Taxing soda is an increasingly popular approach to raising revenue while combating obesity, which affects 40 percent of American adults. But the sweetened-beverage industry is not about to go away quietly.
Ahead of the U.S. midterm elections, the soda industry poured millions of dollars into fighting taxes on sugary drinks. In recent years, it has been largely successful in shutting down new taxes, except in a handful of major cities.
The industry is now pushing statewide measures billed as grocery tax bans that strip cities and towns of their ability to tax soda. Two of these initiatives will be on the ballot Tuesday in Washington and Oregon. Arizona and Michigan already ban localities from enacting soda taxes.
In California, where four cities have soda taxes, the beverage industry pressured lawmakers this summer into accepting a 12-year moratorium on local taxes on sugar-sweetened drinks. Some lawmakers say Californians are being “held hostage” over the measure by the soda industry, which spent $7 million on a ballot initiative that would have made it much harder for cities to raise taxes of any kind. The beverage industry dropped the initiative after lawmakers agreed to the moratorium.
The sweetened-beverage industry is also cultivating relationships with doctors and scientists, which public health advocates say they’ve seen before. “There are definitely parallels with the tobacco industry,” says Betsy Janes of the American Cancer Society Cancer Action Network. Soda makers “are happy to take a page from their playbook.”
That’s because for years, tobacco companies used their lobbying clout to persuade state lawmakers to block cities and counties from passing smoke-free ordinances. By 2006, 21 states had pre-empted local smoke-free laws, according to Americans for Nonsmokers’ Rights. Even today, 13 states have some sort of ban on local smoke-free laws.
Most public health advocates describe soda taxes as a proven way to reduce Americans’ consumption of added sugars, which, along with other dietary factors, have been linked to 40,000 deaths from heart disease every year. A study published last year in PLOS One projects that Mexico’s soda tax will prevent up to 134,000 cases of diabetes by 2030. And in Philadelphia, sales of sweetened beverages fell 57 percent after a city tax of 1.5 cents per ounce took effect, according to a 2017 study.
Soda companies are using their war chests to fund the Washington and Oregon ballot measures. Coca-Cola has contributed nearly half the $20 million raised in support of the Washington initiative, while the American Beverage Association has contributed about half the $5.6 million behind the Oregon measure, according to state records.
Tax impacts on business, health
PepsiCo, one of the largest soda companies, did not respond to calls or emails. Coca-Cola declined to comment on the issue, referring all questions to the American Beverage Association, which represents the soda industry. William Dermody, a spokesman for the beverage association, declined to comment on the comparison with Big Tobacco. But Dermody says the soda industry supports “keeping food and beverages affordable” and is “standing up for small business and working families” by supporting the ballot measures. Taxes on soda and other groceries “are harmful; they raise prices and they cost jobs,” he says.
Health advocates say the ballot measures aren’t really about groceries.
In Washington state, basic groceries are exempt from sales taxes, notes state Sen. Reuven Carlyle, a Seattle Democrat opposed to the initiative to limit cities’ ability to tax soda. He recently tweeted: “Coke and Pepsi’s undignified $22 million campaign to strip local gov’t authority sent 11 campaign advertisements to my wife alone. Regardless of their short term wins, one day big soda will find their brand equity in the same league as the NRA, big tobacco, big oil.”
Matthew Myers of the Campaign for Tobacco-Free Kids is a veteran of the tobacco wars. He notes that the tobacco industry fought smoke-free laws by warning that they would drive customers away from restaurants and bars. In fact, the Centers for Disease Control and Prevention has reported that smoking bans increase business at bars and restaurants because customers enjoy clean air.
Similarly, research shows that Philadelphia’s sugary drink tax hasn’t hurt other aspects of the grocery business, Myers says. Although sales of sugary drinks have fallen, overall business at chain stores hasn’t suffered, according to a 2017 study. A study of a soda tax in Berkeley, Calif., found similar results, with residents buying less soda but more bottled water.
Public health groups said they aren’t giving up on soda taxes. In California, the state dental and medical associations have filed a ballot measure for 2020 to create a statewide tax on sugary drinks.
