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Pepsi contract extended

Shortfall in sales could mean shortfall in funding

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Students who enjoy guzzling back cans of calorie-infused sugar-water should increase their intake in the name of school spirit.

Although the University of Calgary is preparing to accept bids for a new cold-beverage exclusivity contract, the current 10-year contract held by Pepsi has been extended from its original expiry date of September 2007 until at least December 2007.

Ancillary Services director Peter Fraser explained the reasoning behind the extension.

"When we did this contract 10 years ago, it was semi-novel," he said. "Nobody knew exactly what to expect, but what was inherent was that it had a double evaluation. You had a term of X number of years, but within those years you had to meet stated volume requirements."

The number of Pepsi products the university is required to sell, as well as the amount of money the university receives in exchange for Pepsi's cold-beverage monopoly is kept strictly confidential. Fraser noted the confidentiality of the agreement is a decision enforced by Pepsi.

"Simply, the company doesn't want their numbers exposed to their competitors," he said. "It's no different than people bargaining different things. They don't want to give an advantage to their competition."

While the details of similar contracts at universities across Canada have also been kept confidential, there have been a few instances where the details became available to the public.

At the University of British Columbia, the Ubyssey student newspaper reported the university received $8.4 million for their 10-year exclusivity contract with Coca-Cola. The contract, signed in 1995, was the first of its kind among Canadian universities.

Although the contract was set to expire in 2005, UBC did not meet their sales quota, subjecting them to a two-year extension of the contract with no continued payments from the cola giant.

Ian Pattillo, vice-president external for the Alma Mater Society, UBC's student government, noted that before the extension was implemented, the university was given the option of re-negotiating the contract for another ten years, which they chose not to do.

The AMS was at the bargaining table when the contract was signed in 1995; however, they have chosen not to be involved in any discussions of a renewal once the penalty period is up at the end of the year.

"We have a resolution that we won't be getting into another one of those arrangements," said Patillo.

The Students' Union was not involved in the process when the U of C signed the Pepsi contract in 1997. SU VP operations and finance Cody Wagner stressed the SU will not take a back-seat when a new contract is signed.

"This time we've asked to be in the negotiations right off the bat," he said. "We're definitely included in this phase right now. Based on how things go right now, that will determine whether we go with the university."

Fraser confirmed the importance of including the SU in the process.

"[The SU] wants to be respected," he said. "They want to be involved, they want a fair share, and that pledge has already been made to them."

Wagner noted a recent evaluation estimated that 37 per cent of the volume of Pepsi products sold on campus comes from the SU-operated MacEwan Student Centre. He stressed the SU's decision to sign a new contract with the university will be dependent upon the share of money they receive in relation to the volume of sales that come from MSC.

"We want to make sure we are getting a good deal for the students," he said.

While the University of Alberta's SU is a third-party in their current exclusivity contract with Coca-Cola, U of A SU president Samantha Power explained the SU has chosen to leave the decision of contract renewal up to the students.

"The SU has put forward the renewal for a plebiscite in the next election," she said.

In response to the plebiscite, Coke voluntarily released the contract's full details to the SU for any U of A student with a valid ID number to view.

Although a number of UBC student groups have raised concerns about the treatment of Coke's employees at bottling plants in Columbia, Pattillo noted those allegations have not been proven, and therefore, are not the reason the AMS has decided not to renew their portion of the contract. Rather, he stressed the decision was based on the contract's infringement on consumers' right to choose.

"It's not right for the university to make a decision on behalf of students and staff and to impose an inconvenience," he said.

Pattillo admitted that by choosing not to renew, the AMS is losing a considerable amount of money. However, he also noted the AMS has already had to adjust their budget after losing $300,000 last year due to the penalty period.

Power explained the concerns U of A students have expressed regarding their exclusivity contract.

"The two prominent issues are the ethical considerations, which we have had several groups on campus voice their concerns about, and the students' need for the scholarships that are provided," she said. "But, the ethical issues are becoming more apparent."

Fraser noted scholarships are among the list of priorities supported by money from U of C's contract with Pepsi. The money has also been used to support the recent expansion of MSC, as well as Dinos athletic teams.

"Students benefit over and over from this," said Fraser.

While Fraser would not make any promises, he remains confident the university will sell the remaining quota of product outlined in the contract by the end of this year. He would not, however, reveal how many products still need to be sold to meet the quota.

"I can confirm that it is our intent to go out in the next couple of months with a comprehensive [Request for Proposal] to reach a new cold-vendor exclusivity contract," he said. "And that the contract has not been extended beyond the velocity arrangements that we expect to reach very close to the end of the year. We expect to reach the velocity by the end of 2007. Our process right now is based on issuing a new agreement to take place Jan. 1, 2008."

Fraser stressed the importance of the evaluation process before a new contract is signed.

"That's where there is transparency within confidentiality," he said.

Although representatives from the SU will be present during the evaluation process, Fraser confirmed no students-at-large will be invited to participate.

Currently, the SU has not discussed any methods for gauging student opinion of the contract.

A representative from PepsiCo Inc. did not return phone calls in the week before press time.

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Comments

i love pepsi soooo much it is so the best drink ever made..thats all i buy i am drinking it right now!