During PepsiCo’s Q3 2014 earnings conference call today – net revenue up 2% to $17.218bn on a reported basis, net income up 5% to $2.008bn – CEO Indra Nooyi criticized the Californian proposals.
“I believe that discriminatory taxes on certain categories are just wrong. I think we have to understand what the issue is we’re trying to address and address it in a realistic way,” Nooyi said.
“We will make our case, and hopeful that the voters are sensible enough to look at the right answer to address whatever issue it is they’re addressing,” she added.
The November 4 ballot in San Francisco will require two thirds voter approval for a 2 cent/oz tax on such drinks produced using sugar, payable by distributors, with the proceeds earmarked for nutrition and physical activity programs for children.
In Berkeley a ballot on the same day requests that voters approve a 1 cent/oz tax as a ‘general tax’, and as such only requires a simple majority to pass. One of the co-sponsors, supervisor Scott Weiner, says the tax could net $54m/year for nutrition, physical activity and health programs to cut sugary drink intake by 31%.
Berkeley ballot proposes 1 cent/oz 'general tax'
The Berkeley ballot question reads: ‘Shall an ordinance imposing a 1 cent/ounce general tax on the distribution of sugar-sweetened beverages (e.g., sodas, energy drinks, presweetened teas) and sweeteners used to sweeten such drinks, but exempting:
(1) sweeteners (e.g., sugar, honey, syrups) typically used by consumers and distributed to grocery stores; (2) drinks and sweeteners distributed to very small retailers; (3) diet drinks, milk products, 100% juice, baby formula, alcohol, or drinks taken for medical reasons, be adopted?’
“While there is no single cause for the rise in diabetes, obesity and tooth decay, there is overwhelming evidence of the link between the consumption of sugary drinks and the incidence of diabetes, obesity and tooth decay,” the ordnance findings attached to the ballot question state.
CNBC reported yesterday that the American Beverage Association (which is funded by industry giants including PepsiCo and The Coca-Cola Company) has already committed $9.4m to defeat the plans this month.
'Beverage industry got LA consultant to register to vote in Berkeley so he could sue city': Soda tax supporters
“The beverage industry…has hired a Los Angeles PR company and paid canvassers and phoners. And if it hasn’t happened already, expect a flood of mail in an attempt to defeat Measure D. They even got one of their LA consultants to register to vote in Berkeley so they could sue the city over measure D,” supporters argue.
And opponents counter that a tax on some sugar-sweetened beverages and not others is the wrong way to approach complex health issues.
Executives from Landmark Theaters, Teamsters Local 70 union and several restaurant owners argue that Measure D is “arbitrary and confusing” while some stores will pay the tax and others won’t – given that the tax won’t apply to distribution of sugar-sweetened beverages with less than $100,000 in annual gross receipts.
'Organic local root beer will be taxed, but chocolate milk is exempt!' Opponents claim inconsistencies
“Chocolate milk, 100% juice drinks, alcoholic beverages and some coffee drinks will not be taxed – no matter how much sugar or how many calories they contain,” they write.
“Organic local root beer will be taxed, but diet soda is exempt. An iced tea is taxed if it is pre-sweetened, but not if the customer adds the sugar,” they add, complaining that Measure D is less about health and more to do with raising money for the city.