From the Bloomington Pantagraph:

Cash-thirsty state seeks soft drink deal
By Kurt Erickson

SPRINGFIELD -- Illinois may be launching a soft drink war in its thirst for cash. In a move patterned after a plan already in place in New York City, state officials are seeking formal proposals to hire one company to supply nearly every government building with soft drinks and other beverages.

The results of the competition could put the folks at Coke or Pepsi in control of more than 2,300 vending machines in scores of state buildings, as well as give one company the right to sell its products at the Illinois State Fair and at a handful of state university campuses.

''The intent is for the state to make money,'' said Mike Klemens, spokesman for the Illinois Department of Revenue.

It's not the first time Illinois has considered such a plan. In 2004, Team Services LLC, a Maryland-based consultant, said the state could quench its desire for revenue by selling naming rights to state buildings and state programs.

Thus far, the concept hasn't brought in the kind of money that flooded into New York City after officials there inked a five-year, $166 million deal to make Snapple the official drink of the Big Apple.

In fact, since Gov. Rod Blagojevich took office, the state says Team Services has helped the state bring in just $3.7 million in sponsorships in exchange for about $300,000 in fees. The company, which has political connections to former Blagojevich aide Lon Monk, also could receive a small commission in connection with the statewide beverage contract.

Klemens said the proposal does not call for Illinois to name an official state beverage.

''They considered it, but it's not part of the contract,'' he said.

State officials are not sure whether there is even one beverage distributor that could handle a statewide vending program. But, industry observers say the concept is feasible.

One of the large bottling companies, such as Coke or Pepsi, could put together a deal using its statewide network of distributors.

''The ability is readily there,'' said John Sicher, editor and publisher of Beverage Digest, a trade publication.

Sicher said there are hundreds of examples of schools, local governments and university systems that have jumped into the beverage contract business. The deals help soft drink companies raise their profile and expose their brands while giving governments a stream of revenue at a time when raising taxes is not politically palatable.

A contract covering all of Illinois, however, would be notable, he said.

''A deal for all of the state would certainly be among the bigger ones,'' said Sicher.

Under terms of the state's proposal, the vendor would stock soda in all state buildings, including the Illinois State Capitol. It would include interstate rest areas, prisons and offices. The vendor also would have the right to sell its products at all University of Illinois campuses, as well as at Northeastern Illinois University in Chicago.

Other universities were given the option of participating in the proposal. But, some of them already have their own beverage contracts in place.

Klemens said there is no dollar estimate on how much the state could make from such a deal, which could be finalized by late spring. But, bidding documents show the income stream from some of the vending machines tops the $8 million mark.