Resolution 2022-32190 RESOLUTION NO. 2022-32190
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AMENDING RESOLUTION NO.
2022-32091, AND APPROVING THE NEGOTIATED TERMS OF THE
CITY'S AGREEMENT WITH PEPSICO FOR THE EXCLUSIVE NON-
ALCOHOLIC BEVERAGE POURING RIGHTS (EXCLUDING THE
ENERGY DRINK CATEGORY); AND FURTHER AUTHORIZING THE
CITY MANAGER AND CITY CLERK TO EXECUTE THE FINAL
AGREEMENT WITH PEPSICO, CONSISTENT WITH THE TERMS SET
FORTH HEREIN.
WHEREAS, the City of Miami Beach (the "City") entered into a sponsorship agreement,
dated March 14, 2012 (the "Agreement"), with Coca-Cola North America, a division of the Coca-
Cola Company, and Coca-Cola Refreshments USA, Inc. d/b/a Florida Coca-Cola Bottling
Company (the "Bottler") (collectively, "Coca-Cola") for a term beginning January 1, 2012 and
ending on December 31, 2021; and
WHEREAS, on March 1, 2017, the Mayor and City Commission adopted Resolution No.
2017-29774, approving the assignment of the Bottler's interest in the Agreement to Coca-Cola
Beverages Florida, LLC, as the successor Bottler, in connection with the sale of Bottler's assets
to the successor Bottler; and
WHEREAS,the parties executed an assignment and assumption agreement,dated March
29, 2017, assigning Bottler's interest in the Agreement to the successor Bottler; and
WHEREAS, on January 13, 2021, the Mayor and City Commission adopted Resolution
No. 2021-31541, approving an amendment to the Agreement ("Amendment No. 1"); said
Amendment removing the City's requirement to purchase a minimum of 22,500 cases of Coca-
Cola product per Agreement Year for the 2020 and 2021 Agreement Years; guaranteeing that the
City would receive the full Sponsorship Fee for the 2020 Agreement Year, in the amount of
$325,000.00; and reducing the Sponsorship Fee that Coca-Cola would have to pay the City for
the 2021 Agreement Year from $325,000.00 to $195,433.33; and
WHEREAS, the Agreement expired on December 31, 2021; and
WHEREAS, in order to explore all opportunities for a non-alcoholic pouring rights
partnership,while ensuring continuity of services and maintenance of existing equipment,the City
and Coca-Cola agreed to extend the Agreement, on a month to month basis, commencing on
January 1, 2022, for a period not to exceed six (6) months (June 30, 2022), and to remove the
energy beverage category from the scope of the Agreement; and
WHEREAS, Spectra Partnerships initiated a selection process to identify and recommend
an exclusive/official non-alcoholic beverage partner for the City, with the goal of identifying a
partner that would be interested in a brand affiliation relationship with the City, while removing all
plastics included in the proposals for the soda and water categories, and providing a marketing
benefit to both parties, as well as revenue generation for the City; and
WHEREAS, Spectra Partnerships initiated a process that involved the initial identification
of potential respondents; an invitation for those companies to submit proposals; and invited
entities in the nonalcoholic beverage category to submit"best and final" offers; and
WHEREAS, On February 25, 2022, at the Finance and Economic Resilience Committee,
the administration discussed the topic and was given the direction to bring back a
recommendation to the March 9, 2022 City Commission Meeting for a Pouring Rights sponsor,
provided that recommendation was a proposal that included 100% plastic free options for the
water and soda categories,while plastics for certain categories like isotonics(sports drinks)would
be acceptable as plastic-free alternatives were not yet available in the quantities needed; and
WHEREAS, subsequent to their submission and presentation, Spectra Partnerships
recommended to the City the selection of PepsiCo as the City's exclusive non-alcoholic beverage
sponsor (excluding the energy drink category), based on their proposals (the "Proposals"); and
advised City staff that an agreement with PepsiCo would provide a financial, marketing and in-
kind benefit of an approximate amount of $1,595,000.00 to the City over the proposed ten-year
term of the partnership (cash and non-cash value); and
WHEREAS, on March 9, 2022, the Mayor and City Commission adopted Resolution No.
2022-32091, waiving, by 5/7th vote, the formal competitive bidding requirement, and authorizing
the City Manager to negotiate an agreement with Pepsico Inc., for an exclusive non-alcoholic
beverage (excluding the energy drink category) municipal marketing agreement, for vending and
dispensing on certain City-owned properties, based upon the following essential terms:
(1) Term: 10 years;
(2) Sponsorship fee*: $70,000.00 per year, starting in 2022, with a$5,000.00 increase
each year, resulting in $155,000.00 in Year 10. This sponsorship fee is contingent
on the City hitting its annual volume requirements;
(3) Rebate Bonus-: $1/case or gallon purchased;
(4) Marketing Funds - $0.75/case or gallon;
(5) Full Service Vending Commissions -40% of all vending case sales;
(6) Complimentary Product - estimated $4,000.00/year - up to 400 cases of free
product to be used to support CMB initiatives to include 12 oz carbonated soft drink
cans and 16 oz Proud Source Aluminum Bottles (not cash convertible);
(7) Sustainability Fund - $25,000.00/year to purchase mutually agreed upon items to
support sustainability initiatives (not cash convertible);
(8) Community Outreach Programs -$20,000.00/year(not cash convertible);
(9) Equipment& Free Service-$150,000.00 in Year 1 +$15,000.00/following year for
equipment, service and repair(not cash convertible);
(10) Value of sponsorship over term of the Agreement (for cash and non-cash), in the
amount of$2,330,000.00, inclusive of the annual sponsorship fees ($925,000.00);
can rebate ($240,000.00); commissions ($210,000.00); marketing support funds
($180,000.00); and sample product value ($40,000.00); sustainability fund
($250,000.00); community outreach program ($200,000.00); and equipment and
maintenance ($285,000.00); and
*Full Sponsorship fee contingent on the City achieving our required 24,000 case/
gallon commitment. Should the City fall short on that commitment,the sponsorship
fee could be reduced by the same percentage. Should the City exceed our
commitment, we could receive increased sponsorship fees.
