Pepsi exclusivity deal ends next months
Should the U of M re-sign?
TESSA VANDERHART STAFF
The university’s exclusive contract with Pepsi is set to expire on Dec. 31, 2006, but a decision to renegotiate the contract has not yet been announced.
The contract will likely be extended for four to six months, until approximately 25,000 cases of Pepsi — or 600,000 bottles — are sold, said Randall Kinley, executive assistant to the vice-president (administration).
The 10-year contract includes a quota for sales and an undisclosed financial benefit to the university, in return for the exclusive right to distribute “cold beverages” on campus.
“There are a lot of positive spinoffs from the contract — in addition to the obvious monetary ones, there have been a lot of free cases of pop,” said Kinley.
Kinley said the university, in consultation with UMSU, is considering renegotiating the contract for another seven years — “10 years was too long,” he said.
He added that the administration has consulted other soft drink companies about bidding on the contract. “It doesn’t necessarily mean we’re ‘locked in’ with Pepsi for that time,” Kinley said.
UMSU and the Residence Students’ Association Council (RSAC) are signatories to the agreement, and Kinley said the other beneficiaries are the university’s affiliated colleges and Bison sports. A contingency fund has also been set up jointly by the university and UMSU with profits from the agreement’s annual rights fee.
UMSU receives $82,000 from pouring rights, in addition to $5,700 from pouring rights at degrees and $10,000 for the Pepsi student group fund that provides beverages to student events for a total of $97,000 per year, depending on sales, according to UMSU president Garry Sran.
He said that if the university negotiates a new cola contract UMSU council will consider it.
“It’s up to the students to decide, and it’s up to the council to decide,” said Sran.
“Are students satisfied with Pepsi?” he asked.
Angela Plant, Pepsi’s food service accounts manager, said Pepsi has contracts with universities across Canada, including at the University of Winnipeg, U of Calgary, and Brandon University.
“Pepsi and the university are in constant discussions about all things regarding the partnership, so there’s nothing new or different because the contract’s coming to a close,” Plant said.
Even though U of M fell short of its quota, “it’s still a beneficial relationship, of course,” she said.
How much the U of M makes from the contract, as well as other terms like the exact quota, are confidential. Plant said that this is because “everybody’s contract is different [and] those are private.”
The University of British Columbia was the first Canadian university to sign an exclusivity contract with a cola company. When UBC’s contract with Coke expired in 2005, the student newspaper the Ubyssey reported that the university had received $8.4 million to sell 33.6 million cans of Coke, with information obtained in a Freedom of Information request. Because it was the first deal negotiated in Canada, it was based on U.S. universities’ consumption levels. As a result, the contract had to be extended for two years until the consumption quota was reached.
York University in Toronto, the student newspaper Excalibur reported, was offered $7.5 million from Pepsi over 10 years, to fund student organizations and provide stadium upgrades. The York Federation of Students receives approximately $47,500 a year from Pepsi, and the York Graduate Students’ Association, $7,500.
According to its website, the University of Northern Iowa receives $45,000 annually in commissions from its Pepsi contract, signed July 1, 2001.
In October 2005, students at McMaster University voted not to support the university’s Pepsi contract in a referendum. McMaster’s $6 million contract will expire in 2008, and the administration’s newspaper, McMaster Daily News, reported that the administration is considering what to do with the results.
