An Urban's Rural View

Until the votes in the November 4 election are counted, we will not know for sure whether Berkeley, California, has become the first American city to adopt a soda tax.

Berkeley is the epicenter of healthy-eating activism, so the beverage companies figure if they can defeat the soda-tax proposal here, as they have in 30 other cities, the idea will go away for good.

San Francisco also has a soda tax on the ballot but it requires a two-thirds majority and thus seems unlikely to pass. So the beverage companies are focusing on Berkeley -- and outspending soda-tax proponents 10 to 1.

Despite the money they're showering on Berkeley, early polls show voters there favoring the proposed one-cent-per-ounce tax on sugary drinks. There's still time for big bucks to prevail, but at this point it's unclear which side will prevail.

One thing is clear: With or without the tax, soda consumption in the U.S. will decline. It's been declining for 10 years and shows every indication of continuing to decline. Partly for health reasons, partly out of a preference for alternative beverages, Americans are drinking less and less soda.

The soft-drink industry suffered a 3% drop in sales in 2013 (http://tiny.cc/…). Coca-Cola expects to miss its sales target again this year; the company just replaced its marketing chief (http://tiny.cc/…). For a while diet sodas were picking up the slack in the soft-drink companies' sales, but some Americans are now wary of artificial sweeteners.

If you're a farmer and you don't own Coca-Cola stock, should you care? After all, high-fructose corn syrup pales in comparison to livestock feed and ethanol among corn uses (http://tiny.cc/…), and the decline in HFCS demand is playing out slowly over several years. At any given moment falling soda consumption probably doesn't matter much to the price of corn.

In the long run, though, it could make a difference. Consider what happened to America's cattle population over the last three decades as per capita beef consumption fell nearly 40% (http://tiny.cc/…). The herd is 15% smaller. (http://tiny.cc/… and http://tiny.cc/…).

Just as beef gave way to chicken, sugary soft drinks are losing ground to bottled water, specialty coffees, energy drinks, juices and who knows what else. Coke, Pepsi and other soda purveyors have scrambled to stay ahead of changing consumer tastes by creating their own alternative beverages.

Mulling the decline in soda-consumption, people who are pro-small government and anti-tax might say, "Case closed. Soda drinkers are already cutting back, so no tax is needed."

To which those worried about the costs to society of treating needless cases of diabetes and heart disease would counter: "Good start, but not enough. A soda tax the will make more people drink less even faster."

Do soda taxes really discourage consumption? In the past economists have differed on that but recent reports from Mexico, which imposed an eight-cents-per-liter tax on sodas last January, suggest taxes work. In the first two months of the tax, The Wall Street Journal reported (http://tiny.cc/…), Coca-Cola sales in Mexico fell more than 5%.

Urban Lehner

urbanity@hotmail.com

(CZ)

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