Alarmed by a dramatic increase in childhood weight problems, pediatricians are urging schools to stop promoting soda consumption. Will Hillsborough's $50-million deal with Pepsi pay off in the long run?
By LOGAN MABE
Published August 31, 2003
When Hillsborough County students get thirsty, they have lots of options. Scrolling their dollars into vending machines at most of the county's 62 middle and high schools on a given afternoon, they can push the button for Pepsi, Diet Pepsi, Gatorade, Lipton Brisk, Aquafina - in short, they can get anything they want, as long as it's sold by Pepsi.
Exclusive vending deals are nothing new at schools, but this one is a monster. As of June 3, the Pepsi Bottling Group is paying an estimated $50-million over 12 years for the sole right to sell soda and other youth-oriented drinks in the nation's 10th-largest school district.
That averages out to $22,645 every day of every school year until 2015. For a cash-strapped school system and a soft drink giant with an eye on territorial expansion and long-term product branding, it was a deal that made perfect sense.
"For Pepsi it's a win-win," said University of South Florida marketing professor Paul Solomon. "The concept is to get consumers at a young age to develop a preference for a beverage. Remember that Pepsi is in a struggle against Coke. And if Pepsi's not there then Coke is going to be there, and Coke has a full array of products also."
But is it a good deal for the kids? The percentage of children nationwide who are overweight or obese has doubled in the last 20 years, to more than 15 percent in both the 6-to-11 and 12-to-19 age brackets, the American Academy of Pediatrics reported this month. Overweight children are more likely to suffer high blood pressure, high cholesterol and type 2 diabetes. They have a 70 percent chance of becoming overweight or obese adults with even greater health risks, according to the surgeon general.
And soda consumption is widely considered part of the problem. "The increase in carbonated beverage intake has been linked to obesity; therefore, the sale of such beverages should not be promoted at school," the AAP report recommended. "Pediatricians are encouraged to work with school administrators and others in the community on ways to decrease the availability of foods and beverages with little nutritional value and to decrease the dependence on vending machines, snack bars, and school stores for school revenue."
Such concerns (and in some cases, the threat of lawsuits) have prompted school districts in New York and Los Angeles to ban soft drink sales on campus. Shorecrest Preparatory School in St. Petersburg recently pulled candy and soda from vending machines used by seventh- and eighth-graders. In Hillsborough County, though, the Pepsi deal has encountered little dissent.
"I don't know if I'm comfortable with having beverages on a school campus," said school board member Jennifer Faliero. "My grandpa Faliero calls it bellywash." But Faliero ultimately voted in favor of the contract, which passed unanimously.
To be fair, board members have had to stomach a lot in recent months, slashing more than $32-million from the district's annual budget because of funding cuts in the Legislature. Kindergarten aides, school psychologists, guidance counselors and afterschool programs all took hits. Faced with a decision that would actually benefit the district financially, the board jumped at the chance.
"I agree that sodas are not the best thing in the world for you, but we have to find every possible resource to educate our children," said board member Candy Olson in a recent interview. "We have an obligation to provide healthy food and we have an obligation to teach about healthy diets, but I don't think the schools have the responsibility of being the food police. And I don't think schools should be expected to turn up their noses at ($4 million a year)."
Not surprisingly, critics of soda and commercial tie-ins with schools are not swayed by Olson's argument. Alex Molnar is a University of Arizona professor who directs a research group called the Commercialism in Education Research Unit. His goal is to keep the schoolhouse from becoming the Homeroom Shopping Network.
"They're only in it for the money," Molnar said of educators who make exclusive deals with soft drink makers. "That $50-million is a tiny drop in the ocean compared to the downstream health costs of obesity and diabetes. The $50-million is not a gift from the bottling company. It's based on the assumption of this product being consumed by students. And given what we know about this product, this places the school district in a position similar to that of a drug dealer. It seems like a violation of their professional duty and public trust."
Attorney and legal activist John Banzhaf is even more blunt. "The argument that's usually made is that, "We know it's not good for the kids, but we need the money!' " said Banzhaf, who teaches law at George Washington University in Washington. "They're prostituting themselves."
While Molnar's mission is to educate the public and policymakers, Banzhaf's approach is more confrontational. He sues people. In 2001 he got McDonald's to pay a $12-million settlement to religious vegetarians dismayed to find out that the franchises' french fries were cooked with beef tallow. He recently engineered a class-action lawsuit against fast food companies on behalf of an overweight Bronx man; that was dismissed.
In the 1960s Banzhaf was one of the first lawyers to target big tobacco. His campaigns got cigarette advertising off radio and television, ended smoking on planes and buses, and have culminated in the recent bans on smoking in public places such as restaurants and airports.
Now he is targeting another vice. Obesity is the new smoking. As for litigation, he sees schools that permit and even profit from the sale of junk food as target-rich environments.
"You can sue not only the school board, but the individual members," he said. "We argue that this is not an act of mere negligence. When you knowingly make a deliberate decision, then we might be able to go after you."
