California and the West : Pepsi May Be the Real Thing in San Diego : Business: Officials are preparing to give the cola company the contract for vending machines on city property. It would mean millions in revenue for the municipality.
After a high-octane competition between the two carbonated rivals, San Diego is poised to choose Pepsi-Cola over Coca-Cola as the city’s official soft drink.
In the history of the cola wars, the battle for San Diego has been the biggest prize yet.
If the City Council accepts the city manager’s recommendation released Wednesday to name Pepsi, San Diego will become the largest city in the country to give an exclusive contract to one of the cola giants to put its vending machines on municipal property.
For the city, a Pepsi contract would mean big bucks: $1.5 million upfront and $6.6 million to $23.6 million over the 12-year pact.
The exact amount depends on how many machines are installed--Pepsi figures 500 to 2,000--and how many containers of Pepsi and other Pepsi-owned drinks (including Mountain Dew, Lipton Brisk, Mug Root Beer, Aquafina and All-Sports Thirst Quencher) are sold from those machines.
The idea of exclusive soda contracts has meant cash for various California cities, including Fresno, Garden Grove, Sacramento and Huntington Beach (Pepsi, Pepsi, Pepsi, Coke). But San Diego’s size and status as a tourist mecca made it a particularly prized catch.
Coke started strong but ultimately pulled up short: promising only $200,000 upfront and putting a ceiling of $17.3 million on the 12-year total.
The cola competition was encouraged by Mayor Susan Golding. “I think you’re going to find this will be the first of many creative and appropriate partnerships,” said mayoral press secretary Ric Grenell.
Vending machines selling only Pepsi products would be installed in city buildings, community centers, beachfront bathrooms, police stations, libraries and elsewhere. Existing vending machines on public property would be replaced when their contracts expired.
“It’s win-win,” said Deputy City Manager Bruce Herring. “The city gets a nontraditional source of money, and Pepsi gets to associate itself with everything it likes: beaches, parks, bays, everything that is San Diego.”
“San Diego has the youth and active lifestyle that makes it a perfect fit for Pepsi,” said Pepsi spokesman Jeff Brown.
There are limits, of course.
The city would not post any cola signs or billboards under the contract (this is the city that fought, unsuccessfully, the issue of open-air advertising all the way to the U.S. Supreme Court). Nor would police cars post the logo “Drink Pepsi” alongside “To Protect and Serve.”
The city retains authority over where the vending machines will be placed. And the agreement does not cover Qualcomm Stadium, the San Diego Convention Center, the Balboa Park museums or the Torrey Pines Municipal Golf Course.
“The only possible downside [to the contract] may be from hard-core Coke drinkers upset that their favorite drink can’t be found in machines on city property,” said Herring, conceding that he is wed to a Coca-Cola drinker.
Weep not for Coke.
Not only does it remain the leader in the $54-billion-a-year soft-drink market, it has more than a toehold in San Diego. Pepsi may have Sea World, but Coke is a “partner” of the San Diego Zoo and Coca-Cola products are the only soft drinks sold there.
Consider it a trade-off: If you’re being grilled by the homicide squad in San Diego, your choice of soft drink will be limited to Pepsi. If you’re marveling at the pandas, it will be Coke.
