The Coke Machine - Michael Blanding [45]
But Domac wasn’t just the school’s health teacher. She was also the leader for a school “peace and justice” club. After she told the students what she had learned, some formed a new group, called the Public Health Advocacy Club, to investigate. What they found went far beyond their high school. As they picked apart the contract, they found that high schools across the country had adopted similar contracts with similarly restrictive beverage choices. Eventually that simple question asked by that one high school student would grow into a national movement combating soda for its role in the epidemic of childhood obesity. After all, the increase in consumption of sugar-filled soft drinks over the last three decades of the twentieth century wasn’t a happy accident for Coke; it was a deliberate strategy. And schools were right at the center of it.
By the late 1990s, Coke had hit a wall. Despite executives’ push for ubiquity, the company was running into the inevitable fact that the market for soft drinks in America was beginning to be saturated. Beverage analysts began to wonder aloud whether Coca-Cola would be able to continue to expand in its home country. Now with the unraveling of the bottling scheme and sales starting to lag, the company redoubled its efforts to find whatever new markets it could—and found a captive one in schools that could not only ensure a steady source of new sales but also inspire the early brand loyalty that was so important.
In fact, the soda companies, led by Coke, had been slowly pushing open the door to school contracts for decades. In the 1960s and 1970s, sales of soda and other food of “minimal nutritional value” were strictly regulated during school hours. In the 1980s, the National Soft Drink Association fought back, suing the federal government on the grounds that the regulations were “arbitrary, capricious, and an abuse of discretion.” Though they lost in district court, the soda companies won on appeal when the court ruled the United States Department of Agriculture could restrict vending machine sales only during lunch hour. The USDA reluctantly revised its rulings, which went without challenge for more than a decade. When Vermont senator Patrick Leahy tried to bar soda machines again in 1994, Coke leaped to action with a letter-writing campaign that enlisted school principals, teachers, and coaches to complain about lost revenue. Unsuccessful in his efforts, a frustrated Senator Leahy complained that “the company puts profit ahead of children’s health. . . . If Coke wins, children lose.”
With the door now ajar to selling soda in schools, however, Coke pushed it open even further with a new strategy to win big in the hallways. So-called pouring-rights contracts began as agreements by soda companies to sell their products in fast-food restaurants, such as Coke in McDonald’s and Pepsi in Burger King. Sometime in the early 1990s, they began to expand into sports stadiums and state fairgrounds, gaining exclusive access to sell only their own brand’s products in exchange for a premium paid to the facility.
Based on this model, the first school contracts followed with little fanfare: Woodland Hills, Pennsylvania, for example, signed a ten-year contract with Coke in 1994 for twenty-five Coke machines in exchange for $30,000 up front and commissions on further sales. Sam Barlow High School in Gresham, Oregon, signed a contract with Coke in 1995 and received four scoreboards valued at $27,000.
For schools hamstrung by budget cuts, the contracts were a godsend, promising easy money for big purchases they couldn’t squeeze into their yearly numbers. After