New York City’s comptroller has called for the city to cancel $166 million in deals with Snapple Beverage Group that gave the company the right to sell its drinks in city schools and buildings, saying the city violated standards for public bidding.
Comptroller William Thompson also charged that the five-year deal was improperly negotiated by marketing firm Octagon Corp., which does business with Cadbury Schweppes, Snapple’s parent, and a city official who struck a deal to make Snapple the New York Yankees’ official drink.
At press time, the comptroller had asked that bidding be re-opened to fair competition. He began investigating the deal after competitors complained. Snapple bid $40.2 million for the school distribution deal, the report said. The comptroller has also questioned the $126 million deal for vending in public buildings.
The partnership with the Department of Education, announced in September, was for Snapple to sell juice drinks and bottled water in the city’s 1,200 schools. Distribution was to begin within 30 days. In the second, more lucrative deal, Snapple was to put vending machines in all 6,000 of the city’s public buildings to sell its iced tea, water and Yoo-Hoo chocolate drink. This deal is set to begin Jan. 1, 2004.
Other bids were considered for the school deal but not the public building arrangement. Thompson claimed the deal went way beyond what had been made public, according to news reports.
“We followed the guidelines as set forth by the city,” Steven Jarmon, a spokesperson for Snapple Beverage Group, said. “[The city] told us that there is not a violation here.”
NYC Mayor Michael Bloomberg said at a press conference: “This is the one company that submitted a bid in the city’s interest.” The city expected to generate $1 million in revenues and was guaranteed $60 million in marketing and promotion value. As part of the deal, Snapple was to financially support the schools through commissions on sales from vending and via sponsorships supporting sports and physical education programs. To promote its products, Snapple agreed to sponsor concerts, events and use city-owned media including outdoor, TV and online media, the city said.
The deal replaced a previous system that allowed each school to make its own contracts with companies.
Unilever and PepsiCo have formed a joint venture, Pepsi Lipton International, to expand global distribution and marketing of Lipton ready-to-drink tea.
The 50:50 joint venture will use PepsiCo’s bottling and distribution network to launch Lipton in new markets that are strong Pepsi markets. It will also expand current Lipton markets including Brazil, Spain, Greece, Poland, Czech Republic, Slovakia, Hungary, Albania, Romania, Thailand, Singapore, Vietnam, Australia, Turkey, Egypt and Saudi Arabia.
“We have a strong presence in the developing and emerging markets, yet there is plenty of ‘white space’ to move into,” Patrick Cescau, director of Unilever Foods Division, said in a statement. “These markets are the next in our planned rollout and we see Pepsi as the best partner to help us achieve this.”
Unilever lends its R&D expertise and gives Pepsi a strong global brand to round out its healthy-beverage portfolio. London-based Pepsi Lipton International will primarily sell tea concentrate to franchise bottlers. Lipton’s global sales top $4 billion annually.
PepsiCo and Unilever collaborated 10 years ago on the Pepsi Lipton Tea Partnership, now the leading ready-to-drink tea player in the U.S. and Canada. The new venture fits Unilever’s “Path to Growth” strategy that leverages master brands. Its general manager will report to a board of directors drawn equally from Rotterdam-based Unilever and PepsiCo, Purchase, NY.
Marketing and promotions agency RPMC has entered into an exclusive multi-year partnership with the Recording Academy, producer of the GRAMMY Awards. The Los Angeles-based agency will develop branded promotions to raise awareness for the 46th Annual GRAMMY Awards, set to air on CBS Feb. 8.
Along with the Academy, its sponsors and the media, RPMC will work on sponsorship activation, media marketing, travel promotions and hospitality. The agency will also coordinate sales and distribution of tickets to the show, create awareness for the broadcast and develop travel promotions.
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