**Rebates estimated on 24,000 cases and gallon annual volume. In 2019, the City
of Miami Beach averaged 19,000 cases and gallon volume, but we believe that
with the new addition of PepsiCo products - Gatorade and Starbucks - we will hit
the increased target numbers, especially in the MBCC and Beachfront.
WHEREAS, following the March 9, 2022 City Commission meeting, the City and PepsiCo
entered into further negotiations, and agreed to additional essential business terms,which include
providing PepsiCo with certain benefits in order to incentivize PepsiCo to bring large events,
meetings and sampling activations to Miami Beach; increase awareness of the partnership;
increase brand awareness around both brands; and drive sales, therefore increasing revenues
for both the City and PepsiCo; and
WHEREAS, in addition to the benefits outlined in their Proposal, the City and PepsiCo
have agreed to the following additional essential business terms:
1. PepsiCo Corporate Entity. contract entity to be PepsiCo Beverage Sales, LLC, a
Delaware limited liability company;
2. Additional Excluded Beverages. The agreement also excludes hot coffee and iced coffee,
hot tea and hot cocoa;
3. Pricing. on Packaged Products may be changed by PepsiCo each Year during the Term,
provided however, price increases in any Year shall not exceed 4% from the prior Year;
4. Waiver of Special Event Permit and/or Permit Application Fees. PepsiCo shall have the
use for up to one (1) mutually agreed upon event per year, based on availability, for a
value of up to a maximum of$25,000.00 per event, all in accordance with the City Code,
and will not include the waiver of any hard costs, all of which shall be the responsibility of
PepsiCo;
5. One (1) Product Sampling Permit per Month. PepsiCo shall have the right to use a
maximum of twelve(12)product sampling permits per year,which will not include all other
fees and costs of production, including but not limited to taxes, police, security, sanitation,
etc., all of which shall be the responsibility of PepsiCo; said permit waivers having a value
to PepsiCo, in the amount not to exceed $30,000.00, based upon 12 waivers per year,
with an approximate value of$2,500.00 each;
6. Waiver of any rental or use fees for Miami Beach Convention Center Facilities. PepsiCo's
shall have the use of certain Miami Beach Convention Center Facilities (ballroom space
or meeting room space) for one (1) mutually agreed upon event per year, based on
existing bookings and building availability, up to a maximum of$25,000.00 per event;
7. Advertising Benefits. PepsiCo shall have the following advertising benefits, which do not
have an actual out-of-pocket expense to the City: (1) one (1) royalty free advertisement
in any City-produced event collateral as the "Official Non-Alcoholic Beverage of Miami
Beach"; (2) one (1) royalty free PepsiCo PSA or message per year to be aired on MBTV;
and (3) one (1) royalty free PepsiCo PSA or message per year to be aired on the Miami
Beach trolley video screens, with above advertising benefits having no additional costs to
the City; and
8. Rounds of Golf. PepsiCo shall be granted up to twelve(12)rounds of golf each Agreement
Year, with a maximum of six during peak season, and no more than six at Miami Beach
Golf Course, with an approximate value of$131.00-$235.00 per round of golf, depending
on the season; and
WHEREAS, based upon the foregoing, the City Manager recommends approving the
additional essential business terms for the agreement with PepsiCo.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City .
Commission hereby amend Resolution No. 2022-32091, and approve the negotiated
terms of the City's Agreement with PepsiCo for the exclusive non-alcoholic beverage
pouring rights (excluding the energy drink category); and further authorize the City
Manager and City Clerk to execute the final agreement with PepsiCo, consistent with the
terms set forth herein.
PASSED and ADOPTED this 22nd day of June 2022.
ATTEST:
JUN 2 3 Y022 8Dan Gelber, Mayor
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Rafae E. Granado, City Clerk :`�\1:!"
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FINEORP ORATED11
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APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
Date
City Attorney
L�.
Resolutions -C7 K
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Alina T. Hudak, City Manager
DATE: June 22, 2022
SUBJECT:A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AMENDING RESOLUTION NO. 2022-32091,
AND APPROVING THE NEGOTIATED TERMS OF THE CITY'S
AGREEMENT WITH PEPSICO FOR THE EXCLUSIVE NON-ALCOHOLIC
BEVERAGE POURING RIGHTS (EXCLUDING THE ENERGY DRINK
CATEGORY); AND FURTHER AUTHORIZING THE CITY MANAGER AND
CITY CLERK TO EXECUTE THE FINAL AGREEMENT WITH PEPSICO,
CONSISTENT WITH THE TERMS SET FORTH HEREIN.
RECOMMENDATION
The Administration recommends that the Mayor and Commission approve the final business
terms of the contract with PepsiCo Beverage Sales, LLC.