Banzhaf argues that kids today already face an uphill battle staying healthy. Their television programs are littered with ads for Cocoa Puffs and 3-D Doritos. Their chief entertainments involve a soft couch and a nimble joystick thumb. Their parents stock the pantry with endless supplies of microwaveable macaroni and cheese. And on top of that, the people who run their schools have gladly accepted the Pepsi Challenge.
"I look at different areas and ask myself if I can effectively use legal action against something I see as a major societal problem," said Banzhaf. "It seemed that smoking was our No. 1 preventable health problem in the '60s, a time when legal activism didn't exist. Now if you believe the surgeon general's report, obesity is almost as bad as smoking and will overtake it in five to 10 years."
Some findings from that 2001 report:
* The prevalence of excessive weight among adolescents had nearly tripled in the past two decades.
* Risk factors for heart disease, such as high cholesterol and high blood pressure, occur with increased frequency in overweight children and adolescents.
* Type 2 diabetes, previously considered an adult disease, has increased dramatically in children and adolescents. Overweight and obesity are closely linked to type 2 diabetes.
* Health risks aside, some overweight children suffer social discrimination, poor self-esteem and depression.
While a host of reasons were cited for the increase in child obesity (lack of exercise, video games, hours spent on the computer, unhealthy diets), soda pop got got a mention, too.
"Children should be encouraged to drink water and to limit intake of beverages with added sugars, such as soft drinks, fruit juice drinks, and sports drinks," the report said.
For proponents of Pepsi's contract with Hillsborough schools, the argument goes something like this: Kids are going to drink soda one way or another, so why shouldn't the schools get some badly needed revenue?
"I'm a mother whose teenage daughter gave up Coke for lent one year, and believe me it wasn't pretty," said school board member Olson. "When we voted on this, one of our options was to ban (sodas) outright. I guarantee World War III would have broken out if we had done that. Look, when I was in school we had soda machines that were locked up until after school was out. So we just snuck off campus and bought them at the convenience store. If kids want sodas you're not going to stop them from drinking them. And we're providing a whole lot more than soda."
The district, for example, got Pepsi to agree that half of the products offered in school vending machines would be non-carbonated drinks such as 100 percent fruit juice, Lipton iced tea, Gatorade or Aquafina, a bottled water.
In addition, machines selling soda all have timers installed in them so they can't be used until one hour after the last lunch in middle and high schools. Machines selling fruit juice and sports drinks are available during lunch. In elementary schools, vending machines are placed only in teachers' lounges.
These restrictions are what helped convince district student nutrition director Mary Kate Harrison that the contract wasn't all bad.
"We all know that kids come to school and grow up on certain food items that they see at home and parents buy for them," said Harrison, who served on the committee that steered the deal. "In the school setting, we want kids to choose the water and the juice-based drinks as opposed to the other types of items."
It could've been worse. Sarasota County's school district has an exclusive vending agreement with Coca-Cola that is absent many of the concessions Hillsborough got out of Pepsi. Beverly Girard, the director of food and nutrition services there, said she pitched for timers so the machines would be off much of the day. And lost.
"Mary Kate is a longtime friend of mine and neither one of us advocate selling sodas in school," Girard said. "But we both understand the funding realities that our districts are up against, so we work to make sure it's a win-win situation. The school receives funding and we protect the nutritional integrity of our program."
Michael Bookman, chief business officer of Hillsborough schools, understands the "funding realities" as well. He oversaw the committee and staff that began working on the countywide Pepsi deal two years ago.
At the time, individual schools (mostly high schools) made their own deals with bottlers. One contract might have paid 15 percent of sales while another paid 25 percent. Riverview High School, in the southern part of the county, was faring best, bringing in $10,000 to $12,000 in annual beverage commissions.
"We decide we wanted to leverage the buying power of the district to benefit all schools," Bookman said. And that buying power is considerable. Subtracting elementary school students, who have no access to vending machines, the schools can offer Pepsi a captive market of 112,426 students, teachers and staff. That market can only be expected to grow over the term of the contract.
Under the Pepsi deal, every school is to get 40 percent of on-site sales. In addition, all schools will receive annual base payments: $15,000 for high schools, $4,000 for middle schools and $1,000 for elementary schools. On top of that, Pepsi agreed to pay $7.5-million directly to the district: $4-million up front and the rest over the length of the contract.
As Bookman said, "If Pepsi is willing to put $50-million on the table, it's hard to say no."
But a spokesman for Pepsi said, in effect, it wasn't their idea.
"With regard to schools, we don't knock on their doors, they knock on ours," said Kelly McAndrew, public relations director in Somers, N.Y. "We're not out there soliciting business. When they come to us, we're happy to look at their request for proposals."
McAndrew describes these exclusive contracts as "community partnership" that emphasize brand exposure over profitability.
"Do we want the kids to feel good about Pepsi when they come out of high school?" he asked. "Sure we do."