The West Coast Soda Wars Threaten to Engulf the Nation

By Arn Pearson and Rebekah Wilce

A new frontier in the soda tax war is emerging along the west coast. Industry-funded committees have drawn up ballot measures to preempt voters' local soda tax initiatives in California, Oregon, and Washington state.

Starting with Berkeley, California in 2014, public health campaigners have succeeded in getting eight localities to enact taxes on sodas and other sugary beverages as a way to crack down on sugar consumption and battle obesity. Four of those localities are in California, and Seattle, Washington passed a tax that became effective at the beginning of 2018.

Now big soda manufactures are fighting back, putting big money behind statewide initiatives that would stop these local democracy efforts in their tracks.

The name of the game is preemption: banning, with a piece of legislation at the state level, cities and counties from democratically enacting soda taxes. The technique was wielded as a weapon by Big Tobacco in the '80s and '90s to stop communities from regulating their deadly product by creating smoke-free workplaces. Now 12 states ban smoke-free ordinances and experts say preemption itself is the public health threat.

In a June 2017 article in the American Journal of Public Health, Jennifer Pomeranz of New York University's College of Global Public Health and Mark Pertschuk of Grassroots Change in Oakland, California called preemption "a significant and quiet threat to public health in the United States" because it leaves municipalities "increasingly unable to address acute public health issues that will have lasting consequences for the health of communities."

Soda Taxes Tackle Public Health Challenges

Rising levels of obesity, diabetes, heart disease, and other serious public health challenges related to the consumption of sugary beverages have galvanized grassroots public health leaders. One tool they can use to address these challenges is a modest sales tax on sodas and sweetened beverages, with revenues going to support public health and education programs. New data show that consuming sugar in liquid form increases risks of serious health conditions such as heart disease, type 2 diabetes, nonalcoholic fatty liver disease, and obesity in a much more significant way than was previously known.

Soda taxes work. Researchers at Drexel University surveyed consumers before and after the implementation of Philadelphia's tax and found that daily consumption of soda decreased by 40 percent and energy drinks by 64 percent while consumption of bottled water increased by 58 percent. Researchers at UC Berkeley's School of Public Health found that sugary beverage consumption fell 21 percent in Berkeley after that city's tax was implemented, while water consumption increased by 63 percent over comparison cities.

There's a lot at stake for America's biggest soda companies. Carbonated soft drinks--such as Coke, Fanta, Sprite, and Fresca--make up two-thirds of Coca-Cola's production, and U.S. soda sales earned the company more than $10 billion in 2015. And PepsiCo's soda sales – including Pepsi, 7Up, and Mountain Dew – still account for one-quarter of the company's $38 billion in North American sales, despite a shift toward healthier products. But soda consumption fell to its lowest point in 31 years in the U.S. in 2016, according to Fortune, and Coca-Cola concedes that sweetened beverage taxes "are hurting Coke's business."

As cities and counties across the county introduce taxes on sodas and sweetened beverages to counter the public health risks, they are facing sophisticated opposition campaigns funded by these soda giants operating through their deep-pocketed trade group, the American Beverage Association (ABA). The ABA has launched big-dollar TV ad campaigns to fight soda taxes, spent heavily on lobbying state legislatures, sued to block soda taxes, and now is launching massive statewide ballot initiatives to roll back local soda taxes.

The soda industry uses the blandly named trade association to shelter its own brand names from controversy and condemnation, taps small business owners to champion their cause, and spins the tax as a "grocery tax" that will impact all consumers, not just those loading up the shopping cart with Coke and Snapple.

Big Soda Turns to the Ballot to Block Local Health Laws

Now the industry has latched on to statewide preemption ballot measures up and down the west coast as a way to halt local momentum on soda taxes. California and Washington's preemption initiatives are seeking enough signatures to get on the ballot and must finish that process by July in order to go before voters in November 2018. Oregon's initiative has already qualified for the November 2018 ballot.

Coca-Cola Co, PepsiCo, Dr. Pepper Snapple Group, and Red Bull have thrown a combined $3 million at overriding voters' will in Washington state (proposed initiative 1634), and the ABA has spent more than $7 million so far in the effort to override Californians' local votes (Attorney General Tracking #17-0050).

California's proposed initiative would stack the deck for the likes of Coca-Cola and PepsiCo by preventing cities and counties from raising any taxes without the approval of two-thirds of either voters or an elected body. That explains why the industry is throwing so much cash at the current California override attempt, making it potentially the most expensive political contest in the country in 2018.

The American Beverage Association California PAC is by far the largest contributor to the ballot committee ("Californians for Accountability and Transparency in Government Spending, Sponsored by California Businesses") spearheading the industry's preemption measure, accounting for nearly 85 percent ($7 million) of its total reported revenues ($8.3 million) as of June 22, 2018. The largest contributors to the ABA CA PAC in 2017 and 2018 are Coca-Cola ($3.4million), PepsiCo ($2.6 million), Dr. Pepper Snapple Group ($1.1 million), and Red Bull ($97,312), as of June 22, 2018.

Similarly, all but less than one percent of the $3 million contributed to Washington's anti-soda tax "Yes! to Affordable Groceries" initiative committee as of June 18, 2018 was contributed by the soda industry: 47 percent from Coca-Cola, 36 percent from PepsiCo, 15 percent from Dr. Pepper Snapple, and 1 percent from Red Bull. But the committee's website prominently features the logos of "supporters" such as Teamsters No. 28, the Washington Food Industry Association, and the Washington Farm Bureau.

In Oregon, the similarly-named "Yes! Keep Our Groceries Tax Free!" initiative committee has raised over $5.2 million, apparently from retail grocery chains and their regional trade group the Northwest Grocery Association.

Industry efforts in these west-coast states are a "fantastic assault on local democracy, but also on the ability of cities and countries to function," Pertschuk said. Pertschuk added that California's initiative in particular "would be so devastating to communities, so far beyond soda taxes, it really would starve communities."

First published by Salon.
Ballot measure spending numbers were updates as of June 26, 2018.

Arn Pearson

Arn Pearson is the Executive Director of the Center for Media and Democracy. He previously served as the Vice President for Policy and Litigation at Common Cause.