BACKGROUND/HISTORY
On March 9, 2022 the Mayor and Commission approved Resolution 2022-32091 (attached),
waiving, by 5/7th vote, the formal competitive bidding requirement, finding such waiver to be in
the best interest of the city, and authorizing the City Manager to negotiate an agreement with
PepsiCo Beverage Sales LLC. (PepsiCo), for an exclusive non-alcoholic beverage (excluding
the energy drink categories) municipal marketing 'agreement for vending and dispensing on
certain city-owned properties, based upon the essential terms set forth in the City Commission
Memorandum, for a term of ten (10) years; and further, authorizing the City Manager to finalize
and execute the agreement, subject to form approval by the City Attorney.
The Administration and PepsiCo began contract negotiations and in addition to the agreed upon
terms set forth in the March 9, 2022 City Commission agenda item,the Administration agreed to
include additional benefits to PepsiCo, as it was deemed to be favorable to both entities in
terms of financial impact and brand awareness.
•
The City's month to month extension with Coke Florida expires on June 30, 2022. The
Administration does not want to be in a position where vending and concessions operations
within City facilities are halted without a contract in place, so final approvals on the additional
business terms are needed from the Mayor and Commission prior to June 30, 2022. If
approvals are not received, the Administration will need to negotiate an extension of the Coke
Page 357 of 1232
Florida month to month contract (should the vendor be in agreement), or be without vending
services for the period of time between July 1, 2022 to the date of contract signing.
The existing Coke Florida month to month extension does not include any financial incentives
for the City, as it was executed as a bridge contract to ensure continuity in vending services, so
the sooner the Administration is able to execute the contract with PepsiCo, the sooner the City
will start to receive revenues from product sales and vending commissions.
ANALYSIS
In addition to the business terms outlined in the March 9, 2022 City Commission Agenda, the
Administration would like to add the following items to the final agreement, which having a
financial component, require approval from the Mayor and Commission:
1. PepsiCo Corporate Entity- Contract entity to be PepsiCo Beverage Sales, LLC, a Delaware
limited liability company; and
2. Pricing on Packaged Products may be changed by PepsiCo each Year during the Term, provided
however, price increases in any Year shall not exceed 4%from the prior Year, and
3. Waiver of Special Event Permit Fees - waiver of any Special Event Permit and/or Permit
Application Fees for PepsiCo's use for one (1)mutually agreed upon event per Year, based on
availability and meeting all approvals as set forth in the City's Special Event Permit approval
process. For purposes of the Special Event Permit and / or Permit Application Fee waiver,
these Facilities shall include public beachfront areas, and Parks and Recreation facilities where
Special Events are permitted. The City shall only waive fees up to a maximum of $25,000 per
event, and solely for permit or square footage fees for which the city has no hard cost. All other
costs and ancillary fees including but not limited to production, taxes, security, audio/visual,
decoration, parking or food and beverage shall be the responsibility of PepsiCo. Rights may
not be transferred or assigned and do not carry over into future Years.
The Administration is in support of this benefit as we feel that PepsiCo is positioned to partner
with some globally recognized events and this benefit will incentivize them to bring those events
to Miami Beach with zero cost to the City.
4. MBCC Fee Waiver - waiver of any rental or use fees for PepsiCo's use of certain Miami
Beach Convention Center Facilities (ballroom space or meeting room space) for one (1)
mutually agreed upon event per Year, based on existing bookings and building availability, up to
a maximum of$25,000 per event. Waiver shall pertain to the costs associated solely with room
rental fees for which there is no hard cost to City or third-party management company. All other
costs and ancillary fees including but not limited to taxes, security, audio/visual,, decoration,
parking or food and beverage shall be the responsibility of PepsiCo. Rights may not be
transferred or assigned and do not carry over into future Years
The Administration in partnership with Spectra is in support of this benefit, as it will incentivize
PepsiCo to bring a new meeting to the MBCC,where the City and Spectra will be positioned to
see increased revenues on all ancillary fees (parking, food and beverage, audio /visual). The
benefit allows Spectra to approve the room rental waiver only when the schedule allows to
ensure no disruption to existing meeting and convention business.
Page 358 of 1232
5. Product Sampling - Up to one (1) royalty free Product sampling permit per month (up to
$2,500 per permit per month, and up to $30,000 per Agreement Year), to a maximum of twelve
(12) permits per Year. Permit waiver shall only cover permit fee costs for which the City has no
hard cost. If PepsiCo does not use all twelve (12) permits by the end of the Year, any remaining
permits will not roll-over to the following Year and will be forfeited. All other fees and costs of
production, including but not limited to taxes, security, audio/visual, decoration or food and
beverage shall be the responsibility of PepsiCo. Rights may not be transferred or assigned and
do not carry over into future Years.
The Administration is in support of this benefit as sampling activations will not only bring
awareness to our new partnership, but will also bring brand awareness to PepsiCo with the intent
of driving sales at City owned venues, resulting in higher consumption and financial rebates back
to the City.
6.Advertising Benefits. PepsiCo shall have the following advertising benefits, which do not have an
actual out-of-pocket expense to the City: (1)one (1) royalty free advertisement in any City-produced
event collateral as the "Official Non-Alcoholic Beverage of Miami Beach"; (2) one (1) royalty free
PepsiCo PSA or message per year to be aired on MBTV; and (3)one (1) royalty free PepsiCo PSA
or message per year to be aired on the Miami Beach trolley video screens, with above advertising
benefits having no additional costs to the City; and
The Administration is in support of all of the above mentioned advertising benefits as we will be
partnering with one of the most recognizable non-alcoholic pouring rights brands in the world, which
will draw attention to our new partnership, while elevating the Miami Beach brand and driving
consumption and sales, resulting in higher revenues for the City.
