- A new coalition called Californians for Less Soda — which includes the American Heart Association, the California Medical Association and the California Dental Association — is bringing back the fight for a 2-cent-per-ounce statewide tax on sugary drinks, according to Politico.
- The coalition also seeks to reverse a 2018 law that bans new local soda taxes until 2030.
- Although the group does not have a specific ballot measure that they would like to pursue to combat soft drink consumption, Politico reports they are seeking the aid of legislators to push the issue to the 2020 ballot.
If at first you don’t succeed, try and try again. This year in California, the soda industry successfully fought and killed five bills that would have limited soda consumption or brought attention to sugar content through warning labels. And they’re not alone. In the past several years, cities in states including Washington, Michigan, New Mexico, Illinois and Pennsylvania passed soda tax bills in an effort to curtail soda consumption and stem the rise of chronic diseases — including obesity, heart disease and diabetes.
The soda industry, however, has fought hard to stem the spread of legislation that would be unfavorable to the segment, which is already struggling with declining sales as consumers choose better-for-you options. Since 2009, the soda industry spent $48.9 million on tax opposition campaigns, analyst Phil Lempert noted in Winsight Grocery Business. He cited a November 2017 report by the Center for Science in the Public Interest. In California alone, the Los Angeles Times reported the industry spent nearly $12 million in the past two years.
The particular bill this new coalition is looking to revive is the Assembly Bill 138 from this past session. The bill was previously shelved and remains in the California State Assembly's Revenue & Taxation Committee. However, it’s debatable whether it will have the same amount of momentum as it did this past year.
Soda taxes, while aimed at solving a public health crisis, are sold to consumers through their ability to generate revenue for cities. The 2-cent-per-ounce tax in California could tally an estimated $4 billion a year, according to the Legislative Analyst’s Office.
Those revenue promises do not always add up. In the first 12 months of Philadelphia’s soda tax collection, revenues totaled about $79 million — 15% short of projections. As a result, the city council is considering legislation to repeal it — and has passed a bill for a study to show its economic consequences.
Studies have shown that while soda taxes do decrease consumption in the area in which they are enacted, they similarly increase the purchases of the beverages outside of the tax zone. In Philadelphia, soda sales just outside the city's border increased by 38%, according to a 2017 study from Catalina. However, Philadelphia's tax worked. A study in the Journal of the American Medical Association this year found total volume soda sales in the city limits decreased 51% between 2016 and 2017.
This new coalition comes to the table with authority. Made up of state and national health organizations, it will be difficult for lawmakers and citizens to ignore entities who are the standard-bearers for public health in the United States. Plus, if the legislation is pushed by an apolitical group, there is a lesser likelihood that the soda tax issue could be affiliated with to one political party, which could cause some of the underlying divisive sentiment.
Perhaps more important is the speed with which this legislation has returned to the conversation. Despite the big soda companies winning the last battle, the public health crisis some associate with soda is a war. As such, soda companies should prepare.
Some already have. PepsiCo, Coca-Cola and Keurig Dr Pepper have all made moves into other spaces. As the fight against soda and its effects on health continue, consumers still want a jolt in their beverages — one of the many appealing characteristics of soda. That makes coffee an appealing segment. In 2018, Coca-Cola bought Costa Coffee, while coffee giant Keurig merged with Dr Pepper's parent company. PepsiCo is also partnering with coffee brand Lavazza on a ready-to-drink iced cappuccino in the U.K. this summer.
Sparkling water is another category where soda companies have branched out as they look to offer options appealing to consumers. PepsiCo has been the most active on this front, launching its bubly brand and buying in-home water carbonation company SodaStream.
Regardless of whether this newest push to establish a soda tax is successful, manufacturers would be wise to continue to look at other beverage choices. Even without a new tax, consumers are taking their health into their own hands and looking for other options that are better for their bodies.