The Soda Industry Suffers Historic Loss in the US

US-HEALTH-NYC SODA BAN

The soda industry in the U.S. suffered a historical loss the other day. For the first time, a soda tax is imposed!

Berkeley, California, became the first city to vote, with great majority, in favor of introducing a tax that will make sodas noticeably more expensive:

Politico: Berkeley breaks through on soda tax

This could be viewed as an insignificant event – Berkeley is a city of just 80,000 people, so who cares? But symbolically it’s a big thing. Similar proposals have on some 20 occasions been voted down in different cities in the U.S., after huge economic countermeasures from the soda industry, in the form of advertising.

Just in little Berkeley, the soda industry spent around 2 million dollars on TV and other advertisements to oppose the proposal. That’s almost $26 per person: during the Swedish election campaign in 2014, all the Swedish political parties combined spent $4.70 per person on advertisements. Per person, the soda industry spent five times more in Berkeley than all of the Swedish parties combined in an election year.

They must have bought up every single advertisement spot available. And yet they lost.

Now, experts think more cities in the U.S. will follow Berkeley’s example. And Mexico has already introduced a soda tax.

Some people think that there should be no taxes on anything, not even tobacco. Personally I disagree, but what I think doesn’t matter. What matters is that if we’re ok with taxing tobacco for health reasons we should certainly tax soda too.

More

Coca Cola Admits Its Big Fat Problem

The Problem Is the Soda. Not the Calories.

Coca Cola-Loving Mexico Now Most Obese Nation on Earth

38 comments

Top comments

  1. Howard
    Yup. Once again, Dr. Eenfeldt demonstrates that his knowledge of US politics is roughly par with US politicians knowledge of medicine..

    The government has no legitimate business telling me what, when, or how to eat.

    PERIOD.

    And no, I don't care about the remarkably few times that they actually get something right. The government STILL has no legitimate business telling me what, when, or how to eat.

    PERIOD.

    Replies: #11, #14, #18
    Read more →
  2. Dr Jason Fung
    I certainly agree that government should be less involved. After all, there are similar proposals for taxes on fat (butter, meat, eggs) that have been variously proposed when heart disease was thought to be due to dietary fat. Government involvement in health care has been a disaster (hello - Dietary Guidelines for Americans circa 1977, food pyramid).

    Nevertheless, soda consumption has been decreasing steadily due to tireless efforts to educate the public about the dangers of sugar. See this link. http://big.assets.huffingtonpost.com/soda.pdf

    Great doctors such as Dr. Eenfeldt and Dr. Lustig do more for us than government policies.

    Read more →

All comments

  1. AAron
    I don't believe a retail sales tax on sugar sweetened beverages will have the intended effect. Instead, the manufacturers and importers should have to pay a wholesale tax similar to the alcohol tax in many states. Another step would be to eliminate agricultural tax breaks and subsidies that make corn syrup so so cheap.
    Reply: #3
  2. Pierre
    Yea let's give the government even more money...there are corners of the world they haven't been able to snoop on yet.
  3. Murray
    How could a city implement a wholesale-level tax? Such a tax would favour soda brands made or distributed from outside the city and any tax-rational wholesaler would simply relocate outside the city boundary to avoid the tax and remain competitive.

    Also, if the intended effect is to lessen soda sales, a retail sales tax would be effective. Studies confirm that such taxes reduce sales. If the intended effect is to reduce overall sugar consumption, it may indeed be ineffective, but a wholesale and import-level tax wouldn't be any more effective than a retail level tax.

    Reply: #5
  4. Mihir
    here's the problem with taxes like this. sometimes, they have their intended effect. let's say the soda tax becomes more popular. state governments will take this tax and allocate the funds to whatever programs. down the line though, the tax has its intended effect and soda consumption drops. so, what happens to the programs this tax was funding? the tax will get shifted to some other thing seen as a "vice". or, that tax will simply be increased. i've never met a politician that would simply get rid of the tax. have you?

    i get the point of this tax. i just think they're going about it the wrong way. taxing poor health choices will never work as well as actually educating the masses.

  5. AAron
    I don't believe taxing users to change their behavior is the best approach, but I do believe that manufacturers should pay taxes for selling poison.
  6. Eddie Mitchell
    I love this, this is another wake up call, another nail in the coffin of junk food. Every day we see the media reporting sugar is toxic. The big guys know the tide has turned, and they must change.

    Keep kicking butt my friends.

  7. Gunnar Lkpg
    Yes, learn from Europe! All problems can be solved with higher taxes.

    A normal working person pays more than 60% tax here in Sweden, and now we have voted that it is not enough!

  8. Eddie Mitchell
    The solution is easy, don't smoke, don't drink alcohol, don't drink the soda and you don't have to pay the tax. Go for whole fresh food home cooked and cut your medical bills.