7. Rounds of Golf. PepsiCo shall be granted up to twelve (12) rounds of golf each Agreement Year
(max of six during peak season; nor more than six at Miami Beach Golf Course)with an approximate
value of$131.00-$235.00 per round of golf, depending on the season; and
SUPPORTING SURVEY DATA
N/A
FINANCIAL INFORMATION
The contained items will have the following financial impact:
Special Event Permit - up to $25,000 per permit x 1 permit = $25,000 in fee waivers per
Contract Year. This benefit has no negative financial impact, as these waived fees would be
unrecognized revenues. These waivers cannot be used for any hard costs or where the City
has an expense to be paid.
Sampling Permits -up to $2,500 per permit x 12 permits = $30,000 in waived fees per Contract
Year. This benefit has no negative financial impact.
Miami Beach Convention Center - up to $25,000 per room rental agreement x 1 per Contract
Year= $25,000 in room rental waivers per Contract Year. This would have no negative financial
impact, as Spectra will only allow these room rental waivers to be utilized when there is no
Page 359 of 1232
interruption to regular revenue producing meeting and convention business. If utilized the City
would see increased revenues from the percentage share of revenues realized of ancillary fees
like intemet, parking,food and beverage, etc.
Advertising Benefits - $0.00 cost to the City, as the City has no costs associated with these
benefits. City owns all assets and can provide this space for free. This would aim to increase
brand awareness, which in turn can help drive sales of PepsiCo product, resulting in higher
revenues due to the City under the agreement.
Rounds of Golf - $0.00 cost to the City, as the City would not incur any hard costs associated
with this benefit, as it would be considered unrecognized revenues. The costs per round of golf
range from $131.00 - $235.00 depending on the season, with a maximum of six (6) allowable
rounds to be played at the Miami Beach Golf Club during high season ($235.00). Therefore,
approximate value of this benefit would be $2,196.00 (6 rounds x$235.00 high season rates +
6 rounds x$131.00 low season rates).
Applicable Area
Not Applicable
Is this a"Residents Right Does this item utilize G.O.
to Know" item. pursuant to Bond Funds?
City Code Section 2-14?
No No
Legislative Trackina
Marketing and Communications
Sponsor
Commissioner Alex Fernandez
ATTACHMENTS:
Description
❑ Resolution 2022-32091
❑ Resolution
Page 360 of 1232
RESOLUTION NO. 2022-32091
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, WAIVING, BY
5/7TH VOTE, THE FORMAL COMPETITIVE BIDDING
REQUIREMENT, FINDING SUCH WAIVER TO BE IN THE
BEST INTEREST OF THE CITY, AND AUTHORIZING THE
CITY MANAGER TO NEGOTIATE AN AGREEMENT WITH
PEPSICO INC, FOR AN EXCLUSIVE NON-ALCOHOLIC
BEVERAGE (EXCLUDING THE ENERGY DRINK
CATEGORY) MUNICIPAL MARKETING AGREEMENT, FOR
VENDING .AND DISPENSING ON CERTAIN CITY-OWNED
PROPERTIES, BASED UPON THE ESSENTIAL TERMS SET
FORTH IN THE CITY COMMISSION MEMORANDUM
ACCOMPANYING THIS RESOLUTION, FOR A TERM OF TEN
(10) YEARS; AND FURTHER, AUTHORIZING THE CITY
MANAGER TO FINALIZE AND EXECUTE THE AGREEMENT,
SUBJECT TO FORM APPROVAL BY THE CITY ATTORNEY.
WHEREAS, the City of Miami Beach (the "City") entered into a sponsorship agreement,
dated March 14, 2012 (the "Agreement"), with Coca-Cola North America, a division of the Coca-
Cola Company, and Coca-Cola Refreshments USA, Inc. d/b/a Florida Coca-Cola Bottling
Company (the "Bottler") (collectively, "Coca-Cola") for a term beginning January 1, 2012 and
ending on December 31, 2021; and
WHEREAS, on March 1, 2017, the Mayor and City Commission adopted Resolution No.
