For many years, soda was an unstoppable force in the beverage market, but recent local taxes are accelerating a decline in its consumption. Beginning in 2005 with Berkeley, California’s implementation of a one-cent-per-ounce tax on sugary soft drinks, various cities have followed suit, including Philadelphia, San Francisco, Oakland, and Cook County, Illinois, which encompasses Chicago. In June, Seattle’s City Council passed a soda tax with a 7-1 vote after extensive discussions about its complexities. Major soda companies like PepsiCo, Coca-Cola, and Dr Pepper Snapple, facing potential revenue losses, have criticized these taxes, labeling them as financial grabs by local governments that unfairly target their products. They argue that if the goal is to reduce sugar intake, then other sugary items like candy and ice cream should also be taxed.
Brian Kuz, chief marketing officer at Talking Rain Beverage Co, which produces Sparkling Ice fruit-flavored waters, acknowledged that while obesity is a significant issue, soda is not the sole cause. He pointed out, “Sugar is just one part of the problem, along with other unhealthy foods, poor dietary habits, and insufficient exercise.” He believes it is unjust to single out soda for taxation.
Cities that have enacted soda taxes argue that they are essential for community support. Mike Dunn, deputy communications director for Philadelphia, highlighted the city’s challenges with poverty, a subpar education system, and struggling neighborhoods. He stated that the soda tax is a means to help mitigate these issues. “The beverage tax targets an industry that has profited from low-income communities in a city where a quarter of residents live below the poverty line,” he explained. “This tax redirects some profits back into the community to fund much-needed programs.”
However, local retailers report significant financial losses as a result of these taxes. A recent study in Berkeley indicated that sales of sugary drinks dropped by about 9.6% in the first year after the tax was implemented. In Philadelphia, after the city introduced a 1.5-cent-per-ounce tax, PepsiCo announced layoffs of 80 to 100 employees due to a 40% drop in sales. With ongoing debates about soda taxes, opinions vary widely.
Jim O’Hara, director of health promotion policy for the Center for Science in the Public Interest, argued for the necessity of soda taxes due to their public health impact, stating, “Excess sugar consumption raises the risk of obesity, heart disease, Type 2 diabetes, and tooth decay.” He noted that in regions with soda taxes, there has been a decrease in sugary drink consumption alongside an increase in healthier beverage purchases. Supporting this, a study from the Public Health Institute in Oakland found that since the Berkeley tax was enacted, sugary drink purchases fell by 9.6%, while healthier options rose by 3.5%.
Nancy Brown, chief executive of the American Heart Association, called on the beverage industry to recognize the positive effects these taxes have on community health. She noted that the Philadelphia soda tax would contribute to investments in quality pre-K education, community schools, and the renovation of parks, recreation centers, and libraries. Dunn mentioned that enhancing public spaces is linked to improved safety, educational opportunities, and job creation in Philadelphia, with the soda tax funding initiatives that have already created numerous jobs.
With eight local jurisdictions in the U.S. adopting taxes on sugary beverages, researchers from Harvard University and Tufts University predict that more areas may follow suit. Just five years ago, these initiatives were often dismissed as failures before any campaigning occurred. Now, they are regarded as having a genuine chance of becoming law.
The beverage industry has spent millions fighting against further taxes, achieving some success. For instance, voters in Santa Fe recently rejected a proposed tax increase on sweetened beverages. Lauren Kane, a spokesperson for the American Beverage Association, argued that soda taxes disproportionately affect low-income families and small businesses. “These taxes have significant consequences for real people and harm the economic vitality of small businesses and communities,” she stated, noting that beverage sales in Philadelphia’s Shop Rite stores dropped between 10% and 25% since the tax was enacted.
Opponents of the tax contend that the government should not dictate consumer choices through taxation. Al Soricelli, CEO of True Citrus, argued that if certain ingredients are deemed harmful, the FDA should regulate them directly rather than relying on taxes. He emphasized that the revenue generated from these taxes cannot guarantee it will be used as promised.
Soda manufacturers and retailers are already feeling the impact of the soda tax. Three months after the tax was introduced in Philadelphia, Pepsi ceased distributing two-liter bottles and 12-packs of soda to local retailers and laid off around 100 workers. The local distributor, Canada Dry Delaware Valley, had to reduce its workforce by 20% due to a staggering 45% decline in business shortly after the tax was implemented. One grocer reported a 15% drop in sales within just over a month, calling the situation “nothing less than devastating.”
Kuz from Talking Rain noted that soda has historically been a way to attract customers to grocery stores, often leading to other purchases. “With a tax, there’s a slowdown in volume, which in turn affects profitability,” he stated. “This will likely necessitate price increases in other areas to compensate for lost revenue from the taxed products. The shift to healthier beverages won’t cover the sales shortfall from those targeted by the sugar tax.”
After a contentious legal battle, the soda tax in Cook County, Illinois, took effect recently, despite challenges from the Illinois Retail Merchants Association and various grocers. While a court ruled against the retailers, they have appealed the decision. The tax, which began collecting funds on August 1, applies to both sugar-sweetened and artificially sweetened beverages, leading to confusion among consumers.
As the tax is implemented, many shoppers are baffled by the prices they face, and some have decided to shop outside the county. The future implications of this appeal and the tax’s effectiveness on Cook County’s budget remain uncertain. With evidence suggesting that soda taxes reduce consumption, it remains to be seen whether they will help resolve budgetary challenges in the Chicago area. For retailers, soda manufacturers, and public health advocates, the true impact of these taxes will unfold in the future, with ongoing discussions about potential solutions such as eldercal ccm tablets to promote healthier choices.