PepsiCo Inc. pays Sac State $480,000 a year plus 18 percent of its campus sales as part of an exclusivity contract signed in 2006. The contract allows exclusive drink marketing access for the company and prevents the sale of any similar products from other providers.
Sac State’s contract lasts 25 years and will account for more than $12 million in school funding.
University Enterprises Incorporated (UEI) is the Sac State auxiliary organization that oversaw the contract.
“The reason why Coke and Pepsi go into these agreements is they want to get students as loyal customers; they are thinking long-term,” said UEI Executive Director Jim Reinhart last year.
One problem of becoming a long-term and loyal customer of a major soda corporation is that the overwhelming majority of their products are considered damaging to human health when consumed regularly. Companies like PepsiCo and Coca-Cola produce a large variety of beverages beside soda – from teas and juices to sports and energy drinks – with many of them being under different brand names like SoBe and Naked Juice. Unfortunately, almost all of the drinks contain large amounts of sugar, or a sugar substitute, both associated with negative health effects.
The contract is not in the students’ best interest because of the health risks posed by the soda company’s products, the way the products are offered and the limits the contract imposes on future students.
A study by the American Diabetes Association found that drinking one sugar-sweetened beverage a day can increase a person’s likelihood for diabetes by 25 percent.
Artificially sweetened diet soda is not the answer, either. According to the National Institute of Health and Medical Research, the risk of diabetes is actually higher with “light” beverages compared with traditional sugar-sweetened drinks.
Both types of drinks present an array of other negative health effects that have led public school systems, hospitals and government agencies around the world to limit or ban their sale.
The university should do more to ensure it is providing a balanced selection of healthy beverages for its students. The current selection has an extremely low ratio of healthy drinks compared to junk drinks. This ratio facilitates a false impression of how often students can safely drink these beverages, which have no nutritional value and do not directly support students’ wellbeing.
Even Good Eats, the Union eatery focused on fresh and homemade style food, has a drink selection that could easily undermine a healthy meal. The smallest fountain cup size they serve is 24 ounces. If you fill that with Pepsi, it would contain 300 calories and 83 grams of sugar. The options outside of fountain drinks include bottled apple juice with 48 grams of sugar, bottled Starbucks coffee with 31 grams of sugar and plain bottled or tap water.
The habits students form as a result of the marketing effects upon them at Sac State can carry beyond campus life.
“If you build brand loyalty, it is likely to last a long time,” said Sac State marketing professor Pingsheng Tong.
Current and future alumni health concerns may be at odds with the school contracting out to a major soda corporation that has some of the most effective marketing strategies in the world.
In the long run, the contract may even be costing students more money overall than what PepsiCo pays toward the school. The average cost of type 2 diabetes over a person’s life is close to $50,000, according to the Caro Research Institute in Massachusetts. Last year, the school awarded more than 5,600 degrees to graduating students. For some perspective, let us say PepsiCo’s on-campus marketing monopoly results in one percent of graduating students who continue to consume sweetened drinks regularly and over a long period of time. If just one quarter of this one percent (14 students) lived with diabetes as a result of the contract, their medical expenses would be a total of $700,000. That amount is almost one and a half times what the school receives for the exclusivity contract.
Because soda companies have been buying high-priced school contracts for around 20 years now, we can safely assume they are finding it worth their while and they are gaining long-term consumers.
Tong said this is a good deal for a major corporation. Marketing access at large universities allows companies to reach that prized market – the youth. Students have a high value for marketers because they are “still forming their buying habits,” Tong said.
One of the most imbalanced aspects of the contract is the 25-year holding – although, now there are 18 years left. If the school or students were interested in changing the contract, it could only be done with the consent of PepsiCo. Future students will be limited in their choices on campus, while a soda company focused on profits will continue to dictate the drink menu for a relatively enormous length of time.
Sac State Campus Dining should reevaluate what kinds of products they would like to bring to campus based on the student’s best direct interest – not the financial interests of the institution. Student health should not be jeopardized for any price.
“Everything isn’t about the best deal you get,” cautioned Sac State business professor Richard Marens in reference to the contract.
With the understanding we have of the negative health effects associated with drinking sodas and other junk drinks, the school should do more to prevent students from falling victim to harmful food and drinks. If the funding is too crucial to turn away, I would at least hope the school would make more of an effort to ensure student well-being and help prevent unhealthy routines.
Fortunately, however suggestive a relationship or ratio may be, no one is forced to drink the Kool-Aid. A reach for water or other unsweetened beverages is not a great effort away – and might send a message to these companies and the university that students are more interested in their health than corporate pay-offs for marketing access.