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Cola wars schools { March 23 1999 }

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Fighting the Cola Wars in Schools
Health Advocates Sound Alamr as Schools Strike Deals With Coke and Pepsi

By Marc Kaufman

Tuesday, March 23, 1999; Page Z12

School principals in the District of Columbia who are struggling to find money for extras such as school proms, bus tokens for needy students and even replacement books have a new source to turn to: the Coca-Cola Co.

Six months ago, the District replaced its school-by-school soda vending arrangements with a citywide exclusive contract with Coke--joining a growing number of school districts across the nation trying to turn their vending machines into cash machines.

"This contract is a godsend," said Jon Peterson, deputy director of procurement for the D.C. Public Schools. "This is our first District-wide soft drink contract, and it will be a very valuable thing for us."

But vending machine bonanzas for high schools, middle schools and even elementary schools have also produced an increasingly worried backlash from health advocates.

Soda pop is hardly a health food, and it may have negative consequences if children dose up on empty calories and caffeine. At a time when an alarming number of teenagers are overweight and out of shape, these advocates say the last thing America's schoolchildren need is a cola war that stations more vending machines in hallways and makes it easier for kids to buy soda.

"It seems absolutely crazy to have schools sponsor a habit that undermines students' health," said Michael F. Jacobson, executive director of the Center for Science in the Public Interest (CSPI). His group is leading a campaign of public health experts and organizations to raise awareness and increase research into the possible adverse consequences of the burgeoning sales of soft drinks.

"It's time to get soda pop out of schools, just like smoking has been banished," he said.

Bailing Out School Budgets


The National Soft Drink Association has challenged the information being presented by the health advocates, calling it "an insult to consumer intelligence." Any attempts to link soft drinks to health problems, the group says, "are not supported by the facts."
To be sure, no direct connection has been established between increased soda consumption and increased obesity. At the same time, the U.S. Department of Agriculture (USDA) defines soda as of "minimal nutritional value." That means a 12 ounce can of non-diet soda, which usually contains 120 to 200 calories, provides less than 5 percent of the daily requirements for eight key nutrients.

Because most soda contains many calories and few nutrients, some school officials have resisted the trend toward more aggressive soda sales to students. In the Fairfax County School District, for instance, food nutrition services director Penny McConnell has taken a stand against exclusive soda contracts.

"I think it would be a real negative, a bad situation, for a district like ours that's working so hard to promote nutrition to then profit from ripping off kids with non-nutritious foods," said McConnell, a past president of the American School Food Service Association.

While stressing she wasn't judging others, she said, "If I'm going to teach nutrition, I'm going to serve nutrition."

But voices like hers have become increasingly lonely, as hundreds of school districts from Colorado Springs to Madison, Wis., to Edison, N.J., choose Coke or Pepsi as their exclusive soft drink purveyor.

"We have an absolutely wonderful partnership with Pepsi," said David F. Stofa, principal of Oxon Hill High School.

During the three years of his school's exclusive vending contract with Pepsi, Stofa said, the company has helped finance school landscaping, purchased jackets for the security staff, sponsored academic and multicultural events, and supplied a scoreboard, too.

"The kids know all that Pepsi has done for the school," he said, "and they really appreciate it."

In the District, according to spokeswoman Denise Tann, the exclusive contract with Coke does not include any commercial tie-ins or advertising. Instead, in exchange for the exclusive right to sell its soda, juices and bottled water to the District's 71,000 students from elementary school to high school, Coca Cola offered 65 percent of sales, up from the previous 50 percent. She said that vending machines are switched on all day, though students are not supposed to use them while federally subsidized lunches and breakfasts are being served.

The new contract, which is renewable for two more years, has brought the District profits as high as $50,000 a month. "Many, many students will benefit from this contract," Tann said.

In New Jersey, Valerie Wilson, director of food services for the Newark School District, is in the early stages of negotiation with the soda companies.

"Budgets are shrinking for school districts, and we need alternative revenue streams," Wilson explained. "We have good reason to believe there will be significant money put on the table."

Guiding the Newark officials is Dan DeRose, a former college athletic director from Colorado who hires himself out to school districts as a broker and negotiator of exclusive soft drink contracts.

