sodexho Services, which supplies food and beverages to the campus. "We're analyzing our first returns."

She noted that some of the new machines had malfunctions. "They've had glitches and had to replaced some of the mechanisms inside the machines. So they've missed some sales," Rios said.

She said about 130 vending machines exist on campus, and last year some 500,000 of the sodas were sold at UC Davis.

Jerry Brown, vending manager for Sodexho Services, said his office is working to make sure this transition to Coca-Cola is "as easy as possible." The Coca-Cola truckers are still in the early stages of learning the routes around campus. Sodexho is notifying Coca-Cola about problems with the vending machines, Brown said, even though that's not Sodexho's responsibility under the new contract. After all, he added, the bottom line is customer satisfaction.

"In the world of vending machines, not working is the same as not filled," Brown said.

Sodexho also will provide refunds to customers through the same process as before, and just bill Coca-Cola afterward. This prevents delays in obtaining refunds, he added.

"Our advantage is knowing this campus and what people expect," said Brown.

Both Rios and Brown noted that diet drinks are highly popular at UC Davis, with about a 60 to 40 split in favor of the diet variety. "Davis is unique in its embrace of diet drinks. The opposite is typically true elsewhere," Rios said.

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