Single beverage contract for campus goes to Pepsi

For the first time, Iowa State has negotiated a single fountain and bottled beverage contract for ISU Dining and the athletics department -- essentially a university contract. Pepsi Cola outbid Coca Cola for the five-year contract that takes effect July 1. It includes a two-year renewal option.

The contract covers every facility on campus, including the Iowa State Center, Veenker golf course, Memorial Union, athletics venues and every ISU Dining café, convenience store, dining center, vending machine and catered event. As with most beverage contracts, it allows a limited lineup of competing brand beverages in campus convenience stores.

Athletics' most recent contract was with Pepsi, but ISU Dining has had a single contract with Coca Cola since 2012 and, at procurement services' request, extended it two years to align with the expiration of athletics' beverage contract. That put the university in a position to seek bids for a single contract.

ISU Dining assistant director Karen Rodekamp said the switchover will begin this week, with Coca Cola removing vending machines from campus buildings to make room for the Pepsi vending machines. Employees should be able to use their ISU Card at more vending machines once it's complete. She estimated the transition, including fountain machines and bottled products in coolers, would take about three weeks.

Acknowledging that brand loyalty is strong among beverage shoppers, Rodekamp also noted that students and employees will have many choices on campus.

"What we have learned is that every beverage vendor offers plenty of product variety. We will use nearly all of Pepsi's lineup and add new products as they introduce them," she said.

High volume is the key

Procurement agent Dustin Mohr said it's efficient and financially smart to seek a single beverage contract for the whole campus. It's also a directive from the state Board of Regents to streamline contracts and save money. The higher volume of one contract gives the university added leverage in negotiating funds and merchandise the vendor provides to campus, he said. The key to negotiating this first beverage contract was to make sure both athletics and ISU Dining were being served and would emerge as strong -- or stronger -- financially. Both are self-funded units that receive no state funding support.

He estimates the new contract will save the two units $1.1 million over five years from what they pay now for their beverage contracts. Additionally, the volume-based fees Pepsi returns to each are more generous -- up to $500,000 annually for ISU Dining, up to $225,000 annually for athletics. Those funds are folded into each program's operating budget. A normal part of beverage contracts, Pepsi also will provide marketing funds for product promotions, discounts and giveaways and a free product allowance. Rodekamp said ISU Dining uses that allowance to provide beverages to several dozen student organizations each year for their events or fundraisers.

The Pepsi lineup

In addition to Pepsi's well-known soda pop beverages -- Pepsi, Mountain Dew, Sierra Mist and Mug root beer -- and its Aquafina bottled water, the company offers brands such as Starbucks ice coffee, Lipton teas, Gatorade, Dole lemonade, Life Wtr, Tropicana and Naked juices, Bubly and Kevita sparkling waters, Bang and Rockstar energy drinks, and Muscle milk.

A place for Coca Cola

Rodekamp said bottled Coca Cola products still will be sold in campus convenience stores, but not in vending or fountain machines. The contract allows for five options of competitors' 20-ounce bottled carbonated beverages. Coke and Diet Coke are two that will remain on campus, she said, and Dr. Pepper products also will be part of that mix. In addition to the five, Red Bull beverages and Coke's Peace teas will remain in convenience store coolers.