Tax threat shakes up beverage industry


Sugary drinks make up the latest product category to come under attack of those in Washington who would like to improve the health of the average American, raise money, or both. The drinks take a large share of the blame for the US obesity epidemic. They also spend a lot of money with broadcasters.

A number being batted around, according to the New York Times, is a tax of one penny per ounce – a serious levy that will hit up the average can for 12 cents, and a twelve-pack of such cans for $1.44.

The tax would apply to sodas, energy drinks, sports drinks, and certain juices and iced teas, and would not apply to sugar-free drinks.

It is estimated that such a tax would pour almost $15B into the US Treasury in its first year – where it would be applied toward health care initiatives.

Beverage manufacturers complain that the tax would significantly lower consumption, but health and science experts celebrate that it would lower consumption, and would contribute to reductions in per capita weight and reduced health risks – however, the extent of the benefits are a matter of dispute and even supporters of the tax have no definitive proof that they would be significant. But they say even a modest benefit would be a good thing.

Coca Cola CEO Muhtar Kent is outraged, however, that the government would step in and tell “people what to eat and what to drink.” The American Beverage Association has formed Americans Against Food Taxes to combat the proposal, a group which has already taken to the airwaves to make its case.

RBR/TVBR observation: While we’re sure that this will not be a good thing for broadcasters, we aren’t quite sure they would be the most severely impacted business, especially if manufacturers spend money to move consumers over to sugar free drinks.

Speaking from personal experience, when we were children in a large, on-a-budget family, we would never, ever have considered switching from our fruit-flavored store brand sodas for one of Mom’s newfangled diet drinks and their gnarly aftertastes.

Those days are long gone, and in our family, both of our tweens, neither of whom are overweight, have switched over to sugar free soda without complaint in order to stay that way.

We suspect that the beverage industry will fight this tax tooth and nail, and they have already been running ads in our area (and we’re sure if we’re seeing it, so are millions and millions of other Americans). But even if the beverage industry loses and the tax becomes a reality, we know it is quite possible they could move most Americans to new sugar free formulations of their favorite drinks.

The industry that is in real trouble in our estimation? Sugar.