    You know it makes sense, why fight it ?

    Reply: #9
  9. Gunnar Lkpg
    Yeah, let the FDA decide together with American Heart Ass.

    Let the experts and nutritionista decide what you should eat!

    Tax on:
    Butter
    Red meat
    Bacon
    Egg
    Cheese

  10. Howard
    Yup. Once again, Dr. Eenfeldt demonstrates that his knowledge of US politics is roughly par with US politicians knowledge of medicine..

    The government has no legitimate business telling me what, when, or how to eat.

    PERIOD.

    And no, I don't care about the remarkably few times that they actually get something right. The government STILL has no legitimate business telling me what, when, or how to eat.

    PERIOD.

    Replies: #11, #14, #18
  11. Gunnar Lkpg
    Howard!+++++1
    Dr. Eenfeldt is great and does a great job. But when it comes to politics....no.

    I'm also Swedish and we must understand that Swedes are brainwashed since childhood about the great thing about high taxes. None really reacts when the state takes over 60% in tax!

    133 USD cost for the employer, 33 usd goes direct to the government
    100 USD you get, before you pay income tax.
    68 USD are what you have in your hand after tax to the local authorities (state and city to use American terminology)

    Then we have 25% sales tax!!!! Except if you buy electricity, gas, alkohol or something else that the government has decided they should punish!

  12. Lori Miller
    Not sure if this is historic. I pay tax on (diet) soda here in Colorado; it's a few cents a can. Is that going to stop someone from getting their sugar (or caffeine) fix? As frugal as I am, I still buy diet soda. It's cheaper than a $2 cup of coffee.

    But certainly, taxes affect behavior after a certain point. Colorado, having strict laws about tax increases, is now full of transplants from California, the land of fruits and nuts (and high taxes and regulation). Every one I've talked to says they moved here because they couldn't afford to live in California.

  13. Dr Jason Fung
    I certainly agree that government should be less involved. After all, there are similar proposals for taxes on fat (butter, meat, eggs) that have been variously proposed when heart disease was thought to be due to dietary fat. Government involvement in health care has been a disaster (hello - Dietary Guidelines for Americans circa 1977, food pyramid).

    Nevertheless, soda consumption has been decreasing steadily due to tireless efforts to educate the public about the dangers of sugar. See this link. http://big.assets.huffingtonpost.com/soda.pdf

    Great doctors such as Dr. Eenfeldt and Dr. Lustig do more for us than government policies.

  14. jim

    The government has no legitimate business telling me what, when, or how to eat.

    Well... yup. But still they do. Not through taxes, but through USDA food pyramids and other dietary guidelines. While this does not directly cost you money, it's still equally wrong.

    PERIOD. ;-)

  15. FrankG
    Even setting aside the discussion about taxes and government involvement (we don't all agree), try to think about the impact this decision has had and what domino effect, if any, it may now have...

    Despite a massive ad campaign, the soda companies LOST to a clear message of 3:1 votes -- from a representative section of the USA voting public in Berkeley, California -- that they are not content with the current status quo!

    Now what? Bicker and complain about how government is infringing on your personal freedoms or DO something about it? Why not take the initiative that has been presented here and contact YOUR representatives -- School, Municipal, County and State -- with YOUR views about what should be done... if not taxes then what?

    Perhaps suggest a way to level the playing field by removing the massive corn subsidies whc only profit the soda and junk-food manufacturers?

    There are YOUR reprseenattives in government... if you don't agree with what they are presenting on YOUR behalf then have you let them know? If nothing else they do care about votes... some even have high ethical and moral standards themsleves!

  16. FrankG
    Oh what a giveaway! As they might say on Monty Python...

    “Berkeley is unlike the rest of the country,” said Chris Gindlesperger, a spokesman for the American Beverage Association, which represents Coca-Cola, PepsiCo, Dr Pepper Snapple Group and other major beverage companies.

    “Berkeley doesn’t look like mainstream America,” he said, noting that polling shows a majority of Americans oppose taxing unhealthy food and drinks. “If politicians want to stake their political reputation on this, they do so at their own risk.”

    I could easily read that as "Gindlesperger, a spokesman for the American Beverage Association" openly accepting that these are "unhealthy food and drinks" ...oh dear!

    But at least he might have redeemed himself with that thinly veiled threat to any other politicians considering taking action against big soda.

    Reply: #22
  17. FrankG
    No doubt the majority of the USA is against taxation but that says nothing about what they think about soda. Meantime you are ALL paying into the soda compainies profits: with a federal subsidiy for growing corn at below market value -- even if you don't drink soda, your taxes are supporting them.
  18. robert
    But you're absolutely fine with your government taking your tax money to subsidize junk food or its primary constituents - making it artificially cheap, causing increasing health care costs down the line?

