Pear in Mind: A Blog in the Public Interest

Many universities grant The Coca-Cola Company or PepsiCo exclusive rights to sell and market beverages on their campuses in exchange for sponsorships, cash incentives, and other payments. The specifics of these so-called “pouring rights” contracts have been kept hidden until a recent study, published in the Journal of American College Health, revealed the ways beverage companies incentivize universities to market and sell beverages, particularly ones packed with sugar. 

Researchers from the Center for Science in the Public Interest and Johns Hopkins University examined 131 contracts between beverage companies and the largest public U.S. universities (i.e., all public universities with 20,000 or more students) that were active in 2018 or 2019. To obtain this sample, researchers submitted public records requests to 143 universities and found that virtually all of them (87 percent) had a pouring rights contract with Coca-Cola or PepsiCo. In fact, this is likely an underestimate, as some universities declined to produce their contracts, citing loopholes in their states’ public records laws.

Findings revealed that 95 percent of the contracts examined included at least one provision tying payments to sales volume. That means the universities make more money as they sell more beverages. The most common incentive type was commissions, found in 79 percent of contracts, which grant the university a percentage of the revenue from each product sale.

In addition to commissions, other popular volume incentives included rebates, which grant the university a dollar amount per case or gallon of product purchased from the company; volume incentives, which grant the university a cash payment, rebate, or other financial benefit once a minimum amount of product is sold; and volume minimums, which require the university to sell a minimum amount of product to avert a penalty. Not only were incentives nearly ubiquitous across the contracts, but 15 percent of contracts provided higher commissions or rebates for carbonated soft drinks compared to bottled water.

Analysis of a subset of contracts revealed that universities can earn hundreds of thousands of dollars (some even millions) per year from volume-based payments stipulated in pouring rights contracts. The question facing universities now is, at what cost?

There are several reasons to be concerned that public universities are making themselves corporate partners in the sales and marketing of unhealthy beverages. Campus food environments hold important influence over food access, eating habits, and weight-related behaviors of millions of college-aged youths. Considering that sugar-sweetened beverages are the leading source of added sugars in the U.S. diet and linked to higher rates of diet-related chronic diseases, including diabetes and heart disease, universities should be doing everything they can to encourage healthier beverage consumption. This means avoiding financial relationships that require them to push sugary drinks onto students.

There is a path forward: some universities have broken the mold of partnering with Big Soda, including the University of Vermont and Humboldt State University. Other universities have amended their contracts to support a healthier campus beverage environment. In 2018, University of British Columbia modified its contract with Coca-Cola, eliminating promotion of sugar-sweetened beverages, and setting nutrition standards for beverages offered on campus.

Universities are responsible for setting students up for future success. At the very least, they should not be actively undermining students’ health in exchange for cash payments from Big Soda.

If you want to learn more about pouring rights and how to reform them on your campus, check out our new toolkit for advocates.

Tags

Topics