By Mike Esterl 

The trickle of soda taxes is becoming a stream.

Voters in San Francisco, Oakland and nearby Albany Calif. approved Tuesday a penny-per-ounce levy on nonalcoholic drinks with caloric sweeteners affecting everything from cola to sports drinks and ice tea to energy drinks. In Boulder CO, residents approved a ballot measure calling for a tax of two cents per ounce.

And the week isn't over. Cook County's board of commissioners -- representing five million people in Chicago and surrounding suburbs -- is expected to vote Thursday on a penny-per-ounce tax that also would include beverages with zero-calorie sweeteners like diet soda.

The taxes pose a rising threat to beverage industry giants like Coca-Cola Co., PepsiCo Inc. and Dr Pepper Snapple Group Inc. after they spent tens of millions of dollars in recent years successfully opposing them in dozens of cities and states.

Philadelphia became the first large U.S. city to pass such a measure in June, when the city council approved a levy of 1.5 cents per ounce on nonalcoholic beverages with added sweeteners. The beverage industry has sued to try to stop the tax before it goes into effect in January.

Tuesday's ballot-measure victories in the three California municipalities -- with a combined population of about 1.5 million -- come two years after residents in the neighboring city of Berkeley approved a penny-per-ounce tax.

The taxes are levied on distributors. At a penny per ounce, the tax can increase prices by 20% or more if fully passed along to consumers, according to industry trackers.

Even without special taxes, U.S. volumes of carbonated soft drinks declined 1.2% in 2015, the 11th straight yearly decline, according to Beverage Digest, an industry tracker. Many consumers are switching to bottled water, which could surpass soda consumption in the U.S. for the first time this year.

The long-term impact of sugary drink taxes on consumption remains unclear. A recent study by researchers at the University of California, Berkeley estimated consumption fell by about a fifth in Berkeley's low-income neighborhoods in the months after the tax was introduced. The beverage industry said the study was flawed.

Tax proponents say sugary drinks contribute to obesity, diabetes and tooth decay and that the tax receipts can be directed to health programs or budget shortfalls. Beverage companies say their products are being singled out unfairly and that the special tax is regressive and increases grocery bills.

Still, the American Beverage Association, an umbrella group for makers of nonalcoholic drinks, said after Tuesday's vote it would continue working to cut calories.

"We respect the decision of voters in these cities. Our energy remains squarely focused on reducing the sugar consumed from beverages -- engaging with prominent public health and community organizations to change behavior," the group said early Wednesday.

Both sides spent heavily in California, blanketing the Bay Area with television ads. Pro-tax supporters spent more than $20 million on campaigns, with most of the money coming from Michael Bloomberg, who tried unsuccessfully to impose portion limits on sugary drinks as mayor of New York City. The antitax campaign, backed by retailers and funded by the beverage industry, spent at least $30 million.

In San Francisco, residents voted 62% to 38% in favor of the tax. A city plan to slap a health warning on outdoor advertisements for sugar-added drinks was put on hold by a federal court in June after beverage companies argued it violated their free-speech rights.

Residents in neighboring Oakland voted 61% to 39% in favor of the tax. In the small nearby municipality of Albany, the vote was 71% to 29%.

The result was closer in Boulder CO, where residents voted 54% to 46% in favor of a higher tax of two cents per ounce.

Each of those communities pales in size when compared with Cook County in Illinois, where County Board President Toni Preckwinkle has proposed a penny-per-ounce tax as part of next year's budget to help balance the books.

The county's finance committee is scheduled to debate the special tax Thursday, followed by a meeting of the board of commissioners and a potential vote the same day. The measure would require final approval as part of a 2017 budget vote scheduled for next week.

Ms. Preckwinkle believes she has enough support on the 17-member board to approve the tax measure, according to a spokesman. The county estimates the tax, which would go into effect July 1, would raise $74 million in the first six months.

There are no signs that Congress is considering a federal tax on sugary drinks and recent attempts by lawmakers in some states to introduce statewide taxes have failed. But health authorities increasingly are urging consumers to scale back.

The Food and Drug Administration recommends that Americans limit their daily intake of added sugars to about 12 teaspoons or 200 calories -- less than in a 20-ounce bottle of regular Coke or Pepsi. By 2018, U.S. nutrition panels on food and beverage packaging must list how many grams of caloric sweeteners manufacturers added and the daily recommended maximum.

Beverage companies say they are taking steps in response to health concerns, including introducing smaller cans and bottles and promoting more zero- and mid-calorie sodas. Coke, PepsiCo and Dr Pepper pledged in 2014 to cut beverage calories in the American diet by 20% by 2025.

 

(END) Dow Jones Newswires

November 09, 2016 08:57 ET (13:57 GMT)

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