Americans aren't as thirsty for soft drinks as they used to be. And with tax proposals, looming bans, DIY soda machines, and consumers' increasing health consciousness on the rise, soda companies could be entering something of a dry spell, at least from the top-down. As The Atlantic's Derek Thompson reported last month, soda industry revenues have plummeted by 40 percent over the last decade. A couple of trends — including the rise of coffee and energy drinks — led to the industry's present predicament. And if developing political, nutritional, and economic shifts tell us anything about soda's future, PepsiCo and Coca-Cola might have a lot to worry about, at least among influencers and at least in this country. Let's read the writing on the convenience store wall, portending a much less fizzy tomorrow for soda makers:
Soda bans are spilling over from New York
New York City mayor Michael Bloomberg continues to get flack for his scheduled ban on super-sized sodas (earlier this week the New York Post accused "Nanny Bloomberg" of ruining pizza parties and bottle service), but other parts of the U.S. think he's on to something. This week Bloomberg took his soda-squashing crusade to Albany, pushing governor Andrew Cuomo to implement the soda ban statewide. Cuomo's office hasn't responded to Bloomberg's suggestion yet, but the governor has supported the ban in the past, so it stands at least a chance of being considered throughout New York. In Cambridge, Massachusetts, city officials are mulling over a copy-cat ban, saying they'll "move slowly" on the proposed size limit for soda. Last year, a Los Angeles councilman proposed banning soda from parks and libraries. Residents of Fairfax County, Virginia, and West Virginia have moved to ban soda from public schools. While Bloomberg's plan remains the most aggressive, there's clearly momentum behind the idea that sodas should be regulated more.
States and municipalities are considering levying soda taxes
And if you can't ban soda, you could at least heavily tax it. That's the thinking behind bills introduced in California and Vermont recently. This week, California State Senator Bill Monning began pushing for a 1-cent-per-ounce tax on sweetened drinks that contribute to the obesity crisis. The money raised would go to funds for fighting childhood obesity. An identical tax scheme made it to the floor of Vermont's House of Representatives this week, but failed to pass when one of its supporters missed the vote due to a health emergency. A Texas lawmaker proposed a similar tax this month. Such proposals often fail, but researchers say they could work to counteract growing obesity rates (though they suggest manufacturers be charged with the tax, not consumers).
DIY hobbyists are seizing the means of soda production
Bans and taxes aren't the only worries on soda companies' minds. With cheap, easy-to-use technology becoming popular in the United States, anyone can be an amateur soda jerk. Companies like SodaStream (the instigators behind a minor Super Bowl commercial controversy) enable people to put their own spin on classic carbonated beverages. The New Yorker's Joshua Rothman writes today that Coke and Pepsi should be worried about this trend toward soda home-brewing:
The absolute worst thing Coke and Pepsi could do would be to sell their syrup directly to consumers. Doing that would pull back the curtain on the whole soda enterprise. And yet, that’s exactly what SodaStream is doing, in a way that’s particularly unflattering to the big, high-end soda companies. The company’s business revolves around honesty about the industrial sameness of all sodas ... The problem for Coke and Pepsi isn’t that SodaStream cuts into sales. It’s that SodaStream demystifies soda. Coke and Pepsi have spent a century teaching us to have feelings about our sodas. SodaStream shows us what those feelings are really made of.
Many people are starting to see soda as an addiction
Every time someone compares soda to cigarettes, someone raises the issue of addiction. All that high-fructose corn syrup isn't good for you, we all know that — but is it really addictive? Research suggests that soda may indeed stimulate addictive responses, according to last weekend's New York Times Magazine cover story. And soda companies know they're in the business of getting drinkers hooked. Reporter Michael Moss writes about a conversation he had with Coca-Cola executive Jeffrey Dunn, who characterizers Coke consumers as "users":
In Coke’s headquarters in Atlanta, the biggest consumers were referred to as “heavy users.” “The other model we use was called ‘drinks and drinkers,’ ” Dunn said. “How many drinkers do I have? And how many drinks do they drink? If you lost one of those heavy users, if somebody just decided to stop drinking Coke, how many drinkers would you have to get, at low velocity, to make up for that heavy user? The answer is a lot. It’s more efficient to get my existing users to drink more.”
Influencers aren't buying the soda industry's health campaigns
Coca-Cola is leading the charge to combat soda's unhealthy public image. Last month they released a long commercial about their efforts to combat obesity, claiming that their products don't contribute to the crisis anymore than other products. "All calories count, no matter where they come from, including Coca-Cola and everything else with calories," the narrator says soothingly in the ad. Not that they're exactly the leading indicators of worldwide market share, but food writers like The New York Times' Mark Bittman say the ad is misleading, and Coca-Cola has been called out for deceptive marketing on their not-so-natural "natural" orange juice. It also doesn't help your case when relatively young people end up dying from drinking too much Coke.
A caveat: the global perspective
All that said, a few glimmers of hope lie on the horizon for soda companies. Even if the U.S. market is shrinking and facing tighter regulation, the market in countries like China, India, and Mexico is booming. But America's existing users, at least, are thinking twice about drinking more.