"We've been talking to hundreds of school districts along the East Coast, and I can tell you that this thing is coming east in a big way," said DeRose, whose DD Marketing Co. has been a pioneer in the field. Until recently, most of his biggest deals have been made west of the Mississippi River--such as his 10-year, $8 million to $11 million contract with Coke in Colorado Springs.

"Eventually, every school of any size will have to ask the question: Can we do better in terms of revenue with the beverage contracts we now have?" he said. "Does it make sense for us to walk away from the money Coke, Pepsi and the others will pay for an exclusive contract? Within 24 months, I think most every school district in America will have asked that question."

Asked about the possible health consequences of the exclusive soda contracts, school officials generally responded along the lines of Bill Erlendson of the San Jose School District, which is now negotiating with the soda companies and is hoping for a 10-year exclusive contract worth $8 million to $9 million.

"If we sell the sodas and juices in school, the schools get some revenue," he said. "If we don't, then the students go down the road to the corner store. I don't think we would be adding much to soda consumption."

Raising Health Concerns


On one issue, both sides in the cola wars agree: Americans now drink twice as much soda per person as they did 25 years ago. According to statistics from the Beverage Marketing Corp., annual soda consumption was 22.4 gallons per person in 1970; in 1998, it was 56.1 gallons per person.
In its report, the Center for Science in the Public Interest found that one quarter of teenage boys who drink soda consume more than two 12-ounce cans per day, and that five percent drink five or more cans daily.

The report, based on survey data from the USDA, also indicated that on average, girls drink about one-third less, but with potentially greater consequences. Doctors say soda has been pushing milk out of teenage diets and making girls more likely candidates for osteoporosis when they're older. The CSPI and a coalition of health advocates reported that 20 years ago, teens drank almost twice as much milk as soda; today, they consume twice as much soda as milk.

While the loss of calcium from consuming less milk is known to pose problems, the consequences from adding soda are not well documented or understood. According to William Dietz, director of the division of nutrition at the U.S. Centers for Disease Control and Prevention (CDC), studies so far do not "directly demonstrate that increased soda or juice consumption causes obesity. . . . But to the extent that those drinks replace water, they may be adding calories to diet and they are certainly replacing milk."

And with childhood obesity rates double what they were 20 years ago, the CDC is examining the many possible causes of--and solutions to--what it calls an "epidemic" of teenage weight problems. "If the schools must have vending machines, they should concentrate on healthy choices like bottled water," Dietz said.

Some recent research does point to soda consumption as a possible factor in teenage obesity. Richard Troiano, a senior research scientist for the National Cancer Institute, found a possible link in an analysis of federal nutrition statistics for children from 1988 through 1994.

"Soda consumption was the one place where there was a clear pattern," said Troiano, noting that overweight kids generally took in a higher percentage of their calories from soda than kids who were not overweight. While the pattern was particularly strong with boys aged 12 to 19, he said, "the information is suggestive, not definitive."

Because the connection between sugary foods like soda and obesity is not well understood, CSPI and the 24 other health organizations, as well as some prominent doctors and public health experts, have asked the respected National Academy of Sciences (NAS) to conduct a major study of the issue.

"High levels of consumption of sugar and soft drinks may well be contributing to health problems," the health advocates wrote in December to Agriculture Secretary Dan Glickman and Health and Human Services (HHS) Secretary Donna E. Shalala in their request for a study.

The letter urged the federal government to "evaluate evidence regarding acute and chronic health problems" from a high-sugar diet and to "suggest policy actions" that federal agencies might take if sugary foods are found to pose identifiable problems.

In a letter to the two secretaries, the Sugar Association supported the request for a NAS study, saying "we believe such an inquiry would serve to reassure the American public that they can continue to enjoy sugar in moderation."

Jacobson said that HHS has turned down the request for a major study, citing other on-going research into sugar, but that the USDA has not made a formal response.

Meanwhile, soft drink makers have challenged the CSPI report, which referred to soda as "liquid candy."

"CSPI's strained efforts to blame soft drinks for various health issues simply are not supported by the facts," the National Soft Drink Association said in a press release. "The message to American consumers is simple. Enjoy a well-balanced diet of which soft drinks can be a refreshing part."

