SODA—Schools Defy LAUSD With Exclusive Soda Contracts

Just six months after signing an exclusive three-year contract with PepsiCo, North Hollywood High School is assured of getting new uniforms and equipment for its football team this fall thanks to the $25,000 it expects to earn next year from the sales of Pepsi Cola and its other soft drinks on the campus. Under the terms of the contract, all vending machines on the school sell only Pepsi products. North Hollywood High is one of many Valley schools that have partnered with soft drink companies to help fund sports and other programs. School administrators are of mixed opinions about the practice, pointing out that soft drinks are hardly a nutritious supplement to a high school student’s diet. But many ultimately decide that, if teenagers are going to drink Pepsi or Coke anyway, the school might as well benefit from it. “It’s a good deal for the school,” said Dave Smith, an assistant principal who was on the team of administrators who worked out details of the contract at North Hollywood High. “The students and the school benefit.” But there’s one hitch, said Fred Carter, purchasing services coordinator for the Los Angeles Unified School District the district bars exclusive contracts between individual schools and soft drink companies. “Coke and Pepsi have gone to schools and offered them all kinds of scoreboards and equipment to sign these contracts, but frankly, we can’t support these efforts,” Carter said. Still, the district has stopped short of canceling the contracts, sanctioning the schools or reprimanding administrators. “It’s a policy that is not being followed, but we haven’t done a good job communicating this to the schools,” he said of the policy which has been in place for the last three years. Carter says the district plans to inform all schools of its policy and bar future exclusive contracts. The district, he said, wants to improve children’s nutrition by eliminating vending machines stocked only with soda. However, officials at five LAUSD high schools in the Valley that have exclusive soda contracts said they were unaware of the policy. They also said they do not plan to cancel their contracts either, especially given how profitable they are. Grant High School’s business manager, Tess Vallejo, said the Van Nuys school has had a renewable, exclusive contract with Coca-Cola Co. since 1986. She also said a Business Journal reporter was the first to tell her there was a district policy prohibiting it. Coca-Cola spokesman John Roland said the company violated no district rules and has heard no complaints from local school administrators. “We want to do what’s right for the schools and, so far, we haven’t heard of any problems,” he said. “It’s been a successful program that gets our brand out there and helps schools.” Likewise, PepsiCo said the company has not heard from the school district about problems with its contracts. In fact, the soft drink companies’ exclusive deals are largely seen as too good to pass up, said PepsiCo spokesman Larry Jabbonsky. “The districts themselves wanted these exclusive deals,” he said, referring to school districts in other parts of the country. Money in the bank So perhaps to no one’s surprise, Granada Hills High School and Grant extended their agreements with Coca-Cola earlier this year. The moves gave the schools replacement uniforms, sports equipment for their athletic teams and, in one instance, a chance to have the soft drink company shell out for a fancy new electronic scoreboard for the football stadium. Two others, Birmingham High School in Van Nuys and Canoga Park High School also have contracts with Coca Cola in place. As part of its deal at North Hollywood High, PepsiCo provides vending machines for its cola and its other soft drinks marketed under its other name brands. But, of course, it bars Coca-Cola. Although Coca-Cola agreed in March to stop future exclusive contracts with local schools all over the country and PepsiCo soon followed suit, existing contracts will remain in place. Both companies say they are responding to calls by parents and school districts around the country who say they want to reduce the amount of junk food and soda in public schools. Likewise, in the Valley, such exclusivity makes some angry, school officials say, but business is business. While some parents question these arrangements, school officials are quick to point out the benefits to the schools when public education funding is tight. “We’re in the first year of this contract and so far it’s been good to the school. We had a contract three years ago and we got new sports equipment and jerseys and we couldn’t have afforded to get them without Coke,” said Mariette Peregrino, business manager for Granada Hills High. The school last year netted $25,000, which paid for field trips, bus transportation for athletic teams, athletic equipment and band uniforms and instruments. Typically, the soft drink makers furnish their vending machines and agree to stock them, giving the schools a cut of the take. But some schools, like Grant High, agree to stock the machines themselves and buy the soda at a lower rate, giving the school an even bigger return. “I’d rather the kids not drink all that sugar, but that’s what they want to drink,” Peregrino said. Parents have problems Although Granada High officials say no parents have called the school to oppose the new Coca-Cola contract, at least one mother contacted by the Business Journal expressed some reservations about the deal. “I’m totally opposed to having Coke marketing its sugary soda to our kids. It just sends the wrong message about nutrition,” said Lori Berg, the mother of a 15-year-old girl at Granada Hills High. Likewise, Jose Posada, business manager of Canoga Park High, which is in the fourth year of an eight-year contract with Coca-Cola, said students should drink more milk or juice instead of soda, but they don’t. “They’re going to drink whatever they want and, at least this way, we get the profits back to the student body and it benefits them instead of somebody else who sells them the soda,” he said. Last year, Canoga Park High sold $87,000 in soft drinks from its Coca Cola-supplied vending machines, and netted about $35,000. But even with their exclusive deals, Coca-Cola said in-school sales account for about 1 percent of all its revenue last year. Meanwhile, Marion Breckner, senior financial manager at Birmingham High School in Van Nuys, says she won’t be sorry to see her school’s pact with Coca-Cola end. “We do about $30,000 net a year and the money is used for uniforms and the teams, but I’d rather see the kids drink more juice and maybe milk, but I don’t think that’s going to happen,” she said.