In an article in the Buffalo News Business Today:
Pepsi. No Coke. After a 94-year partnership, Delaware North Cos. has ended its contracts with Coca-Cola Co. in favor of a new multi-year deal with PepsiCo. The Buffalo-headquartered global food service and hospitality giant will now exclusively sell Pepsi products at its many park, hotel, casino, resort and airport venues, it announced Thursday. “It was a very difficult and complex decision because of all its moving parts and pieces,” said Michael Reinert, vice president of supply management at Delaware North. “And ultimately it does impact our guests and clients.” The transition from Coke to Pepsi products at Delaware North facilities began the third week of March and is expected to be completed by summer’s end. The deal will not affect Delaware North’s more than 40 Sportservice sporting venue locations, which have private contracts with its beverage companies. Among them are HSBC Arena, which will maintain its partnership with locally owned and operated Coca-Cola Bottling Co. of Buffalo. Still, the local Coke company will lose the rest of its Delaware North contracts. “We’ve had a great relationship with Delaware North over the years,” said Peter Benzino, vice president and general manager of Coca-Cola Bottling Co. of Buffalo. “Nobody likes to lose business, but it was a national decision. Negotiations were driven by Delaware North’s outreach in the rest of the country.” Negotiations, handled by parent company Coca-Cola North America, have been ongoing for months, with word of the transition reaching Coca- Cola Bottling Co. of Buffalo in January. “We knew it was coming. It was no big surprise,” Benzino said. The local company, which employs 150 people at its Town of Tonawanda facility, also has contracts with Coca-Cola Field, which hosts the Buffalo Bisons minor league baseball team. Also unaffected is Boston’s TD Banknorth Garden, home to the Boston Bruins NHL team, which is also owned by Delaware North Chairman and Chief Executive Officer Jeremy Jacobs, Sr. Reinert said a number of factors influenced the decision to switch from Coke to Pepsi, including the beverage vendors’ pricing, service, marketing capabilities, commitment to environmental sustainability and brand portfolio. “Pricing over the entire term of the contract is important, especially when you consider the inflationary pressure experienced in the last year,” Reinert said. The deal makes Delaware North one of PepsiCo’s largest travel foodservice accounts. “We’ve been looking at Delaware North for a long time,” said Jean Jakoby, vice president of Business Development at PepsiCo Foodservice. “It operates in very distinct channels of business into which we wanted to expand our presence and our brand portfolio.” The contracts give PepsiCo products an exclusive arena in more than 200 venues nationwide. “[Considering] the number of locations, you can imagine what kind of volume there would be in a year,” said Glen White, Delaware North spokesman. Though the foodservice sector makes up just a small percentage of both companies’ business, Pepsi and Coca-Cola have been fighting to expand their foodservice presence. “It’s obviously very important for both companies to grow that segment of their business,” said Erin Ashley Smith, a securities analyst specializing in consumer staples for Argus Research Co. “It’s a big positive for Pepsi to get in there after 94 years with Coke.” The deal encompasses all of Pepsi’s beverage products, including industry leaders Mountain Dew, Gatorade and Tropicana. It also includes the company’s line of Frito-Lay snacks and Quaker foods. Delaware North already had relationships with PepsiCo at many locations because of its snack line offering, something Smith speculates could have given the company more negotiating power.
This a big loss for Coca-Cola. However what I have noticed in all of my travels is that the northern states normally like Pepsi better while the southern states like Coca-Cola more. This gain can be a big deal for Pepsi especially after the possibility of losing the Northwest Airlines contract. Also this is a big loss for Coca-Cola cause they have had this contract for 94 years. I think that even though this is a blow to Coca-Cola however I dont think it will hurt them. They just need to continue to pursue the contracts they have and also pursue possible new contracts.