2017-29774, approving the assignment of the Bottler's interest in the Agreement to Coca-Cola
Beverages Florida, LLC, as the successor Bottler, in connection with the sale of Bottler's assets
to the successor Bottler; and
WHEREAS,the parties executed an assignment and assumption agreement,dated March
29, 2017, assigning Bottler's interest in the Agreement to the successor Bottler; and
WHEREAS, on January 13, 2021, the Mayor and City Commission adopted Resolution
No. 2021-31541, approving an amendment to the Agreement ("Amendment No. 1"); said
Amendment removing the City's requirement to purchase a minimum of 22,500 cases of Coca-
Cola product per Agreement Year for the 2020 and 2021 Agreement Years;guaranteeing that the
City would receive the full Sponsorship Fee for the 2020 Agreement Year, in the amount of
$325,000; and reducing the Sponsorship Fee that Coca-Cola would have to pay the City for the
2021 Agreement Year from $325,000 to $195,433.33; and
WHEREAS, the Agreement expired on December 31, 2021; and
WHEREAS, in order to explore all opportunities for a non-alcoholic pouring rights
partnership,while ensuring continuity of services and maintenance of existing equipment,the City
and Coca-Cola agreed to extend the Agreement, on a month to month basis, commencing on
January 1, 2022, for a period not to exceed six (6) months (June 30, 2022), and to remove the
energy beverage category from the scope of the Agreement; and
Page 361 of 1232
WHEREAS, Spectra Partnerships initiated a selection process to identify and recommend
an exclusive I official non-alcoholic beverage partner for the City, with the goal of identifying a
partner that would be interested in a brand affiliation relationship with the City, while removing all
plastics included in the proposals for the soda and water categories, and providing a marketing
benefit to both parties, as well as revenue generation for the City; and
WHEREAS, Spectra Partnerships initiated a process that involved the initial identification
of potential respondents; an invitation for those companies to submit proposals; and invited
entities in the nonalcoholic beverage category to submit"best and final" offers; and
WHEREAS, On February 25, 2022, at the Finance and Economic Resilience Committee,
the Administration discussed the topic and was given the direction to bring back a
recommendation to the March 9, 2022 Commission Meeting for a Pouring Rights sponsor,
provided that recommendation was a proposal that included 100% plastic free options for the
water and soda categories,while plastics for certain categories like isotonics(sports drinks)would
be acceptable as plastic-free alternatives were not yet available in the quantities needed; and
WHEREAS, subsequent to their submission and presentation, Spectra Partnerships
recommended to the City the selection of PepsiCo as the City's exclusive non-alcoholic beverage
sponsor, to exclude the energy drink category, based on their proposals attached to the City
Commission Memorandum accompanying this Resolution (the "Proposals"); and advised City
staff that an agreement with PepsiCo would provide a financial, marketing and in-kind benefit of
an approximate amount of $1,595,000.00 to the City over the proposed ten-year term of the
partnership (cash and non -cash value).
WHEREAS, based upon the foregoing, the City Manager recommends waiving, by 5/7th
vote, the formal competitive bidding requirement, as permitted in Section 2-367(e) of the City
Code, and authorizing the City Administration to negotiate an agreement with PepsiCo for a term
of ten (10)years, based upon the essential terms set forth in the City Commission Memorandum
accompanying this Resolution.
NOW,THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA,that the Mayor and City Commission hereby waive, by
5/7th vote, the formal competitive bidding requirement, finding such waiver to be in the best
interest of the City, and authorize the City Manager to negotiate an agreement with PepsiCo for
an exclusive nonalcoholic beverage municipal marketing partnership for vending and dispensing
in certain city owned properties, but to exclude the energy drink category, based upon the
essential terms set forth in the City Commission Memorandum accompanying this Resolution,for
a term of ten (10) years; and further, authorize the City Manager to finalize and execute the
agreement subject to form approval by the City Attorney.
PASSED and ADOPTED this 9th'day of March 2022.
ATTEST:
l ,i2yZ_______
Dan Gelber, Mayor
MAR 1 4 7O12 APPROVED AS TO
FORM & LANGUAGE
Rafael E. Gran do, City Clerk = - &FOR EXECUTION
' 3—1 —
•
Page 362 of 1232 ='ihv AMn•noy m Date
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MIAMIBEACH . ♦ .
COiIiMIINSSION MEMORANDUM'
TO..` '' Honorable Mayor aid Members of theCity-Commission
FROM: Alm a;T Hudak,City'Ntariager: ., _
DATE: Marcti'9;2022 ..
•- ' SUBJECT:A RESOLUTION OF THE MAYOR AND zCITY COMMIISSIONOF THE CITY OFMIAMI BEACH,'FLORIDA,•WAIViNG.' ' _ - -
-, = —�--BY 51711-VOTE;THE FORMAL-COMPETITIVE BIDDING REQUIREMENT,FINDING SUCH WAIVER TO BE IN THE' _
`--- BEST'INTEREST OF THE CITY,AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE AN:AGREEMENT ' -- - -
' WiTH PEPSiCO' INC,.FOR AN EXCLUSIVE• NON-ALCOHOLIC _BEVERAGE..-MUNICIPAL MARKETING .
' ` `` AGREEMENT(EXCLUDING THE ENERGY DRINK'CATEGORY).FOR VENDINGAND DISPENSING ON CERTAIN' '
' : • CTYOWNED.PROPERTIES:BASED UPON ThE ESSENTIAL TERMS SET,FORTH,IN THE CITY COMMISSION -.:,
MEMORANDUM ACCOMPANYING-THIS-•RESOLUTION, FOR A TERM OFTEN (10)YEARS; AND;FURTHER, ,
`' -'.'.• AUTHORIZING THE CITY MANAGER TO`',FINALiZE AND:EXECUTE'THE AGREEMENT, SUBJECT TO FORM_
' - APPROVAL BY THE CITY ATTORNEY
,
.
RECOMMENDATIOt( ;
The Administration'recom ends that the Mayor and.Comndsslon waive the formal conpedbve bdding requremermtard aulhoiiae die City
Mwteper b negotele tent agreement wifh�PepsiCo Inc;for,an ezciusnie non-alcoholic bevetaige Pouring Rights sponsorship agreement,'to
' :' ''''' "..'...- ,,-.'''
resoitle.the energy.drink rgort baled.upon`the a sartial.terms:set'forth in the City Coarfitsaton,memorandum eccomparryag tins
resoltr6on.fora term of ten(10)years:,and f r,a 4horiarg the-;City Mar>ager to fir erize.acid omctite the'agreement,subject to form
approv by the City Atbmay '"
On March 14,2012:the City of Mani Beach:ente entered into a sponsorslW agreements :Coca-Cola North America for Pouring During Rights'', •.'
exckalinly,fora terrin begin-ing on Jarxrary.1,2012 arri'ending on December 31,2021 _ •
On Mart 1,2017,as per Resok6on No 2017 29774,the-Ma or and Commission approved the acsignmer`rt of Coca-Cola Math Americas.• .
interest in the Pawing Rights agreerrient:-to.Coa-Cole,Beverages Florida:.` •_ _ ' - _ -- , -
--% ' OrrJa nary 13;2021,duet)COVID 19,the Meyer and City Commission adop ed Resolution No.2021-31541;approving an'amendment _,
to the Agreement rAreeridment'No:1'),_emoving tie Citys`,rsquirenyird tSpurchse a minimum of 22,500 cases of Coca-Cola product L,
per Agreement Year,for the 2020 and.2021 Agreement Years'guaruteeeing SO.the City wood raceme the fri Sponsorship Fee for the_ - .
