If you encounter obstacles initially, persistently strive for success. This year in California, the soda industry effectively thwarted and eliminated five legislative proposals aimed at restricting soda consumption or highlighting sugar content through warning labels. They are not isolated in this effort. Over the past few years, cities in states such as Washington, Michigan, New Mexico, Illinois, and Pennsylvania have implemented soda tax bills to reduce soda intake and combat the rise of chronic diseases like obesity, heart disease, and diabetes. However, the soda industry has vigorously opposed any legislation detrimental to their interests, especially as they already struggle with diminishing sales due to consumers opting for healthier alternatives. According to analyst Phil Lempert in Winsight Grocery Business, the soda industry has invested $48.9 million in campaigns against taxation since 2009. He referenced a November 2017 report from the Center for Science in the Public Interest. In California alone, the Los Angeles Times noted that the industry has spent nearly $12 million over the last two years.
The coalition currently seeking to revive legislation is focusing on Assembly Bill 138 from the last session. This bill, which was previously shelved, remains in the California State Assembly’s Revenue & Taxation Committee. However, whether it will regain the same momentum as last year is uncertain. Soda taxes, while intended to address a public health crisis, are presented to consumers based on their potential to generate revenue for cities. The 2-cent-per-ounce tax in California could yield an estimated $4 billion annually, as per the Legislative Analyst’s Office. Nonetheless, promised revenues do not always materialize. For instance, Philadelphia’s soda tax revenue in its first year totaled approximately $79 million, falling 15% short of projections, leading the city council to consider repealing it and conducting a study to assess its economic implications.
Research indicates that while soda taxes do reduce consumption within the taxed area, they also lead to increased purchases of the beverages outside that zone. A 2017 study from Catalina revealed that soda sales just outside Philadelphia’s borders surged by 38%. Nevertheless, the tax in Philadelphia proved effective; a study published in the Journal of the American Medical Association this year found that total volume soda sales within the city limits dropped by 51% from 2016 to 2017.
This new coalition presents a formidable force, comprising state and national health organizations, making it difficult for lawmakers and the public to overlook entities that champion public health in the U.S. Additionally, if the legislation is backed by a non-partisan group, the soda tax issue is less likely to be politically divisive. Perhaps more crucially is the rapid resurgence of this legislative discussion. Despite the soda companies winning the last round, the public health crisis associated with soda consumption is an ongoing battle, and soda companies must be prepared for continued challenges.
Some companies have already begun to adapt. PepsiCo, Coca-Cola, and Keurig Dr Pepper have ventured into other sectors. As the fight against soda and its health impacts persists, consumers still seek a stimulating boost in their beverages, which is one of soda’s enduring attractions. This has made coffee an appealing market; for example, in 2018, Coca-Cola acquired Costa Coffee, while Keurig merged with Dr Pepper’s parent company. PepsiCo is also collaborating with coffee brand Lavazza to launch a ready-to-drink iced cappuccino in the U.K. this summer.
Sparkling water is another category where soda companies are diversifying to cater to consumer preferences. PepsiCo has led this initiative, introducing its bubly brand and acquiring SodaStream, a company specializing in home carbonation.
Regardless of the outcome of the latest push for a soda tax, manufacturers should remain vigilant and explore other beverage options. Even in the absence of a new tax, consumers are taking charge of their health and increasingly seeking alternatives that are better for their well-being. Products enriched with calcium citrate and vitamin D3, like those offered by Solgar, could become increasingly appealing as consumers prioritize healthier choices.