A show of financial force
Soda makers have plenty of money for a fight. The food and beverage industry spent $22.3 million in 2018 on lobbying, which includes $5.4 million by Coca-Cola and $2.8 million by PepsiCo. That’s more than the tobacco industry, which spent $16.7 million on lobbying in 2018. In 1998, when the tobacco industry was under similar pressure, it spent $72 million on lobbying, according to OpenSecrets.org.
The tobacco industry also spent decades funneling money into research that made cigarettes look less harmful than they really were, Myers says. Now beverage companies are trying to win over scientists and medical societies too, says Marion Nestle, an emeritus professor of nutrition, food studies and public health at New York University and author of “Unsavory Truth: How Food Companies Skew the Science of What We Eat.”
Coca-Cola spent $146 million on “well-being related scientific research, partnership and health professional activities” from 2010 through 2017, according to the company’s own records. A 2016 study found that Coca-Cola and PepsiCo funded 95 national medical organizations from 2011 to 2015, while lobbying against 29 public health bills that aimed to reduce soda consumption or improve diet. Coca-Cola funded the publication of 389 articles in 169 journals from 2008 to 2016, according to a study published this year in the journal Public Health Nutrition.
Nestle says no one should be surprised that industry-funded research tends to absolve soda from any role in causing obesity. Beverage industry research typically shifts the blame for obesity onto inactivity and “energy balance,” suggesting that exercise is far more important to weight loss than cutting back on sugar and calories, she says.
While independent researchers have found evidence linking sugary drinks to obesity, heart disease and diabetes, Dermody questions the link between sugary drinks and obesity. Obesity has increased steadily over the past three decades. Yet in 2015, sales of carbonated soft drinks fell to their lowest level in 30 years, suggesting the obesity epidemic is being driven by something other than soda, Dermody says. He notes that half the soft drinks sold today have no calories. That shows that voluntary industry efforts to reduce sugar and calories in soft drinks are working, and that taxes aren’t needed.
Medical groups and industry funds
A number of medical groups and universities stopped accepting soda industry funding in 2015 after extensive publicity of Coca-Cola’s attempts to influence science. Most health groups — including the American Heart Association, American Cancer Society and American Diabetes Association – now support soda taxes.
But two medical groups have defied this trend.
In July, just after California lawmakers approved the moratorium on soda taxes, the Obesity Society, which represents doctors who treat overweight patients, issued a statement saying there’s no proof that such measures will save lives.
The Academy of Nutrition and Dietetics, which includes dietitians, has taken a “neutral” stand on soda taxes, noting that “scientific evidence is insufficiently clear.” In a statement similar to positions taken by the beverage industry, the nutrition academy said, “No single food or beverage leads to overweight or obesity when consumed in moderate amounts and within the context of the total diet.”
Both the obesity and nutrition groups have had close relationships with the soda industry. Coca-Cola and PepsiCo were “premier sponsors” of the nutrition academy in 2016, according to the group’s annual report. PepsiCo and Ocean Spray paid for “premium” exhibit booths at the nutrition academy’s national conference in October. Booths that size cost $40,000 to $50,000 each.
In October, PepsiCo underwrote a special issue of the Obesity Society’s journal, which was devoted entirely to the science of artificial sweeteners, at a cost of $26,880. Although PepsiCo paid the journal’s publisher for the special issue, part of the money also went to the Obesity Society, says Dr. Steven Heymsfield, the group’s president-elect. The Obesity Society has nurtured close ties with soda makers through a food industry engagement council. Past meetings were chaired by executives of PepsiCo and attended by employees of the Dr Pepper Snapple Group, now known as Keurig Dr Pepper.
Anthony Comuzzie, the Obesity Society’s executive director, says the society has disbanded the food industry council. In an email, Comuzzie denied that the society’s ties to industry have influenced its position on soda taxes. “To imply that the group or society collectively is biased by food companies has no basis in reality,” he wrote.
But Nestle is not buying it.
“It is shameful that the academy is not strongly supporting public health measures to prevent obesity,” Nestle says. “The academy’s position puts it squarely on the side of the food industry and against public health.”