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Coke alters school plans
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March 14, 2001: 10:16 a.m. ET
Responding to complaints, soft drink maker to sell nutritional drinks in schools
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NEW YORK (CNNfn) - Coca-Cola Co., the No. 1 U.S. soft drink maker, plans to scale back its aggressive marketing strategy in schools, citing frequent complaints about commercialism and targeting of children through exclusive soft-drink deals with schools.
Jeffrey Dunn, president of Coca-Cola Americas, is expected to reveal the Atlanta-based company's plan to eliminate some exclusive contracts with schools and begin offering more nutritional, vitamin-enhanced juice-based drinks and water in vending machines.
The company also plans to replace advertising on vending machines with non-commercial graphics featuring students engaged in sports and other physical activity, as schools have requested.
Coke (KO: Research, Estimates) also said it will limit the hours and places in schools where soft drinks are sold.
Schools, which reap a portion of the profits from these exclusive marketing deals, still will receive a portion of beverage sales, but without the exclusivity, Coke said.
"The classroom is a clean zone, and we've always been committed to promoting a learning environment that does not become commercialized," Dunn stated. "Now we're prepared to take this commitment a step further, reducing our commercial presence in other areas of the school environment as well."
The move comes less than a month after Coke and Procter & Gamble (PG: Research, Estimates) said they agreed to develop and sell fruit drinks and snacks together in a new $4 billion venture.
Coke, which also produces Minute Maid, Five-Alive and Fruitopia beverages, will contribute those brands to the new venture while P&G will contribute its Sunny Delight and Pringles products.
Under current practices, schools let soft drink makers install vending machines in schools in exchange for a share of the sales. Schools get a bigger share if they agree to distribute only Coke. About 240 schools in 31 states have such exclusive arrangements, the Center for Commercial-Free Public Education told the New York Times in Wednesday's edition.
The center dismissed the changes as a way for Coke to preserve its ability to target young consumers.
"This is not about education," Andrew Hagelshaw, the center's executive director, told the Times. "Coke is making a business decision to try to stay in schools. They've seen the writing on the wall, they know that exclusive contracts are on their way out, and they're doing everything they can to stay in the schools."
Coke rival PepsiCo (PEP: Research, Estimates) said it plans similar changes.
Coke shares fell $1.23 to $47.52 shortly after the open Wednesday on the New York Stock Exchange, as the Dow Jones industrial average slipped below 10,000 for the first time since last October. 
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