- ATLANTA (Reuters) - Coca-Cola
Co., under fire from critics who have linked sugar-laced soft drinks to
childhood obesity and other health problems, said on Wednesday it will
begin selling water, juices and other nutritional drinks to students as
part of a makeover of its controversial school marketing strategy.
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- The world's No. 1 soft drink maker also said it will
work to lessen its commercial presence in school cafeterias and hallways
by covering up giant company logos on vending machines and ending exclusivity
contracts with educators.
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- Such contracts prohibited Coke's competitors from selling
their products in certain schools. In return, schools received a larger
share of the profits from Coke's vending machine sales.
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- The practice, however, prompted a backlash from educators
who charged that schools were becoming mere marketing arms of corporate
America.
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- ``We think our products have an appropriate role in schools,
but we just don't think that schools are an appropriate venue for marketing,''
Jeff Dunn, president of Coca-Cola's Americas business unit, told Reuters.
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- Coca-Cola's about-face, which it said resulted from months
of consultations with parents, teachers and administrators, came in the
wake of growing concerns about the nutritional value of soft drinks and
snacks sold in schools.
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- A study published recently in the British medical journal
The Lancet suggested an extra soft drink a day increases the likelihood
of children ending up obese.
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- The U.S. Agriculture Department also has asked Congress
for authority to regulate what foods and beverages could be sold to schoolchildren.
An estimated 200 schools in the United States have contracts with Coca-Cola
and other soft-drink companies giving them exclusive rights to sell their
products.
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- Coca-Cola's main rival, PepsiCo Inc., said it already
was marketing its water, juice and other ``healthy beverages'' in schools.
``We've always offered the schools a choice,'' Pepsi-Cola spokesman Dave
DeCecco said.
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- The Purchase, N.Y.-based company added that it did not
typically require schools to sign exclusivity deals.
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- Coke Bottlers Support Changes
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- Dunn, who noted that Coca-Cola has 50 years experience
''helping'' schools, said the controversy over exclusivity contracts and
the marketing of soft drinks in schools had turned extremely negative in
the past several years.
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- Coca-Cola's bottlers supported the move to end contracts
that had sparked ``cola wars'' in school districts across the nation, he
added.
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- The changes would also allow schools to limit the sale
of soft drinks at certain times during the day, Dunn said. New drink products
will probably be in Coke's 100,000 school vending machines by September.
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- Analysts said it was premature to gauge the impact of
the marketing change on Coca-Cola's sales, but they noted that schools
represent a small percentage of the company's unit case volumes in the
United States.
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- Credit Suisse First Boston analyst Skip Carpenter said
the move could end up enhancing Coca-Cola's business, which is expanding
from soft drinks into health, nutritional and sports beverages.
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- ``They recognize that other beverage categories are seeing
greater growth and there is a consumer preference change, especially among
the youth,'' said Carpenter, who added that the move also reflected Coke's
desire to improve relationships with consumers, regulators and government
officials.
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- Coca-Cola recently embarked on partnerships with consumer
products giant Procter & Gamble Co. to market snack foods and fruit
juices and with Swiss food giant Nestle SA
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- for tea-based drinks and other beverages.
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- Shares of Coca-Cola were down $2.47, or more than 5 percent,
at $46.28 in afternoon trade on the New York Stock Exchange, while PepsiCo
dropped 49 cents to $44.36 and P shed $1.18 to $66.96.
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- Shares of Nestle dipped 2.5 percent to close at 3,500
Swiss francs on the Swiss Exchange.
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