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Has deal lost its fizz?
By KENT FISCHER
© St. Petersburg Times, Two years after the Pasco County School District sold Pepsi the exclusive rights to market its beverages in district vending machines and cafeterias, sales are booming and the district has earned an estimated $2-million in cash and freebies. Sales are so brisk that local nutritionists and one School Board member are now questioning whether the school district has gone too far in allowing kids access to the sugary drinks. And one of the nation's leading beverage contract brokers, however, says Pasco isn't getting enough money out of its deal with Pepsi. The number of vending machines on campuses has increased from 180 to 250 and kids report teachers allowing them to sip the drinks in class. The result? Vending machine sales at the district's 17 middle and high schools topped 30,600 cases last school year, a 31 percent increase in one year. For every dollar their machines take in, schools get to keep up to 35 cents. It can lead to big bucks. Pasco's middle and high schools collected a combined $138,122 in commissions between March 2000 and March 2001. Take Pine View Middle School, for example. While most middle schools in the county typically sell several hundred cases of Pepsi products each year, Pine View's sales hit 1,687 cases this past school year. Principal David Estabrook says one reason could be the location of four new vending machines in the boys and girls locker rooms. Thirsty kids coming in from gym class are now buying a 20-ounce sport drink for $1 before heading off to their next class, he said. School Board member Marge Whaley, a nurse, said she was surprised to learn of the burgeoning sales. She added that she didn't like the idea of putting more machines into areas like locker rooms. "That's not a good thing," Whaley said. "I did know that we were making a lot of money, but I am concerned about the drinks." Sales in Pasco have grown substantially in each of the first two years of the contract. During the first year, the district sold 43,336 cases of Pepsi products. During the second year, which just ended, sales hit 52,838 cases, a 22 percent increase. "Yes, there's a big push on consumption, but that wasn't the intent" when the district signed the contract, said Chip Wichmanowski, the district administrator who oversees it. But schools since have realized that more sales mean fatter commission checks. Pine View Middle earned $40,000 in commissions last school year, more than twice that of any other middle school in the county. Pine View had no machines available to kids before the Pepsi contract, Estabrook said. Dan DeRose runs DD Marketing, one of the nation's leading brokers of exclusive beverage contracts. He has negotiated multimillion-dollar deals across the country and says that schools that aren't getting at least $25 per student haven't maximized their profits. During the first two years of its contract, Pasco has earned roughly $15 in cash per student. "This is what we do," DeRose said. "We know the business inside and out. The potential revenue is so substantial that schools would be remiss not to go after it." Wichmanowski, the district's point man on its Pepsi contract, said he's happy with the district's deal. When the pending merger between Pepsi and Gatorade's manufacturer is finished, sales could continue to grow because the district then could sell the popular sport drink. When the School Board approved the Pepsi contract in 1998, it did so with the understanding that soda sales would be limited, by timers, to after school and during extra-curricular activities. Several students, however, said they could get soda all day during the regular school year. Wright said kids at Hudson High have been able to circumvent the timers by unplugging and replugging the machines.
 © 2006 • All Rights Reserved • St. Petersburg Times
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