` - - 2020 Agreement-Year In the ernoint of$325,000;aid reducing the Sponsorship Fee that Coca-Cole would have to.pay the pay for the -
a2021•Agreement Year,from$325,000 b$195,433:33i .•° - ,•
.; On December'6 2021,the Mayor aid City-Commission adopted,Resolution No:2021.31965,aulhorm g the City Manager to negotiate ,
aid execute ArteindinerrtNo:2,to the Agreement,in order te extend the Agreement,one month 10 month basis.commencirg,or J .anuary 1, ,
2022,for a period�notto eibceed six(6)months(June 30,2022);ard'!eniovirp.the.energy c gmy from the scope of the ,
AgreemeirR Foflov irg the December 6,;2021 meeting furt er discussions wittt.Coca-Cola Flo ida resulted in the need to male ackilfs nal. ,. _-
•', , charges b the m oniO to monittsrareerrterk in'ordar.b eroeci�e Amendment No 2; :. • ;
(1)rerrwvai of Coca Cola Florida's:oblg ton b pay the Cilia Sponsorship Fee per.Agreement Yew and.r!emovai of the City's requirement -
lo purctieaa 22,500.cases Of bottiesicane psrAgre.ment Year:both pursuant b Section 5('Sporuoishp Feel"of AttachrientA eTim--
Sheet-jib'ttieAgreemenG
•' ovi
(2)removal cf Coca`Cola Flond*s,ragrarem'ent to"prde the Coy watt S17 500in"rash for the putchise d eqr pine t and other;products: _
'.- pigswill b Section 7("Complimientary Product")of AttectrnentA to.the Agreement.`
`-'f` (3)removal of Coca-Cola Florida s`regiwernent to'proide the City w%h iri4 rtd marketing suppo►t find,puritant ro Section 11('Marketirg, . . ' , -
' ' P ' " of Attst msnit A b the Ag eementti aid
''i' 7.(4)einovel of the Crtys:regi aemei f to provide sun part.pr rsuartt t Section l4('City SL Iporf)d AttachmentA la lie lgrwnnent •
Thiotgli'Nov�eniber aid December 2021 the City.tTrough'ou m r uiicipal sponsorship corer itent;Spectra Partnerships,initiated a new
mound of negotiatiorns to select a non-alcoholoihol porring,righte per bated on the best fktartclal model and revenues for tie City.,Each . . .,
" cornparty was my d b submit proposal,including a'best and frna-of&er' .trice-Cole Beverage Florida,LLC(Coke Florida)and PepsiCo -
- (Pepsi)subrnlled ten-year proposals;Dr r did hot not submit a proposal and Rid Bit North America,Inc,(Red But)subntitted a free- -
yea proposal for the enagy dmk cafbgory..
Each proposal provided a oombinetlon Of.a tarrrral sponsarship fee,as well as a stnicNre for itddiftonal revenues to the City from sale of.
., - -:Page 494,of 874.' :1
_ Page 363 of 1232
:*'. products(either vending or dispensed)and'notenEal marks opporturtibes.Spectra Partnerships evaluated the short and long-term
. benefits,both financial and Intangible,to the,City,and recommended that the City enter negotiations with Coke,Florida and"Red Bus as the . -
Crtyys"officoal nori-eicohot beverage and•energydrirkc partners
.
:.,-.Upon further.review aid oonstita ion wrttt stakeholders and members of the,Cormmission,the administration was provided wntti feedback -'
regarding the proposals.and felt that further consideration wood be;prudent,in order to minions concerns*mind plastics and_sustainabilty., . '
• In order to explore these options.the City withdrew the,Coke Florida"sponsorship agreement from the December 8,2021 Commission , . "
., ; agenda,hat>dea referral wiles made to the Finance and Economic Resliencce Committee to.gain direction.front the Committee cn what an.
.
ideal Pouring,Rigtds agreement would looklikei ,', .- , -
Foilowing the December8-2021 Commission meeting,the'adnan oration began a new ri and of negotiations with valour beverage, .
suppliers to request proposals that were plastic free for the water and soda categories,and ensure more of a focus on susteinabiity,
, - As pat of thecurrent month to month extension with Coke Florida.the City receives approximately$100,000 worth of vending equipment, -
--- is well as ail nverbry.managemet�t that maintenance services for that tauipmeni across City fealties:tit is the w pm:talion of the.:.. ,.
- administration that any new pouring rights partnier Word.need to supply the same level oFvending`service,inventory management and : '
• : . -maintenance;as has been provided by Coke Florida fertile last ten yeas se as.not to affect the services currently provided in various city
owned prhiperfies
Coke Florida's contrast expired on December 31.202i. : = - .