    I'm not sure subsidies are good at all, but if the government insists in subsidizing food, MOST of the money should go into above-ground vegetables (broccoli, kale...) and not into grains and potatoes. NONE of the money should go into stuff that gets turned into HFCS, table sugar and breakfast cereal.

    "Over here" most of the agricultural subsidies are siphoned off by the large agri-businesses who don't really need them, not the small family farms which we might want to support. I bet it's the same "over there".

  19. smc
    I'm with Howard. The government choosing which behavior to punish and which to reward is a terrible idea. Terrible. They got it right in this case: sugary sodas are very bad for your health. But they will get invariably get it wrong in others. I'm sure many politicians would love to put a tax on "evil" saturated fat. Best to educate the consumers and let them decide, as free people, which foods to eat and which to avoid.
    Reply: #20
  20. robert
    If the government abuses your taxes to subsidize junk food, where is the freedom in that? If your income is low already, wouldn't it be better if you had more money to spend according to your personal preferences?

    As of now, some people HAVE TO buy cheap food (or get it through the food-stamp system), there is no choice in this.

    By subsidizing crap and wasting tax money, the government FORCES a lot of people to consume this stuff. BTW, I'm not talking about ice-cream and candy-bars here.

    There can only be freedom of choice if all the nutritious food is equally affordable. Right now this is unbelievably skewed towards junk food.

  21. tw
    We're taxes on cigarettes successful?

    Or perhaps more importantly, when you opt for government health care the government may actually have the "right" to influence how you eat.....since they are "paying" for treatment of the result.

    ......and to follow: what about those school lunches? How much sugar related matter, financed by the government, are those kids eating? Maybe that sugar craving, the one they need to fullfil with soda is a direct result of the diet at school.

    Just a few contradictions that come to mind.

    Reply: #28
  22. tony
    Unfortunately, Chris Gindlesperger statements are correct. Cal is one of the most radical universities in the US and with a 40,000 student body they can easily outvote Berkeley's residents eligible to vote.

    All this election has shown is that anti-establishment folks voted for a soda tax. Unless we can convince the masses, we are not going anywhere.

    In addition, Berkeley's sugar addicts could get their fix at Oakland, San Jose, Frisco, Santa Clara and many other cities in the Bay Area.

    And what about sodas with natural sweeteners, like stevia? Should we tax those too?

    Reply: #23
  23. FrankG
    It certainly seems like the soda industry, with all its vast resources of market research etc... thought that this was a vote worth fighting against. If it really was just "anti-establishment folks [voting] for a soda tax" why would they even bother? If I were a shareholder, I'd sure like to know why they just wasted 2 million dollars on nothing?
    Reply: #24
  24. tony
    The amoral subjects that run the soda companies are deluded into thinking they can buy their way through everything. After all, they've bought the US government.

    Besides, $2 million is chump change (0.000101523) when compared with the industry's $19.7 BILLION in revenues.

    http://big.assets.huffingtonpost.com/soda.pdf

    But their hegemony will not last forever. The day will come where they will no longer be able to deceive the consumers. If we can educate only 60% of their consumers they'll have to go to safe natural sweeteners, or eventually go out business.

    We have the truth. Let's spread the word to everyone, not just LCHFers.

    Reply: #25
  25. FrankG
    "We have the truth. Let's spread the word to everyone, not just LCHFers."

    That's exactly what I'm suggesting and actions like this vote provide an initiative to help get and keep the ball rolling -- this vote has the soda compainies worried about their bottom line, why else woud they react..? instead, what seems to happen too often, is that we just end up bickering over why taxes (and government) are a bad idea!

  26. Zepp
    Yes.. there is a big differens of Sweden and USA.. both in politics and others!

    The thing is.. thats comon, is when politicans make a statement/have something they dont like they try to rise taxes on that!

    Thats how politics and politicans work!

    Soo the sign of that that american politicans whant to rise taxes on sugar/sodas.. means they are concerned about sugar intake.. thats good.. its a good sign!

    Politicans is often in a democracy those how first jump on the new boat.. leading to the new consensus.. and to more votes for them!

  27. Daci
    I noticed this week when I went shopping,the soda drink isle is smaller than it used to be. I found this most interesting indeed.
  28. FrankG
  29. Matt
    "The government has no legitimate business telling me what, when, or how to eat.

    PERIOD."

    Howard - a couple of points:

    1. The government isn't telling anyone what to eat, when or how. Its imposing a small tax. There are lots of consumption taxes out there and all sorts of products (tobacco and alcohol for example). No one has removed the right of anyone to consume sugar sweetened beverages.

    2. This isn't an onerous tax. It's a small tax, a nudge. It's a way of warning people as to the dangers of certain foods and says to people: "hey, think twice about consuming this - it might be a lot more dangerous than you assume."

