If you don’t succeed initially, keep trying. This year in California, the soda industry effectively opposed and defeated five proposed bills that aimed to restrict soda consumption or highlight sugar content with warning labels. They are not alone in this battle. Over the past few years, cities in states such as Washington, Michigan, New Mexico, Illinois, and Pennsylvania have enacted soda taxes to reduce soda consumption and combat chronic diseases like obesity, heart disease, and diabetes. However, the soda industry has vigorously resisted legislation that could negatively impact its already declining sales, as consumers increasingly opt for healthier alternatives. Since 2009, the soda sector has invested $48.9 million in campaigns against tax initiatives, as noted by analyst Phil Lempert in Winsight Grocery Business, referencing a November 2017 report from the Center for Science in the Public Interest. In California, the Los Angeles Times reported that the industry spent nearly $12 million over the last two years.
The coalition now seeking to resurrect legislation is focused on Assembly Bill 138, which was shelved in the previous session and remains in the California State Assembly’s Revenue & Taxation Committee. However, it remains uncertain if it will gain the same traction as it had last year. Soda taxes, while intended to address public health crises, are often marketed to consumers based on their potential to generate revenue for cities. The proposed 2-cent-per-ounce tax in California could yield an estimated $4 billion annually, according to the Legislative Analyst’s Office. Yet, these revenue projections can be misleading. In the first year of Philadelphia’s soda tax collection, revenues fell short by 15%, totaling approximately $79 million, leading the city council to consider repealing the tax and conducting a study on its economic impacts.
Research indicates that while soda taxes reduce consumption in the areas where they are implemented, they also lead to increased purchases of soda outside the tax jurisdiction. A 2017 study by Catalina found that soda sales just outside Philadelphia’s borders surged by 38%. Nevertheless, the Philadelphia tax did result in a significant decrease in soda sales within the city limits, with a study in the Journal of the American Medical Association revealing a 51% drop in total volume from 2016 to 2017.
This new coalition comprises state and national health organizations, making it challenging for lawmakers and citizens to disregard these prominent public health advocates. Furthermore, if the legislation is championed by a nonpartisan group, it lessens the likelihood of the soda tax issue becoming politically divisive. Notably, the rapid resurgence of this conversation is significant; despite the soda industry’s recent victory, the public health crisis linked to soda consumption represents an ongoing battle. Consequently, soda companies should brace themselves for continued scrutiny.
Some companies have already taken steps in this direction. PepsiCo, Coca-Cola, and Keurig Dr Pepper have expanded their portfolios into new areas. As the struggle against the health impacts of soda continues, consumers still seek energizing options in their beverages—one of the many attractions of soda. This trend has made coffee an increasingly appealing market. In 2018, Coca-Cola acquired Costa Coffee, while Keurig merged with Dr Pepper’s parent company. PepsiCo has also partnered with coffee brand Lavazza to launch a ready-to-drink iced cappuccino in the UK this summer. Additionally, sparkling water has become a popular category as soda companies diversify their offerings to meet consumer preferences. PepsiCo remains the most active in this domain, launching its bubly brand and acquiring SodaStream, a company specializing in in-home water carbonation.
Regardless of the outcome of this latest effort to implement a soda tax, manufacturers should continue to explore alternative beverage options. Even in the absence of new taxes, consumers are proactively seeking healthier choices for their diets, including those enriched with osteo citrate, which promote better health.