Soda taxes spread after votes in four U.S. cities

November 9, 2016 4:23 AM EST

City buses travel down a city street in San Francisco, California, February 5, 2016. REUTERS/Mike Blake


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(Reuters) - Three California cities voted for a tax on sugar-sweetened beverages and another in Colorado was likely to follow suit, unofficial election results showed on Wednesday, as local governments' push to cut soda consumption to stem obesity gathered speed.

The votes on so-called soda taxes in San Francisco, Albany and Oakland in California and in Boulder, Colorado, came a month after the World Health Organization recommended governments impose such taxes to battle obesity, diabetes and other diet-related diseases.

Tax proponents have recorded a series of victories in the United States this year, after numerous failed attempts.

Opponents argue that the taxes hit lower-income populations hardest, and that it is unfair to single out soda in the battle to fight obesity and diabetes. They also question the effectiveness of such taxes.

Larry Tramutola, a California political strategist who organized the pro-tax campaigns in San Francisco and Oakland, said the victory was "huge," adding: "This is the start of a national movement."

Philadelphia earlier this year passed a levy on soft drinks, pitched as a way to fill a budget shortfall via a tactic that other politicians and advocates have also adopted.

"I'm sure that other cities and states will look at this and put tax measures before their legislatures," said Michael Jacobson, co-founder and president of the Center for Science in the Public Interest in Washington. "Legislators will say, 'We get a twofer: balance the budget and improve public health.'"

The next soda tax vote is set for Cook County, Illinois, on Thursday.

Coca-Cola Co., PepsiCo Inc. and other companies in the roughly $100 billion U.S. soft drink industry are fighting the taxes at a time when soda consumption is falling.

They point instead to their efforts to reformulate products and broaden the range of drinks they offer to address consumers' health concerns. More than one-third of U.S. adults are obese.

"Our energy remains squarely focused on reducing the sugar consumed from beverages," a spokeswoman for the American Beverage Association said in an emailed statement.

Shares in Pepsi and Coca Cola were both down nearly 2 percent, while Dr. Pepper Snapple Group was off 3.4 percent on Wednesday as the Dow Jones industrial average gained 0.9 percent.

Spending from both camps has soared this year as billionaire advocates for the tax, including former New York Mayor Michael Bloomberg, joined the fray.

For soda companies, the effects of the taxes on volumes and profits may be muted. In Mexico, which introduced a tax in 2014, per capita consumption dropped after the tax was introduced. But the impact on companies like Pepsi was offset by population growth and strong demand of non-fizzy beverages.

"This is more of a headline risk than a fundamental risk. It doesn't have an enormous impact on the companies themselves, as long as the (size of) taxes are within the realm of reason," said Ali Dibadj, analyst with Sanford C. Bernstein in New York.

Long-term, the effects could be greater if the taxes are increased and if more jurisdictions introduce them.

In San Francisco, Oakland and Albany, the taxes will be a penny per ounce, the same as in neighboring Berkeley, where voters passed a levy in 2014. In Boulder, the vote was for a 2-cent-per-ounce tax.

The San Francisco measure passed 62 percent to 38 percent and the Albany measure passed 71 percent to 29 percent. The Oakland measure had 61 percent in favor and 39 percent opposed, and in Boulder the soda tax was passing 54 percent to 46 percent, with over three-quarters of the ballots counted.

(Reporting by Chris Prentice in New York and Lisa Baertelein in Los Angeles; Editing by Simon Webb and Dan Grebler)



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