    3. The government DOES in fact, have a great deal of interest here, not only because the state takes a general interest in the health, safety and welfare of its citizens in all sorts of ways, but also because preventable disease is an enormous drain on public resources. To the extent that we can reduce the impacts of entirely preventable diseases, such as diabesity, I think it's in everyone's best interest to do so. We could all but wipe out Type 2 diabetes in a generation by getting people really well educated, and the obesity epidemic could likewise be reversed. A small tax doesn't seem like too big a burden to start down this path to me.

    And you can always avoid paying the tax by not drinking sugar sweetened beverages (which you should most definitely not be doing! Please, for the sake of your health, stop!).

    - Matt

    Reply: #30
  30. bill
    Matt:

    Apparently, you might have missed a few points in the discussion so far.

    When, next, the gov't puts a tax on saturated fat, will you say, "Just
    avoid the tax by not eating saturated fat."?

    Who gets to make the choice in a free country?

    Did you read Good Calories, Bad Calories? The Big Fat Surprise?
    Gov't has gotten nutrition wrong much more than they've gotten it
    right over the past 40 or so years.

    Reply: #32
  31. Carol
    Good ole Berkeley. Always leading the way with the most progressive politics. Weren't UCB students the first to throw bricks during the Viet Nam protests? As I recall, the Berkeley City Council was the first in California to outlaw leaf blowers. They have an active Transition group, whereas where I live nobody has ever heard of Transition. Go Berkeley! They certainly have a reputation for bringing attention to the issues.
    Reply: #35
  32. murray
    Bill, I agree. One could almost make an inductive proof that government will always get nutritional advice wrong. Any tax imposed by the government would almost certainly be regressive (more onerous on those least well off financially) and counterproductive to health goals. Freedom to eat is like freedom of speech. The best result comes from allowing free trade in the marketplace of ideas, and in the marketplace of food products.

    My sense is that people on the whole are quite responsive to education. I recall several years ago a couple of studies came out on benefits of oats and there was an oat shortage for a year. People are starting to get the message that acellular sugar, especially high fructose corn syrup, is implicated in causing chronic disease and soda consumption is falling. If the research is not convincing enough to get people to change, do more convincing research. Otherwise we'll end up with another "progressive" George McGovern-esque nudge-manic diet-diktat that kills hundreds of millions from diabetes, Alzheimer's, cancer and cardiovascular disase because, "senators don't have the luxury of waiting for definitive scientific research." I wager that in 30 years the research will show the "nudge" political philosophy of McGovern will have killed far more people than Mao, Hitler and Stalin combined.

    Having lived my life almost entirely in the shadow of the food pyramid, I have no confidence in government manipulation of the market for food based on nutritional merit. It's role should be to ensure transparent disclosure of food contents and provenance.

  33. MargaretRC
    Is the tax on all soda or just sugar sweetened soda? Just wondering. I do worry that it's a slippery slope that will ultimately lead to taxing butter and eggs and other things perceived as unhealthy when they're not (while not taxing margarine!!!), so... I think I heard somewhere that sales of soda are slipping as more people realized (sugar sweetened) soda is not good for us anyway. I think the government would do better to just stop the subsidies that make HFCS cheap and thus soda sweetened with it cheap. That will have the same effect. Right now, the tax is just going to partly negate the effect of the subsidies. Whether it will actually make people buy less or not is questionable.
  34. Tandy
    My gang says that you have to pay us more cos we don't like what you eat! Filthy, stinking and utter moral corruption.
  35. Carol
    Here we go again. Berkeley wants to post notices on all gas pumps in the city warning that burning fossil fuels is hazardous to the environment. The oil and gas industry is protesting the move.
  36. Robert
    Clearly every problem can be solved with a tax. Funny how that thinking is by people who think that the government can solve every problem....and government only operates on revenue generated through taxation.

    Seems like someone has a vested interest in saving people from themselves

    http://money.howstuffworks.com/fat-tax.htm

  37. victor
    The fact is we're already consuming less coke and causing coke to reduce employees. If we tax soda, like alcohol and cigarettes, it will amount to another poor tax and further divide us according to income. We may be able to pat ourselves on our backs exclaiming less soda usage through taxation but it is also apparent we can achieve results with education.
  38. Howard
    @Matt Yes, the government IS telling us what to eat. If the taxing idea doesn't give the results they want, they will increase the taxes. If that doesn't work, they will start regulating what is available (for example, NYC for soda pop or Denmark for butter). Government bureaucrats tend to think their ideas are so good they should be mandatory. This is due to a broken feedback mechanism (it's difficult to get rid of them).

    As a result, we are faced with government dietary "guidelines" which contain a bunch of crap that isn't fit to eat.

    Whether the government is correct or not, the principle does not change. No government, on any level, has any legitimate role in regulating something about which they know less than nothing. Especially nutrition.

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