Pepsi wins college contracts

By Neil Tambe U-WIRE

ANN ARBOR, MICH. – The University of Michigan is not the only school that has cut its contracts with the Coca-Cola Company. Nineteen other schools have called the company out on its refusal to submit to third-party investigations of alleged human rights violations in Asia and South America.

But even with the loss of revenue from the schools, the major victim of the suspensions will be the company’s public image – not its pocketbook – according to a financial analyst who monitors the beverage industry.

But the analyst, who wished to remain anonymous because of legal complications, said the loss of business is not likely to have a noticeable effect on the company unless the contract suspensions continue for an extended period of time.

About 25 percent of Coca-Cola’s profits are made in North America and schools compose only a small part of sales.

Any tangible effects caused by universities turning away from Coke would only be felt by local bottlers – who buy syrup from Coke – with a large portion of their income tied to a university contract, he added.

Lauren Torres, a financial analyst for HSBC Group, said smaller bottlers would be most affected by the cuts, adding that even they might not feel any effects.

Coca-Cola Enterprises, the largest bottler of Coke products, makes more than $18 billion in worldwide revenue.

According to Percy Wells, spokesman for the Coca-Cola Bottling Group of Michigan, the university purchased 80,000 cases of Coke products annually. In comparison, sales across Michigan are in the millions.

“That equates to a small percentage of our overall business,” Wells said.

Wells added that the small amount of sales lost when the university suspended its contract “doesn’t [undermine] the importance of every case we sell and how it affects our business.”

New York University began pulling all Coke products from campus in early December.

Pepsi had been the primary beverage provider on campus and Coke products were mostly found only in vending machines on campus, according to an NYU spokesman.

Rutgers University in New Jersey discontinued its contract with the soft-drink giant last June. Rutgers then entered into a 10-year exclusive contract with Pepsi. The school says the decision was not based on civil-rights issues.

“Ultimately it was Pepsi’s proposal that was far more advantageous,” spokeswoman Sandra Lanman said.