ASU's contract with The Coca-Cola Company carries the usual stipulations one would expect from a deal with a mega-corporation: Coke will compensate the University about $30 million by the time the contract expires and limit the other types of beverages ASU sells. It also requires the University to encourage community members to purchase Coke products and requires prominent people making an appearance on campus to only consume competing Coke products if "no branding is visible."
These types of contracts incentivize universities to market and sell sugar-sweetened beverages, which pose health risks with consumption, according to a study published in May in the Journal of American College Health. The study found that 124 public universities in America with 20,000 or more students have a unique contract with beverage companies like Coke or Pepsi.
Eva Greenthal, the study's lead author and senior policy associate for the Center for Science in the Public Interest, said research has shown consumption of sugar-sweetened beverages, like Coke, have shown an increased risk of heart disease, type 2 diabetes, dental disease and obesity.
"Universities can play a really essential role in shaping the food environments for their students, faculty and staff and communities to promote healthier choices," Greenthal said.
With under three years left in ASU's contract, Greenthal advises students to "encourage the University to adopt an alternative beverage model or explore improving or ending their contract with Coca-Cola."
The contracts, however, are lucrative for the University.
The two Coca-Cola contracts, a sponsorship agreement, and a vending agreement have provided ASU with $16 million so far, an ASU spokesperson said in an email on July 15. Earnings from the contract with Coke are redirected toward student engagement programs like Changemaker Central, Programing & Activities Board and Fraternity and Sorority Life. It also assists the University with initiatives like building the Coca-Cola sun deck, an event space at the Sun Devil Stadium, the ASU spokesperson said.
The University, the spokesperson added, has increased the number of no or low-calorie beverages it offers on its shelves. And, water fountains are available in all ASU buildings to "encourage Sun Devils to choose water over soda or sweetened beverages," the spokesperson said.
Punam Ohri-Vachaspati, a professor in the College of Health Solutions, says there is no incentive for students to choose water over sugar-sweetened beverages.
"Our students are coming in at a young age of 18 or 19," Ohri-Vachaspati said, making them "still very impressionable" on the dietary habits they make.
Prior to speaking with The State Press, Ohri-Vachaspati checked the Coca-Cola vending machine on her work floor at the Arizona Biomedical Collaborative. Out of the 10 or drinks offered, Ohri-Vachaspati said, only one was a non-sugar-sweetened beverage: DASANI water.
"Given (ASU's) focus on health and wellness, I was hoping to see more of the healthier beverages," Ohri-Vachaspati said.
ASU did not provide information on its previous contracts with beverage companies because documents are discarded five years after contracts end, the ASU spokesperson said on Aug. 10.
UA has a contract with Coca-Cola from 2019 to 2029 worth $33 million. NAU's $15 million contract with Pepsi has a timeline of 2017 to 2032, which Greenthal says is one of the longest pouring rights contracts she's seen.
Laura Coordes, the associate dean of faculty and an associate professor for the Sandra Day O'Connor College of Law who specializes in contract law, said decade-long contracts or longer contracts are often beneficial. They typically don't require constant renegotiations between parties. However, shorter contracts can allow renegotiations that follow any change in "market conditions," Coordes said.
The vending agreement
The vending agreement allows Coke to be the exclusive beverage vending provider to the University with on-campus marketing rights, the contract said.
At the start of the agreement, ASU had 185 Coke vending machines on campus, and now, the University has 116, an ASU spokesperson said in an email on July 15.
The University receives royalties from the beverages sold through Coke's vending machines, which is almost $4.5 million after 10 years.
The sponsorship agreement
The sponsorship agreement makes Coke the exclusive beverage sponsor of the University and gives them access to on and off-campus marketing rights, the contract said.
There are exceptions, as the University can sell unbranded tap water, milk, and coffee. Non-Coke brand drinks can't take up more than 10% of shelf space in campus convenience stores like the P.O.D. market. For each non-Coke drink, ASU must also carry the Coca-Cola equivalent beverage. "For example," the contract reads, "if Lipton is carried, Gold Peak must also be carried."
Ohri-Vachaspati finds the amount of marketing required by the contract to be "aggressive."
Personalities performing or appearing on-campus, including athletes, coaches or musicians, can only consume a "limited" amount of non-Coke drinks. If they do, the product's branding can't be visible.
The contract requires that ASU annually "remind" University members of the Coke agreement and "encourage" them to use Coke beverages for their departments, the contract said.
Each year, ASU receives about $2 million in sponsorship fees from Coke which is about $22 million after 10 years. In the first two years of the COVID-19 pandemic, ASU received two-thirds of their annual sponsorship fee as the contract allowed them to "negotiate payments based on sales volume and athletic event cancellations," the ASU spokesperson said.
In addition to the fee, ASU receives rebates for each case of Coke beverages purchased by the University for concessionaires. Coke will pay ASU about $300,000 each year, resulting in a total of at least $3 million in rebates after 10 years.
Coke provides $18,000 for merchandising items, while an additional $200,000 worth of beverages are donated to the University for "student and faculty special events and student athlete use, but not for resale," the contract said.
The contract allows Coke to use University athletics as a sponsorship opportunity. For instance, on-campus athletic events must use Powerade branded trademarks on cups, coolers, and equipment. ASU must provide Coke with tickets and "hospitality rights" to athletic events for no charge.
The sponsorship contract also states that ASU and Coke must meet annually to develop a plan addressing "recycling needs on the University's campus."
"With lots of universities trying to reduce their environmental impact, having contracts that require them to maximize the sales volume of single-use plastic bottled beverages can interfere with sustainability goals on campus," Greenthal said.
In response, the ASU spokesperson said the University "has a cross-functional committee that oversees SUP usage and waste."
Edited by Grace Copperthite, Wyatt Myskow, Logan Stanley and Piper Hansen.
Jasmine Kabiri is the assignment editor at The State Press, overseeing and editing stories produced by the six digital desks. She has previously worked as a reporter at The Daily Camera and Cronkite News.