In July 1998, the University of Saskatchewan (U of S) entered into a 10-year agreement for Coca-Cola Bottling Ltd. to be the exclusive supplier of cold beverages (excluding dairy and alcohol products) on campus. The decision was made by the Board of Governors after consultation with the university community and a comprehensive review of proposals from two leading cold beverage suppliers.
The agreement generated net revenues of about $200,000 per year, which were allocated by the Board of Governors to support student services. Benefits for students were central to the decision to enter into a long-term sponsorship agreement.
The original agreement, which expired June 30, 2008, was tied to sales volumes which were not achieved over the 10-year period of the contract. As a result, the provisions of the contract called for the contract to be extended to June 30, 2010.
With the two-year extension ending in June 2010, the U of S Cold Beverage Steering Committee (CBSC) is interested in hearing from the campus community to determine next steps. The CBSC is a committee with broad representation from across the U of S campus that acts as an advisory board to senior administration on issues relating to the financial and operational implications of the original, and any future, agreement on cold beverage exclusivity. Your viewpoint is important and will assist the CBSC in providing a recommendation to the Board of Governors which will in turn make a decision on future cold beverage agreements at the U of S.
To ensure the campus community has sufficient time to comment, the university can temporarily extend the current cold beverage agreement to ensure cold beverages continue to be offered on campus during the consultation process. For the future, in order for the university to continue offering cold beverages on campus, both through food outlets and vending machines, there are two viable options, which are outlined below, along with expected outcomes.
|VIABLE OPTIONS:||Ability of colleges and units to make individual arrangements with suppliers||Access to sponsorship funds from the supplier||Variety of cold beverage options on campus||Effect on the retail price of cold beverages on campus||Ability to influence provisions in the contract benefitting the university|
|Pursue a new exclusive agreement with one major cold beverage supplier through a competitive bid process||None||Maximum availablity||Limited choice / variety||Static, consistent retail prices||Maximum ability|
|Pursue agreements with two cold beverage suppliers through a competitive bid process||None||Limited Availablity||Maximum choice / variety||Unknown||Limited ability|
Are cold beverage agreements common at other universities?
A 2009 survey conducted by the U of S of 16 other universities in North America revealed that each had some type of cold beverage agreement and most agreements were exclusive.
How does the current sponsorship agreement influence the sale of beverages on campus?
The agreement made Coca-Cola Bottling Ltd. the exclusive supplier of cold beverages (excluding dairy and alcohol) on the U of S campus. This agreement extended to university functions where cold beverages are served. Coca-Cola also received exclusive access to all advertising opportunities for cold beverages in campus publications.
When does the current agreement expire?
The original agreement expired on June 30, 2008. However, because sales targets as set out in the contract were not achieved, a provision in the agreement called for a two-year extension, meaning that the agreement actually ends on June 30, 2010. The university can temporarily extend the current cold beverage agreement to ensure cold beverages continue to be offered on campus during the campus consultation process.
Will the university simply renew the agreement with Coca-Cola?
While the university can temporarily extend the current cold beverage agreement to ensure cold beverages continue to be offered on campus during the campus consultation process, the current agreement will not simply be renewed. The university is committed to ensuring fair treatment of all potential suppliers through a competitive bidding process. However, before making any such decision, the university wants to hear from students, faculty and staff. Your viewpoint is important and will assist the Board of Governors in making a decision on future cold beverage agreements at the U of S.
Does the U of S need a sponsorship agreement for cold beverages?
As a publicly funded institution, the U of S needs to find innovative ways to complement funding from the public sector. A sponsorship agreement for cold beverages is one way for the university to diversify revenues to further enhance the student experience.
What are the considerations of any new agreement?
Before any decisions are made, several factors must be considered including the views of the campus community, product choices, sustainability implications (both environmental and social), and potential contract revenues and benefits.
Does the university need an agreement at all?
The university needs some type of agreement, but the agreement does not necessarily need to be exclusive. Not having any agreement in place could result in the elimination of cold beverages being available through vending machines on campus or might require colleges and unit to coordinate individual vending arrangements with suppliers. In addition, without an agreement, an alternate revenue stream dedicated to the student experience would be lost.
Visit our website at www.usask.ca/coldbeverage or call Cold Beverage Steering Committee co-chairs Gwen Toole (966-6711) or Jim Traves (966-1863) to speak to them on the phone or arrange a meeting.