Most people understand the influence the pharmaceutical industry has had on federal regulatory agencies and physicians. However, less is known about the influence food manufacturers, specifically the American Beverage Association (ABA), has had on your purchase choices and in state legislatures. 

Marion Nestle holds a master’s degree in public health from the University of California and a Ph.D. in molecular biology. She’s written a number of books, including “Soda Politics: Taking on Big Soda (and Winning),” a fascinating expose revealing a wealth of information about the pervasive influence the soda industry has on communities, schools and public perception.

In an unprecedented and calculated move, the beverage industry recently took on the California state legislature to ban a tax on soda throughout the state. A fight between beverage companies and local municipalities against efforts to tax soda has been fought for more than a decade.¹ Berkeley, California, first passed a tax on sodas in 2014, followed closely by Philadelphia; Cook County, Illinois; and San Francisco, Oakland and Albany, California.

These taxes severely cut into the industry’s profits. In an effort to curtail public momentum without continually fighting battles at the city level, the industry took advantage of a law passed in 2014 called the Ballot Initiative Transparency Act² and, quite literally, held the California legislature hostage.

Soda Companies Hold Legislature Hostage to Protect Profits

Groups have the ability to include a ballot initiative at the state level, which essentially bypasses the legislature and is a healthy demonstration of direct democracy in action. This is especially effective when the legislature is under the thumb of industry. However, by perverting the Ballot Initiative Transparency Act, the beverage industry held the legislation hostage.

The Act gives the legislature input into the ballot process, enabling proponents of an initiative entered on the ballot to withdraw the measure if the legislature finds a satisfactory solution. It was intended to help avoid costly ballot fights by giving the legislature more power. However, in this case, the beverage industry used it to get exactly what they wanted. 

In the past, the soda industry has spent a lot of money to rally local businesses and shoot down any move toward enacting a soda tax in individual cities. However, when Berkeley, California, passed the first tax, followed closely by eight other communities, the industry realized it needed a new approach.

Their strategy began by spending $7 million³ to get an initiative on the ballot in November 2018 to prevent local communities from raising taxes without first getting supermajority approval from at least two-thirds of the voters or an elected body.⁴

This two-thirds supermajority threshold included tax measures passed by city governments and any citywide initiatives.⁵ This would have damaged local budgeting and cost millions of dollars, making it exceedingly difficult for cities to pay for public services such as police, fire and transit. Next, the industry approached lawmakers and proposed the legislature pass a bill to ban taxes on soda and food for 12 years. In exchange the industry would drop the initiative on the November ballot. 

Scott Wiener, state senator representing San Francisco, commented on their tactic, saying,⁶ “They sent us a ransom note that they would drop this horrible ballot measure if we put a 12-year moratorium on local soda taxes. It’s a classic case of picking your poison. The soda industry has gone completely rogue.”

In another interview, Wiener said,⁷ “[The industry] is aiming basically a nuclear weapon at governing in California and saying if you don’t do what we want, we’re going to pull the trigger and you are not going to be able to fund basic government services.”

The Beverage Industry Changed Tactics as Taxes Cut Profits

Past tax measures added a penny per ounce for each drink sold. Supporters said they took inspiration from the fight against Big Tobacco, which enjoyed success by imposing taxes on cigarettes to curb consumption.⁸ Soft drink sales were already on the decline as more consumers switched to bottled water. These taxes were seen as a threat by the ABA to their core product, which they took seriously and spent $38 million opposing in ballot proposals. However, they lost each one.

Research from Mexico, where national taxes on sugar drinks and junk foods were enacted in 2013, found sales declined particularly among low-income populations, who tended to drink more soda.⁹ Research in Berkeley¹⁰ found a similar trend after soda taxes were enacted there. With the realization that as more cities enacted soda taxes, revenue would decline further and faster, the beverage industry decided to change venues, moving toward enacting new state laws to protect their profits. 

Several lawmakers reported they opposed the measure of banning soft drink taxes but felt obliged to support it since the effects of a broader ballot initiative could have created significant infrastructural problems in California cities. Although this law does not overturn taxes enacted before 2018, it does prevent any new ones.¹¹

Once announced, the American Heart Association, the American Diabetes Association, the American Cancer Society and more than 20 other health groups issued a joint statement asking Governor Jerry Brown to oppose it. Nancy Brown, chief executive of the American Heart Association, commented,¹² “We were disappointed that the American Beverage Association and their member companies went to such great lengths to take away the right of Californians to vote for better health.”