Not such sweet news for soda brands
Posted by Giles Lury on August 15, 2012
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Alcohol has long been subject to high taxes but if you are a fizzy drinks or soda brand these are worrying times, as events in California unfold and further pressure is put on your business
Last May the City Council in Richmond, California agreed to put a measure on their November ballot to charge businesses a penny for every ounce of sugar sweetened soft drinks they sell. Aimed at helping to combat obesity it would mean a two litre bottle could go up from $2.19 to $2.87 (if all the cost was passed onto the consumer) – and so could represent a 30% increase in price.
Other cities and their councils are following suit and drafting their own ‘soda taxes’ or are actively monitoring the situation. Some 30 states already levy a sales tax on sweetened drinks which according to The WSJ averages about 5%. However this new tax is different as it is proposed as a business license fee imposed on the sellers and meaning it is up to them how and if they pass on the additional cost.
Now in the run up to the November ballot both sides are out and lobbying local people.
Currently 7% of Americans calorie in-take is in the form of sweetened soft drinks (source: US Department of Agriculture) but according to Beverage Digest there has been a decline in the consumption of these types of sugary drinks in the States. If passed it will be interesting to see if there is any direct impact on future consumption trends.