Coke, Pepsi and the war on Big Soda

New York City and other anti-obesity forces are talking about taxing and regulating soft drink sales. Should investors be worried?

By Jonathan Berr May 31, 2012 11:41AM
How did Coca-Cola (KO), PepsiCo. (PEP) and their smaller rivals become Public Enemy No. 1 in the battle against America's obesity epidemic? The consumption of carbonated beverages has been plummeting for years. It makes no sense.

But the soda industry provides a convenient target for politicians in cash-strapped cities because it is large and makes a product that is indefensible from a nutritional standpoint. New York Mayor Mike Bloomberg on Wednesday proposed a ban on the sale of large sugary drinks such as soda, claiming the city wanted to do something to fight obesity.  There are a couple of problems with this idea.

First, I don't think it's legal to put these kinds of restrictions on a lawful product. Bloomberg is essentially picking winners and losers in the market because his proposal won't apply to fruit juices -- many of which are chock full of sugar -- and dairy-based drinks like milkshakes, which are hardly paragons of nutrition. Moreover, I don't see how Bloomberg's idea will affect obesity rates one iota. A consumer can buy two 16-ounce sodas instead of one 32-ounce one. What about people who buy large sodas to share with a friend? I suppose they will need to pass a lie-detector test.

Bloomberg isn't the soda industry's only headache.

The Center for Science and the Public Interest, which has long advocated soda taxes to fight obesity, on Wednesday announced plans to hold what it called the "first-ever National Soda Summit," whose goal is to improve public health by reducing the consumption of soda and other sugary drinks. It praised Bloomberg's plan as the "boldest effort yet to prevent obesity."
 
If critics are looking for a war with Big Soda, they needn't bother declaring one, because they are already winning the fight.

As CSPI itself noted in 2010, per-capita consumption of carbonated soft drinks had declined for 11 straight years, a trend it described as encouraging. Sales of diet soft drinks, which aren't that great for you either, are rising, as are those of sports drinks, many of them high in calories. I find it odd that the food police are willing to give these other beverages essentially a free pass.

Any restrictions on the sales of sugary beverages would be bad news for investors and may force companies to increase spending on developing healthier alternatives or buy smaller rivals that produce them. Such moves could eventually yield huge profits for the beverage industry but do little to shrink America's bulging waistlines.

The problem with drink-size mandates and soda taxes is they reduce the very complicated issue of obesity to a simplistic search for good guys and bad guys. People get fat and stay fat for a host of psychological and economic reasons. Making soda more expensive will only hurt the poor and penalize small businesses for selling a legal product.

Besides, many overweight consumers, including me, prefer zero-calorie sodas. The war on soda wouldn't do us much good.

Jonathan Berr is long Coke. Follow him on Twitter@jdberr.

Tags: KOPEP
19Comments
May 31, 2012 1:52PM
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Has anyone given any thought to perhaps putting responsibility for obesity on the person who is drinking a case of soda a day and eating 4 hamburgers? Why is it always someone else's place to try and fix something that is wrong? Why should some mayor of any state step up to the microphone and declare a ban on anything? Who made him the cookie monster guard dog?

This entire case is rediculous. Let us just stop making coke and any other product that someone feels is the problem to obesity and pretty soon we can just eat seaweed....

May 31, 2012 2:55PM
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This is typical. Let's not worry about our trillions of dollars of debt and worry about banning or taxing goods. If health care wasn't one of the dirtiest industries with insurance and drug companies then we wouldn't be in so much trouble on this end of the spectrum.

May 31, 2012 3:43PM
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 What about the people who aren't overweight? They can't buy the big drinks either? The goverment can't cure obesity. They can only tell us what we can and can't buy and thats not helping. If anything, this will just make it worse.

   What about anorexics? They have to eat healthy too? How about making a law saying they have to offer high calorie sugary drinks, food cooked in transfat, and a little pot to give them an appitite? All the young girls who look up to superskinney supermodels, who starve themselves to be like them. Thats a huge problem too.

 Noone should have the right to tell me what I can buy. or eat. or smoke. My body, My choice. The goverment needs to get out of our kitchens and go do something else!

