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Soda Industry Fights Back Against Sugar Taxes

The food industry might have to pay attention now, especially considering the goal of The Conference Board – reducing 20 percent of calorie intake from liquid refreshments by 2025.

Soda Industry Fights Back Against Sugar Taxes

By: Divya Rajan

Posted on: in Beverage News | Food Manufacturing and Supply Chain News | Food News

The soda industry is trying to prevent local governments from imposing sugar taxes on sweetened beverages. In attempts to avoid a soda tax similar to the ones implemented in Seattle of 1.75 cents per ounce, they are pushing for a ballot initiative campaign in Washington State. Bills banning local governments from implanting these kinds of laws have been signed into effect in Arizona and Michigan. The soda industry has spent $48.9 million on opposition campaigns since 2009 according to Winsight Grocery Business.

In 2015, Berkeley, California implemented a soda tax in hopes of reducing consumption of sugary beverages. Similar tax bills started to appear in other places such as Philadelphia, Pennsylvania and Cook County, Illinois. However, due to resistance from the soda industry, the penny-per-ounce law was overturned in Cook County after only four months.

PepsiCo, Dr Pepper Snapple and Coca-Cola claim that this soda tax is just a money grab tactic used by municipalities who need it. The soda giants claim municipalities singled out sweetened beverages while asserting that their intention was to reduce overall sugar intake – which in the eyes of the soda industry, is unfair.

“It’s a devastating tax and there is no rationale for what they did … This is a money grab around municipalities that are going bankrupt,” James Trebilcock, executive vice president and chief commercial officer for Dr Pepper Snapple, told Food Dive.

The efforts of the soda industry don’t seem to be going to waste. Residents from Santa Fe, New Mexico had rejected a similar tax. However, the US is not the only country implementing these new taxes; Britain’s sugar tax took effect in April of this year. South Africa, Australia, India and New Zealand are also countries in favor of implementing a sugar tax.

Sugar taxes are supposed to decrease overall sugar consumption. In fact, according to Winsight, there is new data that shows consuming sugar in liquid form increases the risk of heart disease, non-alcoholic fatty liver disease, type 2 diabetes and obesity. It is claimed that the cities with a soda tax could eventually have a healthier population considering 30 percent of children and over three-quarters of American adults are said to be overweight or obese.

However, there is a downside to the taxes. Stats show that sales of taxed items drop drastically, with sales of sweetened drinks plunging by 40 percent in Philadelphia within months of implementing their sugar tax. In Berkley, soda sales fell 21 percent in 2016, a year after the soda tax was implemented. This definitely has a negative affect on retailers and even on their workers. Canada Dry Delaware Valley laid off a fifth of its workforce in Philadelphia since the taxes came into effect. PepsiCo also cut dozens of jobs in that area.

The soda industry is restructuring their argument, making it revolve around the cost of groceries for the average consumer. They argue that taxing individual products would increase the cost of living and hurt working class citizens. Both sides of the sugar tax have pros and cons – which one will prevail has yet to be determined.


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