As the US moves to limit consumption of sweetened beverages, producers focus on overseas markets and alternative product sales

Following recent efforts to address obesity by banning transfats and proposing a moratorium on the opening of new fast food restaurants, in late December of 2007 San Francisco Mayor Gavin Newsom proposed a tax on soda. The sweetened beverage fee would be applied to big box retailers who sell sweetened soda and other beverages; “Mom and Pop” stores would be exempt.

Newsom proposed the measure, which will be voted on by the Board of Supervisors early this year, as a means by which to address rising obesity rates and the attendant rising health care costs. Though the surcharge on sweetened beverages has yet to be defined, proceeds from the tax will support Newsom’s “Shape Up SF,” a program designed to encourage San Francisco residents to exercise.

Though the Mayor’s office argued that there was a well developed linkbetween obesity and the consumption of high-fructose corn syrup—a corn-based sweetener preferred over table sugar by the beverage industry because of its lower cost in production. Most researchers agree that carbonated sweetened beverages have played an important role in rising rates of obesity in the United States and elsewhere. Malik et al (2006) found evidence for this relationship in their meta-analysis of 30 publications. They state: “The weight of epidemiologic and experimental evidence indicates that a greater consumption of SSBs [sugar sweetened beverages] is associated with weight gain and obesity. Although more research is needed, sufficient evidence exists for public health strategies to discourage consumption of sugary drinks as part of a healthy lifestyle.”

Despite this emerging scientific consensus, the American Beverage Association (ABA), the trade association for the non-alcoholic beverage industry, argued that taxing soda would be ineffective given the complexity and multifaceted nature of obesity. An ABA press release stated: “It makes no sense to single out one food or beverage product to address an issue created by a lack of balance between calories consumed and calories burned. It would be just as silly to tax all the high-tech companies in San Francisco and blame them for contributing to childhood obesity through their video games, computer games and Internet search engines…This idea for taxing retailers sounds more like a thinly veiled attempt to raise revenues for more city spending than a sincere effort to reduce childhood obesity.” Others criticized the Mayor of behaving in a “Nanny State” manner, a charge that has been applied to other advocates of taxes on obesic foods and beverages.

In response to proposals such as Newsom’s, the beverage industry continues to fall back on the food industry’s stock line that obesity is caused by an imbalance of calories in and out and that all foods and beverages can have a place in a well-balanced diet accompanied by an active lifestyle. Yet according to an unreleased draft report by the San Francisco Department of Public Health, sweetened beverage consumption is the leading source of added sugar in children’s diets accounting for more than 10% of the total daily caloric intake for an average child. In addition, the consumption of sweetened beverages is more strongly associated with pediatric obesity than is high fat content or decreased physical activity.

While the industry publicly rejects any particular association between sweetened beverages and obesity, it is clear that beverage makers are concerned. In the spring of 2007, Coca Cola Company Chief Creative Officer Esther Lee described obesity as an “Achilles heel” and something that works against beverage makers’ marketing strategies. Although Americans spent$105 billion on “refreshment beverages” in 2007, US sales of soda are decreasing. During 2005, the number of cases of soda sold in the US declined by .07 percent. In April of 2007, Coca Cola first quarter profits report indicated that unit case volume had declined by 3 percent.

In response to declining sales and changing markets, Big Soda is shifting its marketing and distribution practices in two ways. First, the industry is promoting the sale of alternative beverages such as “enhanced” waters, juices and energy drinks. Sales of these products more than tripled in one year, from $80 million in 2001 to $245 million in 2002 and have continued to grow since. Odwalla juices and Glaceau Vitamin Water, (owned by Coca-Cola), SoBe’s Synergy Drinks, (owned by PepsiCo) and Snapple Juices (owned by Cadbury Schweppes) have become increasingly popular as Americans seek to substitute what they perceive as more healthful drinks for soda. However, critics such as Dump Soda, a global campaign whose goals include reducing soda consumption and eliminating the marketing of sweetened beverages to youth under 16, have illustrated that these “alternative” beverages are often just as sugar and calorie-laden as the soft drinks they seek to replace.

Second, as beverage makers promote “healthful” products in the US, they have refocused the marketing and sale of their traditional, sweetened soft drinks on the global south to maintain sales. According to Dump Soda, Coca-Cola has tremendously increased spending on non-US media, rising to $1,176 billion in 2000 from $500 million in 1994. Sales of Coke and Pepsi have also risen dramatically. In 2005, sales of Coca-Cola increased eleven percent in North Asia, Eurasia and the Middle East, case volume grew by seven percent in Latin America, and by four percent in Africa. In 2006, Pepsi’s international volume growth was up 9%.

With increasing sales comes increasing consumption, raising concerns about the spread of Western-style diet and disease in the global south. By linking local efforts such as those of San Francisco Mayor Newsom to tax high sugar beverages to global campaigns such as Dump Soda, public health advocates can ensure that a move toward a healthier US does not come at the expense of the global south.