Coke is it, Again

July 26, 2000

Mark Miester

All soda pop might be 99 percent sugar water, but that remaining one percent is enough to divide a nation. Or at least a college campus. "Coke is just much better than Pepsi," opines Alicia Gillentine, Web manager at the A. B. Freeman School of Business and confirmed Coca-Cola devotee.

"A lot of times, I'll bring my own to work. I'll stop at the Boot store, pick up one of those one-liter bottles and just get a cup of ice."

For Gillentine and other diehard Coke fans, the real joy of cola is back. After a seven-year absence, Coca-Cola and its family of beverages returned to the uptown campus last month when the Office of Auxiliary Services signed an agreement with the Louisiana Coca-Cola Bottling Co. to make Coke the exclusive supplier of soft drinks to Tulane.

Back "in" are products such as Coca-Cola Classic, Diet Coke, Sprite, Minute Maid, Powerade and Dasani bottled water; "out" are brands including Pepsi, Diet Pepsi, Mountain Dew and 7 Up. With this move back to campus, Coke hopes to capitalize on the fastest growing segment of its market-water. While Abita Springs Water Co. will still offer coolers and gallon jugs on campus, Coca-Cola plans to sell its Dasani brand bottled water in vending machines.

Like the 1993 agreement that made Pepsi the sole soft drink supplier to Tulane, the new contract gives Coca-Cola a valuable monopoly on campus. Coca-Cola products exclusively will be sold in campus vending machines, retail outlets, dining halls and at catered and athletic events.

"What that means is we're going to have restricted choices," says associate vice president of auxiliary services Rob Hailey, who crafted the deal. "But we said going into this we wanted to determine if we could get fair value for that restriction of choices, and I think we got fair value."

Few issues at Tulane have generated as passionate a response as the Coke-versus-Pepsi debate. While the Pepsi deal earned the university substantial benefits over other proposals, it left a bad taste in the mouths of many.

"Sodexho Marriott tried to serve Pepsi for catered events, and people would call and say, 'Send soup and sandwiches but don't bring us drinks; we'll get our own,'" notes Hailey. Initially, Hailey expected to hammer out a non-exclusive deal that would enable Coke and Pepsi to share Tulane's business. Not sure of the value of an exclusive contract to the bottlers, Hailey requested soft drink proposals based on both exclusive and non-exclusive partnerships. When Hailey saw the numbers, the choice was apparent.

"It's a whole different model if you're doing an exclusive agreement," Hailey says. "Both Coke and Pepsi's responses were much, much, much more lucrative if they were exclusive."

In reviewing the two proposals, Hailey organized a committee representing various areas of the university-athletics, development, student programs, housing and residence life, and the health sciences center-to ensure that each group's concerns were recognized.

In the end, Coke's comprehensive 214-page proposal was clearly the winner. In preparing the report, Coke even sent representatives to campus to sift through garbage cans and gauge the market for Coke by how many cans and bottles had been brought onto campus. In addition to agreements to aggressively recruit on campus, hire two interns from Tulane per year and bring corporate executives to Tulane to speak, Coke pledged annual sponsorship money for university events. So far, the response to the agreement has been overwhelmingly positive.

"I'd say 9-to-1," says Kelly Venable Carroll, assistant director of auxiliary services. "We have run into so many people asking if Coke is back yet. People are excited." "The local Coca-Cola bottling group's market penetration in South Louisiana is the highest of any of their operations in the world," Hailey adds, between sips of a 12-ounce can of Diet Coke. "The flavor of New Orleans is Coke."

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Tulane University, New Orleans, LA 70118 504-865-5000