School soda issue may come to a head soon

By Dawn Ziegenbalg

September 6, 2000 Web posted at: 9:54 AM EDT (1354 GMT)

WINSTON-SALEM, North Carolina (Winston-Salem Journal) -- Coca-Cola's $3.85 million bid for a five-year, exclusive contract with the Winston-Salem/Forsyth County school system is about $600,000 higher than Pepsi Cola's bid, according to a financial analysis that school officials presented last night.

Pepsi outbid Coke by about $140,000 on a 10-year contract, the analysis showed.

The city-county board of education is expected to vote on a deal as early as Sept. 12. A contract would give the winning company the sole right to sell and market its drinks -- mostly fruit juices, fruit drinks and bottled water -- in school cafeterias, vending machines and concession stands.

Soda cannot be sold to students in elementary or middle school during school hours, and it can be sold to high-school students only after lunch.

Last night, school-board members appeared to be leaning toward a five-year deal.

They said that the school system's adjustments for inflation show that a 10-year bid may not be the most lucrative.

''The second five-year increment is not worth as much as we'd anticipated,'' said Donny Lambeth, the chairman of the school board.

For instance, Coke bid $3.85 million in cash, advertising and donated products for a five-year deal. The bid is actually about $3.48 million, adjusted for inflation, school officials said.

Pepsi bid $3.25 million in cash, advertising, scholarships and donated products. Adjusted for inflation, the bid was $2.95 million. For a 10-year deal, Pepsi bid $8.14 million, or $6.51 million, adjusted for inflation.

Coke bid $8 million, or $6.45 million adjusted for inflation.

The numbers differed from the company's initial proposals, released last month, because school officials adjusted them based on their own sales data and upon allowances for inflation.

So far, the bids appear to be comparable with what other similar-size school systems have received, said Doug Punger, the system's attorney.

''I'm still gathering information . . . but so far, the information I'm getting on the phone looks very much in the ball park,'' he said. ''They (the companies) choose to put their eggs in different baskets, but they're both very competitive.''

For instance, Coke does not specifically earmark money for scholarships, although Pepsi does. But Coke offers the school system a chance to make a larger profit on cafeteria sales.

Most of the drinks sold in Forsyth County schools are sold in the cafeteria, said Kerry Crutchfield, the system's director of finance. The system sells more than 70,000 cases of bottled water, sports drinks, fruit drinks and iced tea each year in its cafeterias.

The contract the system signs will not have any incentive for raising that sales volume, Punger said.

''We're not interested in that,'' he said. ''Some people are (saying) we're trying to push soft drinks on kids. We don't want to go there.''

Among the concerns raised by board members last night was a fear that high schools would lose money. Many high schools have negotiated their own contracts with soft-drink companies. Each school's contract would be honored until it expired, but after that, the school would become part of the systemwide contract.

''There's still a perception among high schools that they will lose some flexibility and control over their money,'' Lambeth said.

Schools would keep their own commissions from vending sales. But school-board members would decide how the bulk of the contract money would be spent.

Superintendent Don Martin has advocated using the money for technology.

Soft-drink companies want an in

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