Five years ago, Mayor Michael A. Nutter proposed a tax on soda in Philadelphia, and the industry rose up to beat it back.
Soda lobbyists made campaign contributions to local politicians and staged rallies, with help from allies like the Teamsters union and local bottling companies. To burnish its image, the industry donated $10 million to the Children’s Hospital of Philadelphia.
It worked: The soda tax proposal never got out of a City Council committee.
It’s a familiar story. Soda taxes have also flopped in New York state and San Francisco. So far, only superliberal Berkeley, Calif., has succeeded in adopting such a measure over industry objections.
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The obvious lesson from Philadelphia is that the soda industry is winning the policy battles over the future of its product. But the bigger picture is that soda companies are losing the war.
Even as anti-obesity campaigners like Nutter have failed to pass taxes, they have accomplished something larger. In the course of the fight, they have reminded people that soda is not a very healthy product and fundamentally changed the way Americans think about soda.
Over the past 20 years, sales of full-calorie soda in the United States have plummeted by more than 25 percent. Soda consumption, which rocketed from the 1960s through 1990s, is experiencing a serious and sustained decline.
Sales are stagnating as a growing number of Americans say they are actively trying to avoid the drinks that have been a mainstay of American culture. Sales of bottled water have shot up, and bottled water is on track to overtake soda as the largest beverage category in two years, according to at least one industry projection.
The drop in soda consumption represents the single largest change in the American diet in the past decade and is responsible for a substantial reduction in the number of daily calories consumed by the average American child. From 2004 to 2012, children consumed 79 fewer sugar-sweetened beverage calories a day, according to a large government survey, representing a 4 percent cut in calories overall. As total calorie intake has declined, obesity rates among school-age children appear to have leveled off.
The change is happening faster in Philadelphia than in the country as a whole. Daily soda consumption among teenagers, a group closely tracked by federal researchers, dropped sharply — by 24 percent — from 2007 to 2013, compared with about 20 percent for the country. Last month, the city Department of Public Health reported a sustained decline in childhood obesity over the past seven years.
Those reductions are not accidents. The soda tax didn’t pass. But the debate about it, along with a series of related city policies, helped discourage people from drinking soda.
The Philadelphia school district forbids the sale of sugary beverages in schools and limits their availability in public vending machines. The city provides financial incentives for corner stores to highlight healthy foods. And it sends educators into public school classrooms to teach children about nutrition.
“It’s a fight every day, and you just have to stick with it,” said Nutter, who will leave office in January. “You can’t give up, because it’s just really important.”
The public health community has coalesced around an anti-soda message, and health officials and industry experts agree that public attitudes about soda and consumer tastes are shifting in ways that may be permanent.
The beverage industry continues to fight these shifts — and especially to fight taxes on its products. But it is also aware that after decades of selling a handful of popular, iconic products, changing public attitudes are leading to a profound change in the nature of the business.
The new tobacco
This past summer, executives from the beverage industry gathered in New York City. The annual event, hosted by the trade magazine Beverage Digest, featured speakers from the three largest soda makers — Coca-Cola, PepsiCo and the Dr Pepper Snapple Group — along with smaller upstarts, like SodaStream, the home seltzer maker company, and Talking Rain, which makes no-calorie carbonated fruit drinks called Sparkling Ice.
The industry’s rapidly expanding bounty was displayed in the center of the room: Snapple Sorta Sweet, Squirt, Tropicana Farmstand juices, Lipton Sparkling Iced Tea.
Such events give companies a chance to brag about their successes, but there was nothing bubbly about the atmosphere. This is an industry grasping to master the shifting market.
As John Sicher, Beverage Digest’s publisher, put it in his blunt opening remarks: “It’s been a really challenging decade. It would have been a lot rougher if not for bottled water.”
As sales of the companies’ mainstay products have declined in the United States, the companies have scrambled to offer new products better suited to consumer tastes. Iced teas, sports drinks and flavored waters are smaller but fast-growing segments of the beverage industry.
In explaining the disdain for sodas — sometimes called CSDs, for “carbonated soft drinks” — industry executives have noted that consumers these days seem more interested in healthier or natural products. They are also frank about other attitude changes that are a threat to their businesses.
“Health and wellness is a major enduring trend, and each brand has to compete in that environment,” J. Alexander M. Douglas Jr., president of Coca-Cola North America, said at a Goldman Sachs investor event in May. He described a “secular decline in carbonated soft drinks.”
The changing patterns of soda drinking appear to come thanks, in part, to a loud campaign to eradicate sodas. School cafeterias and vending machines no longer contain regular sodas. Many workplaces and government offices have similarly prohibited their sale.
For many public health advocates, soda has become the new tobacco — a toxic product to be banned, taxed and stigmatized.
“There will always be soda, but I think the era of it being acceptable for kids to drink soda all day long is passing, slowly,” said Marion Nestle, a professor of nutrition at New York University. “In some socioeconomic groups, it’s over.” Nestle’s latest book is called “Soda Politics: Taking On Big Soda (and Winning).”
The subtitle reflects her view that “Big Soda” is an enemy to be vanquished.
In Philadelphia, schools have introduced nutrition education programs.
Donna Smith, principal of John Wister Elementary School in North Philadelphia, has been promoting these changes for years. When she started there, children often came to school carrying shopping bags from local corner stores, full of chips and sodas or sugary fruit drinks.
She went to the corner store owners and asked them not to sell anything to children in the early morning.
While schools citywide have changed their vending machine offerings, her school has no vending machines at all, just water fountains. She told her students she would do “whatever it is going to take to get you not to eat that junk.”
Water on the rise
The anti-soda sentiment has the big soda makers worried. Even diet sodas are experiencing a sharp decline in sales.
“People go toward diet, and then ‘other,’ ” said Barry M. Popkin, a professor of nutrition at the University of North Carolina, who has measured the calorie declines. Lately, he said, people are simply switching to water.
Water has been the runaway success story of the industry. Gary A. Hemphill, an industry consultant, projects that in 2017, water will surpass soda in sales and become the largest beverage category in the United States.
Although the big three soda companies all sell bottled water, they are not that excited about the trend. Bottled water is a less reliable line of business for them.
Historically, beverage preferences are set in adolescence, the first time that most people begin choosing and buying a favorite brand. But the declines in soda drinking appear to be sharpest among young Americans.
“Kids these days are growing up with all of these other options, and there are some parents who say, ‘I really want my kids to drink juice or a bottled water,’ ” said Hemphill, managing director of research for the Beverage Marketing Corp. “If kids grow up without carbonated soft drinks, the likelihood that they are going to grow up and, when they are 35, start drinking is very low.”
When Nutter was fighting the soda tax battle, he kept a bottle of Mountain Dew and a container with 17 teaspoons of sugar — the amount in the bottle — on the table in the center of his office. It was a good “conversation piece,” he said, about the surprising number of calories in a typical soda.
“Who in their right mind would ever put this much sugar into something you’re going to drink?” he said.
Now his city has changed. At the Corner Food Market, a store in a poor, largely African-American neighborhood in North Philadelphia, fresh apples, peaches, lettuce and green peppers were displayed on a counter near the front of the store.
Taped on the glass refrigerator doors were signs warning customers about the calories contained in the products inside. “Did you know it takes 65 minutes of dancing to work off a bottle of soda?” one said.
Hanif Tucker, 17, stepped in and bought a large bottle of Rock Creek soda to take home. But he said he had cut down on his soda drinking, at the urging of his football coach.
“I used to just drink straight soda all day,” he said. Now he estimates he has about two sodas a week and drinks mostly water and juice.
“They said too much soda isn’t good for you,” he said.