May 31, 2012 3:34PM
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This is just another mean of big Gov't taking control of our personal choices/lives.  First, attacks on McDonald's Happy Meals and the toys they include (the meals are called Happy Meals), and reducing the portions of french fries.  Now, NY wants to ban sales of soft drinks over 16 oz..  Funny, with all the DUI's and drunk drivers, why can bars serve beer in such large glasses (ever had a yard of beer?).  Obesity starts at the home and personal responsiblity.  Parents need to be responsible for what they serve their children. Many are lazy and fast food is easy/cheap.  When people are heavy, they need to take responsibility of what they put through their proverbial "pie holes".  This is just another gov't play to take away our personal liberties.  STOP IT.
May 31, 2012 3:14PM
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No more than 12 M&M's per pack. 

Must be 18 or older to buy McDonalds... must show ID.
Jun 8, 2012 5:56PM
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So-----

It is OK to walk into a fast food place and order 12 BiGBurgers, 12 XLarge Fries, A 2 Gallon MIlk Shake , and a 16oz Coke because you won't have to worry about obesity if you limit your sugary drink intake.

More Idiotic government regualtions that do nothing to solve anything.

 

Bloomberg is a bigger Idiot than Obama!!!!!

May 31, 2012 2:26PM
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It's called addiction. Sugar and caffeine highs. I guess you have switch to meth, then you won't get fat.
Jun 8, 2012 5:08PM
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bottom line is NY keeps crossing the line. If they want to do anything, they should manage the gas prices that are bleeding new yorkers dry. Oh wait its ny and there gas tax thats doing it. hmm I think its time we let them know....NO!!! you work for us and dont you forget it, next time your fired. People seem to foget this little fact. We as the people control those who make these outlandish policies and laws. We are well within our right to speak up and say no. Banning the size of a soda is petty and out right stupid. I will say this, if there goal is to push companies and people out of NY then great job, keep up the good work.
Jun 8, 2012 5:32PM
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That Jack A@s Bloomberg has no right to restrict where I can buy a legal item at. WTH this proves we live an sissy nanny state. Dont vote for this Jack A@s again !!
Jun 8, 2012 9:03PM
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lets stop and think a momement will there always be a number one health issue or will everybody live forever and be taxed for being old or limited how old they can get. be real careful what people propose on others for it may come back to you.
Jun 8, 2012 5:34PM
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Johnathan, your an idiot.

But continue to drink your "Zero Calorie - soda" and be overweight.



Jun 8, 2012 6:22PM
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becouse the new your mayor is an idoit, i am sorry whele you at it why not band cady and sugor and gum and any and every thing whith chocolet in it , and why stop there way not  band beer, volka, rum. gin, coffee, tea,  and you sapot donut day realy! i hope for your sake you are not looking for a secand turm couse i don't thing it well happen, i think that you want to tax any thing you can did not we fight aganst enland to stop in crease in taxes, serously?! have you lost your mind, i defy you to tell your wife she can't have chocolet , if the people of new york wanted adlph hittler they promly would have voted him in office. put's.
May 31, 2012 3:50PM
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lol ok I have no dog in this fight but the information not in this article is astounding

first you say it's not fair to limit drink sizes
2nd you say it won't make a difference because people will buy 2 so what's the problem with that?
3rd you mention that juices are packed with sugar and you forget they are also packed with vitamins.
last make a vague reference to a soda tax without discussing so much as a proposal for such a tax but lets weigh the pros and cons of said unspecified tax.

pro: 1: the increased revenue will help offset the cost of healthcare caused by the product and those who consume it. While being paid for by those who consume it: a very conservative Ideal 2: people will start drinking more (gasp) water... maybe
Cons : people will drink less soda... maybe

Don't get me started on diet drinks just google the diet drink side effects

and how exactly is this supposed to hurt the poor again? you just kinda through that out there but you didn't justify it.

Jun 8, 2012 5:12PM
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I read an editorial that referenced Adam Smith- author of "Wealth of Nations".  The editorial mentioned that Adam Smith in the 1700's recommended that sugar, whiskey and tobacco  be taxed to support this nation.  The editorial mentioned that starting with George Washington, whiskey was taxed,   and Lord knows tobacco is being highly taxed.   Taxation on sugar has been on this nation's agenda since 1700's before Democrats and Republicans.   It makes sense.   Make the products that are damaging the health of this nation PAY for the damage they are causing.   Sure - we can not stop people from drinking alcohol,  smoking tobacco or drinking sugar but at least we can tax it and help pay for the damage they are causing.   Time to move with the times.   Sugar in ALL drinks (eg Red Bull) needs to be taxed.   George Washington would have wanted it that way. 
May 31, 2012 1:32PM
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A lot of excuses for the pop industry here. Tax 'em high. 
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