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Chicago sugary drink tax to take effect next week after ruling

By Julia Jacobs

CHICAGO (Reuters) – A sweetened beverage tax will take effect in Chicago on Wednesday after an Illinois judge threw out a lawsuit by retailers that argued the measure was vague and unlawful.

Cook County, which includes Chicago and surrounding suburbs, joins a growing number of localities across the United States that have adopted measures to cut consumption of sugary drinks for health reasons, including Seattle and San Francisco.

Cook County Circuit Court Judge Daniel Kubasiak decided in the county’s favor on Friday, about a month after he had halted implementation of the penny-per-ounce tax in response to the lawsuit by the Illinois Retail Merchants Association.

“We believed all along that our ordinance was carefully drafted and met pertinent constitutional tests,” Cook County Board President Toni Preckwinkle said in a statement released after the ruling.

The retailers had argued the tax was unlawful because it exempted custom-made sweetened beverages, such as coffee drinks made in a cafe, and only taxed pre-made beverages, such as sodas, sports drinks and flavored water.

In his order on Friday, Kubasiak agreed with the county that there was a significant distinction between taxing the two types of sugary beverages.

County attorneys had also argued that taxing custom-made beverages would put an excessive administrative burden on the county, and that taxing widely available pre-made beverages would be more effective in improving public health.

Preckwinkle said in the statement that the county, which passed the tax in November, lost at least $17 million in revenue in the weeks in which the measure was delayed.

Kubasiak said in his order that he was aware of the county’s “budgetary turmoil” as a result of the revenue loss but that it did not factor in to his decision making. “The Court is not party to the County’s budget matters and is not moved by its public airing of those matters,” he said.

In response to the plaintiffs’ claims that the technology needed to collect the tax would not be ready for quick implementation, Preckwinkle said the retailers should have been prepared to collect the tax a month ago.

David Ruskin, an attorney for the retailers’ association, said the plaintiffs are considering an appeal.

“We are disappointed with today’s ruling,” Rob Karr, president of IRMA, told reporters. “I can only imagine the outrage felt by consumers.”

(Editing by Patrick Enright and Matthew Lewis)

Panera rolls out ‘added sugars’ labeling on fountain drinks

The sign on the hood of a delivery truck for Panera Bread Co. is seen in Westminster, Colorado February 11, 2015. Panera Bread Co was to issue its Q4 2014 Earnings Release on Wednesday. REUTERS/Rick Wilking

NEW YORK (Reuters) – Panera Bread Co on Friday will begin to roll out new labeling of added sugars and calories in sodas and other self-serve fountain beverages, the first such move by a U.S. restaurant chain as food companies face rising demand from consumers to cut back on their use of the sweetener.

The move comes at a time when casual restaurant chains from McDonalds Corp to Starbucks Corp have been under pressure from slack demand and underscores the pressure that soft-drink makers are facing as sales decline.

The U.S. government last year said that companies need to detail how much added sugars are in packaged foods, but restaurants do not have any such requirements. Governments worldwide are also seeking to impose taxes on sweetened beverages.

Panera will also introduce six new low- and no-sugar teas and lemonades, an extension of the bakery chain’s shift away from artificial sweeteners and flavors rolled out last year, company executives said in an interview.

Panera said focusing on beverages was the next step to creating a healthier menu, after introducing its clearer labels. Sugary drinks are contributing to U.S. rates of obesity, diabetes and heart disease, the company noted.

“After food, we clearly felt the role of beverages,” said Panera’s founder and Chief Executive Officer Ron Shaich. “A 20-ounce Dr Pepper has more sugar than two of our chocolate chip cookies. Which would you rather have?”

Panera’s new drinks will sit on counters next to the traditional soda fountains, and be offered at the same prices. That will require the company to increase prices in some markets, said Sara Burnett, the company’s Director of Wellness and Food Policy.

Burnett said the company is reviewing its entire menu based on last year’s new sugar labeling guidance.

Panera first plans to roll out the new beverages in five U.S. cities, including Washington and Atlanta, and then nationally later this year.

(Reporting by Chris Prentice, editing by G Crosse)

California lawmaker makes push for health warning labels on soda

By Chris Prentice

NEW YORK (Reuters) – A California state senator is taking another stab at introducing a law that would require sugary drink manufacturers to put a warning label on their products, the latest effort in the “War on Sugar.”

Officials and public health advocates have heightened their criticism of sugar as a key contributor to health epidemics like obesity and diabetes, and California has become a major battleground in the fight against what they say is excessive sugar consumption.

San Francisco is battling Big Soda in court over a law requiring a warning label on advertisements for sugary drinks, and voters in four Bay Area cities have approved taxes on the products. On Monday, Democratic state Senator Bill Monning for a third time introduced a bill that would place warning labels on soda and other sugar-sweetened beverages sold in California.

Similar bills from Monning failed in 2014 and 2015, but the lawmaker said he sees a rising tide of support.