. , There was no Finance and Economic Resilience Meeting In Jannuery,,2022 ' . , ' ,'
' On Fabruary25,2022,the administrationditcuisadthe topic with the FERC Committee and was given the direction tb bring back a
recommendation to the.March 9,2022Commissi in meeting,provided that recortmendationwas'a proposal thatincluded 100%plastic free ' - '
options;for the water and soda.categories.:The Commie agreed that plastics for certain categories lice isotwhics(sports drinks)woutd.be ., -
acceptable as plastiairoe alternatives were het yet avaiable in the quantities needed. - .
At4ALY$IS" r
-°= ' 'Comparable'to the previous patnershin;the selected entity world have exclusive vending rights at atl City:faciliiies,as weiR`as'pou!ing: - ,
tights'*certain ally-owned facilities,including those axrentymaiaged by Ord pates,including•,but.not limited to tie Miami-seach .
Convention Center,the North Beach Bardshel and Flamingo Park Tennis Center Pouring'rights refers_to dispensed norrateotiolic . -
beverages or be eragea sold via concession,as compared to being sold through avending . ' „ ` - '
,. The contracted management corapa vies timeless"'respective City facilities via be required to participate in the Citys selected Pouringrights
`. `beverage;Ogren,with as revenues relating to sponsorship aid coitvnastorc,as well as:mafretkhg'support,to benefit theCity directly. .
y ,SpectriPartnerships.has managed tire piece*on behalf of the City.The process he irnol*d the instal identfkationof potential. ' - .
respondenfs'aninvitation for those,companies to submit proposals;the selection of the best potentiail.patnsrship offers.for the submission .
of-ebest aid finer Offen and the. `of a final ear for corie�ideration - -
•
Spectra Parer ernstrps'in velvsmanthas included aidlysis ofcomp`arable parinersfiips,negotia ion.onsponsorship dea.poi ts,aid providing
' these potent et pan ers'valti Hormabon`rela`ng to the'Cityantonportiatiest They rema sd in co with potential partners before ad„-
disk this.pnxess.This I ncluded.gathering:irfom lion on:crerentverxues.',voiunes and deaf structras .' . , -
Spectra.Part ierships advised prospective'Wopotereof the Citysinter,estin en excit sivM oile nonalcoholic beverage Partner p so that ___- - •
.must meet Our plastic free initiatives as itrelates tO the-soda a .r categories;and aer ca egories,wban nerstibhie In addition b.-"' • .. -
• d vwinfomhafhon on vokmes,venues wrest pricing:etc„'SpectraPsririsrstrps recommended a mirsmun ten-year term for the partnership '
_. which is not only consistent With typical beverage partiersthips;!Masai watss'an incentive for prospectii�e�proposers—as
`' the Weeded partner'*V have excite*,tights for an eidartded time—sufficient te arnortol any capital hi esbinent ....and 0 esiallsh their -
.. ores..in Rn rrr�rfn!. .
. ' .,- Based'on Spectra Partnerships review.PepsiCo presented the best proposal that provded.a combination of anamual"sponsorship"fee,
-.• commissions on sales,and.a rebate program The sponsorship fee was reduced MS proposals stets.regtlre ent,of becoming teactic _
' "'. free negtnirod higher production costs for ak yonn.especially considering the Orient sheirlage in tine supply chain ".
-Belo
wars tie major cartponshtsof.the PepsiCo prePosa. - ' .
:`, paresi0o Dial Peirr/s :' .
I m l0 years.
Sponsorship fes`S70,000 pays.,starting in 2022,_w th s$5 000 increase each year:resulting ip$155,�in Year 10 Ttrs,sponsorshp , ' '
fee-Ls contirngeritt on the;City tit ing our annual voluris nequiremer ts. - _ -
Corrvrrssinnsl Priiii g I Rebates:.
Rebate Bonus•'
s1 Jcaaseorgaliah
R wkatina'Funds'=50 75 icaseor Gallon
age495of874-
•
_.- Page.364'of 1.2.32
Full Service Vending Commissions-$21,000/year on 1,000 case annual volume at 40%
Complimentary Product-estimated$4,000 I year-up to 400 cases of free product to be used to support CMB initiatives to
include 12oz carbonated soft drink cans and 16 oz Proud Source Aluminum Bottles(not cash convertible).
Sustainability Fund - $25,000 / year to purchase mutually agreed upon items to support sustainability initiatives (not cash
convertible)
Community Outreach Programs-$20,000/year(not cash convertible)
Equipment 8 Free Service - $150,000 in Year 1 + $15,000 /following year for equipment, service and repair (not cash
convertible).
'Full Sponsorship fee contingent on the City achieving our required 24,000 case I gallon commitment Should the City fall short
on that commitment,the sponsorship fee would be reduced by the same percentage. Should the City exceed our commitment,
we would receive increased sponsorship fees.
"Rebates estimated on 24,000 cases and gallon annual volume.In 2019,the City of Miami Beach averaged 19,000 cases and
gallon volume,but we believe that with the new addition of PepsiCo products-Gatorade and Starbucks-we will hit the increased
target numbers,especially in the MBCC and Beachfront
PepsiCo South Florida Market Share for Liquid Beverage Refreshment Category;
Non Carbonated Category(Isotonics,Teas,Water,Juice,Coffee)-80%of market share
Carbonated Soft Drink Category(Pepsi,Diet Pepsi,Mountain Dew,Brisk Iced Tea)-20%of market share
Category Pepsi Share Coke Share
Sports 73.9 10.0
Coffee 86.2 7.0
Value Added Protein 36.4 26.0
Juice&Juice Drinks 36.3 10.1
Tea 31.2 9,9
Water 6.7 18.9
Soft Drinks 21.2 60.0
Liquid Refreshment Beverage(LRB)Total 22.9 17.9
Proposals:
Attached to this agenda item,you will find the proposals of both PepsiCo and Coke Florida for the Pouring Rights category and Open
Water, Icelandic. Pathwater, Nestle USA(Perrier, San Pellegrino,Acqua Parrs), and Maranalu in the Water Category. The proposals
delineate the general responsibilities of each party during the tern of the Agreement to be confirmed in the verbiage included in the final
contract The final contract will also include all confirmed locations of potential vending equipment within City owned facilities.
