Pepsi gets 5-year school beverage contract

By Harold Gwin

A school official said the Pepsi deal was better than one offered by Coca-Cola.

YOUNGSTOWN — The city school board has awarded its exclusive beverage contract to Pepsi-Cola Bottling Co. for the next five years.

It’s a deal that could bring the district nearly $220,000 in revenue over that time.

It comes with a $7,000-per-year guaranteed fee for the exclusive right to sell beverages in the city schools as part of that $220,000 in revenue. The guaranteed fee is will below the $40,000 annual fee Pepsi, which has held the beverage contract for more than a decade as PepsiAmericas, was guaranteeing in its previous contract.

“There’s a lot less money out there now,” said Roger King, warehouse manager for the local PepsiAmericas facility, noting that Pepsi’s guaranteed fee in the past contract also included two scholarships and some financial assistance to Youngstown Early College.

Youngstown banned the sale of carbonated soft drinks five years ago, and that has reduced the profits from sales, King said.

Still, the Pepsi proposal was the best of two heard by the school board’s business committee, said Tony DeNiro, assistant superintendent of school business affairs.

The Pepsi plan, based on the sale of 3,850 cases of various water, fruit and energy drinks per year, guarantees the $7,000 annual fee and projects another $184,446 in sales commissions (average just under $37,000 per year) to the district over the five years, bringing total revenue of nearly $220,000 to the district.

Pepsi paid the district a total of $109,628 in fiscal year 2009, which ended June 30, but that included a double $40,000 guarantee fee (the 2008 payment was late), according to William Johnson, district treasurer. Sales commission accounted for nearly $30,000 of the total.

The district can use the guaranteed fee for whatever purpose it wishes. The commission money has historically been divided between the district’s food service department and the individual schools that rely on it as a source of studentactivity funding, DeNiro said. There are no plans to change that practice, he said.

Coca-Cola also made a pitch for the district’s beverage contract, offering a fee totaling $50,000 at the rate of $10,000 per year, but that wasn’t a guaranteed number, according to DeNiro.

It was based on minimum sales of 4,800 cases of drink per year and would go lower if that volume wasn’t reached. By the same token, the guarantee would be higher if sales exceeded the 4,800-case mark, he said.

Coca-Cola predicted total district profit over the five years could reach $242,500 including sales commission.

School officials are confident the 3,850 cases-per-year number can be reached but are less confident that the 4,800 cases would be attainable in light of current economic conditions and the continued decline in the district’s pupil population, DeNiro said.

Youngstown has lost some 3,000 students over the last several years, primarily to charter schools, and is projected to lose 400 more in the new school year. The 2008-09 enrolment stood at about 7,250.

gwin@vindy.com