Utz fights to return to UM's campus Chip maker challenges deal that gives Pepsi, Frito-Lay exclusivity

Food service

January 30, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The latest battle in the Great Cola Wars is being fought over chips -- specifically the ability of Utz Quality Foods Inc. to sell and market snacks at the University of Maryland, College Park.

Hanover, Pa.,-based Utz is challenging a Dec. 17 university contract giving PepsiCo Inc. and its subsidiary, Frito-Lay, nearly exclusive 15-year "pouring rights" to sell beverages and snacks in campus convenience stores, dining halls and vending machines. Utz has also filed a lawsuit in Prince George's County Circuit Court charging the university with interfering with its advertisements by removing Utz signs from campus sports arenas.

"Utz has been kicked off campus, and it's not our fault," Utz says in a double full-page advertisement in yesterday's issue of the Diamondback, the student newspaper. The ad, in which Utz complains of being excluded from contract negotiations, then having signs removed without its knowledge, offers a coupon for a free bag of Utz potato chips redeemable off-campus.

"We've got a real concern about our brand and the image of the brand," said Tom Dempsey, vice president of sales for Utz, which distributes in the mid-Atlantic states. "We want to make sure students, faculty, alumni and staff know we're not out of business. Our not being able to come on campus isn't because we withdrew from the University of Maryland."

The December contract approved by the state's Board of Public Works authorized Pepsi and Frito-Lay to sell products on campus through 2013. In return, Pepsi will pay the university $8 million and $260,000 a year in commissions.

The practice has become a common one, with about 100 campuses or state higher education systems, including Coppin State College and Towson University in Maryland, giving exclusive pouring rights to cola giants Pepsi or Coca-Cola.

"What we sought in our request for proposal was a contract that was comprehensive," said Dr. Charles Sturtz, university vice president for administration. "We previously had separate contracts for a number of the beverage and snack food areas. We looked to put them together, if possible. This contract limits the extent of non-Pepsi and Frito-Lay products."

Utz has advertised with illuminated signs in Cole Field House through a contract with the scoreboard operator since 1990. Utz had no knowledge that the pouring rights granted to PepsiCo also covered competitor Frito-Lay until a campus convenience fTC store manager asked Utz to stop shipping its products, Dempsey said. During a University of Maryland basketball game Jan. 3, company executives noticed that all five Utz illuminated signs had been removed, he said.

The company formally protested to the university's procurement director Jan. 16, asking the university to overturn the contract -- which PepsiCo won against a bid from Coke -- and reopen the bidding. But yesterday, officials said procurement regulations were followed. "There has not been a violation of procurement law," said Jennifer Forrence, an assistant attorney general handling the case for the state. "The focus of the RFP was to find a major beverage vendor who would return significant funds to the university to be used for capital improvements, scholarships and other things related to the university's education mission."

Pub Date: 1/30/98

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