NOTE ON WATER PROPOSALS:While we received some great proposals for the water category,both PepsiCo and Coke Florida
confirmed that the removal of the water category from their proposals would result in their inability to participate as a Pouring Rights
sponsor. Considering that vending within City facilities,including but not limited to the Miami Beach Convention Center,tennis centers,golf
dubs,and community and recreation centers is a large portion of this contract and revenue stream for the City,we have had to disregard any
separate water category bids in order to ensure continuity in our vending business,as no water specific company was able to undertake our
city wide vending business.
proposal Comparisons:
The following charts provide a breakdown of the value of the proposed partnership between the City of Miami Beach and PepsiCo versus
Coke Florida(cash and non-cash):
PUOPOTOLS BECHT OF MOE EACH II0II4IOONOUC POURING RIGHTS•FARM?'":on
PEPSI
Contrast Vow
1 2 3 4 5 1 7 0 1 10 TOTAL
Annual • Funds $10 000 $75 000 $80.000 505.000 510.000 115 000 5100 000 5105 000 5110 000 $115 000 112.5.000
as.�r ass.. 4 000 $24 000 $24.000 524.000 $24.000 574 000 $i1000 524.000 524.000 524.000 $740 000
'4rksdg Supprt $415 751cas and gap 510)00 51SA00 510 000 510.000 515.000 -_$10.000 $1a.000 511.000 $16.000 510.000� $1tr0 000
Conpanttr4ry Product Valve 54.000 $4.000 S4 000 $4 000 S4 000 $s 000 $1.000 $4 000 $4 000 54 000 $10 000\.
FSV Commission(40%1 $21.000 $21 000 $21 000 521 000 521.000 $21 000 521.000 $21 ow $21 000 5210oi 5210.000
Total" $137 000 $142.000 5147 000 5152 000 5157 000 1162.000k 5157.000' 5172.000 5177.000' 5112.000 51,515,000
Mon
tat W si ly n Msgy category
Doss not made 3ra party mots Cdy*ends from s marketing stndposn slip/•a nc0A.d n neat they 9.1
Page 496 of 874
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YNNnq 18l(<e1e111eIN IN WWII/e 1/I1.441 NI L'!WV ytt1N1!Ieiurly
COKE FLORIDA
Contract Year
•
r 1 2 3 e 4 5 5 7 a . 9 t0 TOTAL
Alms S90ns0lstn0 S50 000 550 000 150.000 550 000 150 000 550 000 S50 000 560 000 550 000 S50 000. 5500.000
Rmt " 515 5e7 $15.54r 515.547 515.547 515.5+7 515 547 515 547 515,50 515 5e7 515 547 6155.470
IN:neared Commusnrons••• 1 S31,406 531406 531.406 S31.406 531.e06 531.006 531.406 531,406 531 406 531 406\ 1314.060
Maritime and Value 5S0 000 550.000 550,000 560 000 S50 000 550.000 550,000 $50 000 550,000 550.000 S500 000
Conpsmenlery Product Valle SS 0% 56.000 56 000 55 000 55 000 SS 000 55 000 SS 000 SS.000 56.000 S50.000
Total* S151953 5151953 5151953 5151463 5151953' 5151 953' S151953' 5151 953r 5151953' 5151 gab 51.519.530
Notes
No Inclusaty in envoy Mellon
',nascent based 0n estimated r04mle actual payments ma be based on Kiwi volume purchased
•••Propcted FSV Commissions baud on a 30%rate contingent on the placement d Unattended Retai lAcro•mrket.
""Payment tot Sma s/atm=Vahat a Muscle Such(wlBaudlec Bros)
••••'aloe MOM co-brander trader tar Recycing program on beach
Term is 10 years or until MB purchases 224 546 cases 3560 pitons or syrup
Estirnatad Total Value:
As reflected in the above chart,the estimated total value of the proposed Pouring Rights sponsorship partnership with PepsiCo over the
term of the agreement(for cash and non-cash)is approximately$1,595,000.00,inclusive of the annual sponsorship fees($925,000);can
rebate($240,000),commissions($210,000)marketing support funds($180,000)and sample product value($40,000).
SUPPORTING SURVEY DATA
N/A
FINANCIAL INFORMATION
wA
Amount(s)1Accourtt(s):
All details regarding the fiscal impact of this item can be found within the"Analysis"section.
Aeolic dlitAna
Citywide
Whit a'Reaidents Right Does this item utilize G.O.
to Know'loam,pursuant to Bond Funds?
City Code Section 2-14?
No • No
Strategic Connection
Non-Applicable
Legislative Tracking
Marketing and Communications
ATTACHMENTS:
Description
a PepsiCo Pouring Rights Proposal
o Coke Pouring Rights Proposal
o Icelandic Water Proposal
o Mananalu Water Proposal
o Nestle USA Water Proposal
o Open Water Proposal
o Path Water Proposal
o Resolution
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