“Certainly the victories in local communities show a growing awareness of the health risk posed by these drinks,” Monning said by telephone, referring to votes in November in three Bay Area cities approving soda levies. Voters in Berkeley had approved a soda tax in 2014.

“This is not a tax measure. We’re not taking products off the shelves. This is about consumers’ right to know,” he said.

The legislation would require companies like Coca-Cola Co and PepsiCo Inc to put warning labels on beverages sold in California that have added sugars and have 75 or more calories per 12 ounces. The warning would state that drinking beverages with added sugar contributes to obesity, diabetes and tooth decay.

Soda companies are already facing declining sales of their namesake beverages and trying to introduce new products to meet changing tastes.

“America’s beverage companies already provide fact-based, easy-to-use calorie labels on the front of every bottle, can and pack we produce,” said an American Beverage Association spokeswoman, adding that “misleading warnings” won’t solve complex public health problems.

ABA has sued San Francisco to block the city from introducing a warning label on sugar-sweetened beverages. It recently lost a legal challenge to block a soda tax from being rolled out in Philadelphia last month.

Coca-Cola and the ABA have been sued by a nonprofit group for allegedly misleading consumers about the health risks from consuming sugary beverages. That case is in U.S. District Court for the Northern District of California.

(Reporting by Chris Prentice; Editing by Leslie Adler)

Philadelphia passes soda tax after mayor rewrites playbook

By Luc Cohen

NEW YORK (Reuters) – Philadelphia Mayor Jim Kenney scored a victory that eluded more than 40 U.S. public officials who took on the powerful U.S. soda industry when the city council voted on Thursday to slap a tax on sweetened drinks.

After a bitter, months-long battle, the city council voted 13-4 to approve a 1.5 cent-per-ounce tax on sugary and diet drinks. The council already approved the plan in a preliminary vote last week, and the outcome had not been expected to change.

The City of Brotherly Love became the biggest U.S. city to have such a tax. Much smaller Berkeley, California, was the first.

Similar efforts, including several spearheaded by former New York City Mayor Michael Bloomberg, were defeated after intense lobbying from organizations like the American Beverage Association, which opposes the Philadelphia move and represents Coca-Cola Co and PepsiCo Inc.

The Philadelphia tax marked a major victory for health advocates who say sugary drinks cause obesity and diabetes. But experts noted those concerns were not the focus for Kenney and other backers of the tax as they took on critics complaining that “nanny state” public health measures intrude on residents’ personal lives.

Instead, Kenney rewrote the soda-tax advocate’s playbook. He played up the benefits of the cash injection from the tax for the city’s depleted coffers. In the first year, the tax is projected to raise $91 million, and he pledged to spend funds on public programs such as universal pre-kindergarten.

The strategic shift could lend momentum to movements in San Francisco, neighboring Oakland, California, and Boulder, Colorado. Residents of those cities will vote in November on similar taxes, which could deal further blows to a U.S. soft drink industry already hit by declining soda consumption.

U.S. soda consumption fell for the 11th straight year in 2015, according to Euromonitor data.

AVOIDING THE BLOOMBERG TRAP

Bloomberg made public health a centerpiece of his tenure as New York City mayor between 2002 and 2013. He moved to limit smoking in parks and restaurants, ban transfats and require calorie counts posted in some restaurants.

On soda, he pushed for a tax, then a ban on soda purchases with food stamps, and finally a much-lampooned limit on the size of sugary drinks. His efforts were ultimately rejected, with critics decrying the moves toward a “nanny state.”

The strategy worked in Britain, where a new soft drinks levy was announced in March after officials emphasized the country’s obesity crisis, saying it cost the economy billions of pounds annually and was a huge burden on the state-funded health system.

That approach never worked in Philadelphia. Michael Nutter, the previous mayor, twice tried to pass a soda tax as a health initiative and as a way to plug a budget shortfall. He was unable to push it through the city council.

Kenney, who became Philadelphia’s mayor in January, had made a campaign pledge to provide universal pre-kindergarten, and he kept that issue as his focus. A spokeswoman said complex state laws on taxation made enacting a citywide soda tax the best option to raise revenue for that signature proposal.

Bloomberg personally contributed funding to support Philadelphia’s pro-tax campaigners.

FIZZING WESTWARD

Opponents of Philadelphia’s soda tax argued that the measure will disproportionately hurt the poor and prompt Philadelphians to travel to nearby suburbs to buy soda.

In Colorado, Boulder hopes to use soda tax revenue on health programs, and San Francisco and Oakland officials would recommend but not require funds raised to go toward obesity and diabetes prevention.

When Berkeley passed its soda tax in 2014, industry groups dismissed the measure as a fluke given the city’s largely white population and reputation as a hotbed for liberal measures.

But Philadelphia is the fifth-largest U.S. city, with 1.6 million people. “No one can trivialize it as they can trivialize Berkeley,” said Larry Tramutola, a California political strategist who worked on the Berkeley campaign and is currently leading the San Francisco and Oakland efforts.

(Additional reporting by Melissa Fares in New York; Editing by David Gregorio and Dan Grebler)

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