ISU evaluates exclusive Coca-Cola contract

Jodi Mace

In the early stages of evaluating whether to accept an exclusive contract with Coca-Cola, Iowa State officials are looking at the trade-off between increased profits and less variety in soft drinks, said Warren Madden, vice president for Business and Finance.

Exclusive contracts, such as the University of Iowa’s five-year contract with Coca-Cola, are being studied, Madden said.

ISU also plans to garner opinions on campus and use the results to evaluate what an exclusive contract would be worth, he said.

“The more exclusive you get with soft drink companies, the more limitations you have,” he said. “You have to accept those limitations if you get into a contract like the University of Iowa.”

U of I is guaranteed $400,000 this year from revenue sharing, no matter how much Coca-Cola sells on campus, plus a percentage of vending machine sales, said U of I Business Manager Mike Finnegan.

“If Iowa State is considering an exclusive contract, they should consider their options,” he said. “Get bids from different companies and compare the differences.”

Madden said ISU officials are looking at the U of I profit margins.

“The question we are asking ourselves is if Iowa State is willing to accept the exclusive contract for the additional amount of money,” Madden said. “With a non-exclusive contract, we are not getting the large one-time payment like the University of Iowa.”

Vending sales have generally been increasing at ISU this year, Madden said. Marketing and promotion have contributed to this increase, as well as the volume growth of students on campus, he said.

If ISU were to accept an exclusive contract with Coca-Cola, vending machine locations would probably not change at ISU, Madden said. Instead, Coke would offer more variety through different sizes of bottles and different kinds of beverages like fruit drinks and bottled water, he said.

Coke vending machine money is used in a variety of ways, Madden said. Once operating and distributing costs have been covered, money is given to student and departmental clubs on campus, he said.

“We figure that the students are the ones buying the beverages,” Madden said. “This is the best way that ISU can give the money back to them for reuse.”

Madden said he did not know how an exclusive contract with Coca-Cola would affect soft drink consumption on campus.

ISU officials have to take people’s opinions into account, answer budgeting questions and reevaluate their current contracts before they make a decision whether to go to an exclusive contract with Coca-Cola, Madden said.

Coca-Cola already has a vending contract on the ISU campus and is the main soft drink provider at the Memorial Union and the Iowa State Center, Madden said. The Memorial Union and the Iowa State Center have separate five-year contracts with Coke, and both are roughly halfway through the contract. Madden said neither of these contracts is exclusive.

“If we went to an exclusive contract, what is served in vending machines on campus and at different venues like the Memorial Union would be governed by Coca-Cola,” Madden said. “Coke would say what we can and cannot have.”