Gaining Popularity in Secondary Schools


High schools have long had some soda vending machines, but the push for brand exclusivity and the soda companies' willingness to pay handsomely for it are relatively new. The idea originated on college campuses earlier in the decade and began spreading tentatively to secondary schools several years ago.
In most states, secondary schools follow the minimum federal regulations and allow soda to be sold throughout the day, except in school cafeterias when government-subsidized breakfast or lunch is being served. In the late 1970s, the USDA tried to impose much wider restrictions, prohibiting the sale of soft drinks and other foods with "minimal nutritional value" throughout schools from the beginning of the school day until 30 minutes after the end of the last lunch period.

The National Soft Drink Association challenged the regulation, and in 1983 the U.S. Court of Appeals struck down the USDA prohibition. In recent years, several states, including Florida and Kentucky, have imposed regulations similar to those initially proposed by USDA.

As the soft drink producers explain it, they have been actively involved with schools and school districts for decades, and the exclusive contract issue has been overblown.

"We don't see it as we're doing anything that different," said Scott Jacobson, a spokesman for Coke. "Our bottlers in particular are local companies, and they've long tried to be responsible corporate citizens in their communities."

"That means they've worked to help schools generate revenue and sponsor certain programs," he said. "In the last couple years, yes, you have seen more activity in the high schools and middle school years."

"The money we bring to the table outstrips the money we get back," said David DeCecca, a spokesman for Pepsi. "Schools are struggling to meet costs and budgets are being voted down, so they're looking for new sources of revenue. And us, we always look for ways to connect with teenagers."

Both spokesmen stress that their vending machines provide far more than high-calorie soft drinks. Most also sell bottled waters, juices and sports drinks, as well as diet colas. Spokesmen for Coke and Pepsi, however, would not estimate what percentage of their school sales were in their main cola drinks.

Boosting Consumption


Critics of the exclusive contracts say the beverage companies enter them for one basic reason: to increase sales of their main soda brands now and in the future.
"What we have seen in just about every exclusive contract around the country is a resulting increase in the amount of soda consumed by students," said Andrew Hagelshaw of the Center for Commercial-Free Public Education in Oakland, Calif.

"There's almost always an increase in the number of vending machines, and they're put into schools that previously didn't have them," he said. "They're also putting machines in schools with younger and younger children."

In Edison, N.J., for instance, the school district signed an exclusive vending contract with Coke last fall, and has received scoreboards, scholarships, T-shirts and considerably larger commissions as a result.

Before the contract, said business administrator Daniel Michaud, few Edison schools had any soda machines, and those schools had two at most. Now, he said, most high schools have four machines, the middle schools have three, and most elementary schools have one, too.

Similarly, the new exclusive Coke contract in the District school's allows for 300 soda vending machines in the high schools, middle schools and elementary schools--almost twice as many as there were before the contract.

To health advocates, the dangers of exclusive soda contracts became apparent several months ago in Colorado Springs, where the school district has urged principals to increase sales of Coke products to keep the profits flowing from vending machine contracts.

The controversy was sparked by a letter to principals from John Bushey, executive director for school leadership in that district. As he explained it, local administrators turned to exclusive soft drinks contracts two years ago as a part of an ongoing effort to make schools more "entrepreneurial."

"Many of our principals had been dissatisfied with the old ways of raising extra money for the schools--like selling gift wrap or chocolates," Bushey said. "It took a lot of time, and most important, the schools didn't get their profits until later in the school year. They wanted their profits up front, and that's exactly what our contract with Coke provides."

Under the Coke contract, each elementary school in the district now gets $3,000 a year, each middle school gets $15,000 and the high schools receive $25,000. That's about double what each school was earning before through individual soda vending contracts.

But there's some fine print. In a letter written to school principals last fall, Bushey wrote that not enough soda and other Coke products were being sold to earn the big dollars initially promised in the contract.

In fact, the district had to sell at least 70,000 cases of Coke products during one of the first three years of the contract, the letter explained. If it did not, the payments from Coke for the following seven years of the contract would be significantly reduced. The letter, signed by Bushey as "the Coke Dude," encouraged principals to make sure the vending machines were easily accessible and that "if soda products are not allowed in classes, consider allowing juices, teas and waters."

Bushey now says the district may well not hit the 70,000 case goal, but he nonetheless has no regrets about the Coke contract. "People are calling me from all over the country--fire departments and and park departments and municipal governments along with all the other schools," he said. "They're all interested in doing what we've done."

1999 The Washington Post Company

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