American Beverage Association

Cities and counties have long played a valuable role as laboratories of democracy for important public policy innovations, including public health policies. As cities and counties across the county introduce taxes on sodas and sweetened beverages to counter the rise in obesity, diabetes, heart disease and other serious public health challenges, they are facing sophisticated opposition campaigns spearheaded by the deep-pocketed American Beverage Association (ABA) and allied groups.

In numerous localities, the ABA partners with U.S. Chamber of Commerce affiliates like the Seattle Metropolitan Chamber of Commerce or the Chicagoland Chamber of Commerce. Statewide retail and grocery groups like Illinois Retail Merchants Association and PA Food Merchants Association have also been active. In Michigan in 2017, farm groups and the National Federation of Independent Businesses took a leading role on a state level bill to prevent soda tax initiatives. In Arizona in 2018, a host of business groups including Arizona Beverage Association, Arizona Retailers Association, Arizona Restaurant Association, Arizona Food Marketing Alliance and more, worked to pass another state level bill to prevent local soda tax campaigns. More below.

Cities with Soda Taxes

Many U.S. localities have implemented a soda tax to reduce obesity and related public health problems. In each locality, the ABA has bankrolled a big dollar PR campaign against the tax.

• Berkeley, California.
• Philadelphia, Pennsylvania.
• San Francisco, California.
• Oakland, California.
• Albany, California.
• Boulder, Colorado.
• Santa Fe, New Mexico, tax defeated 2017.
• Cook County, Illinois, repealed in 2017.
• Seattle, Washington.

Participants and Board of Directors

The American Beverage Association (ABA) is a 501(c)(6) trade association and a lobbying powerhouse bankrolled by the largest players in the soft drink industry including Coca-Cola and Pepsi-Cola. (ABA’s full membership directory can be viewed here.) The D.C.-based ABA is currently led by Susan K. Neely, President and Chief Executive Officer.

The ABA’s Board of Directors is composed of soda industry executives. The CEOs of these institutions receive generous compensation for their efforts to push surgery drinks.

• Susan K. Neely, President and CEO of ABA: $1,704,665 (2015)
• James Quincey, President and CEO of Coca-Cola: $1,300,000 (2017)
• Indra K. Nooyi, Chairman and CEO of Pepsico: $1,700,000 (2017)
• Larry D. Young, President and CEO of Dr. Pepper Snapple Group: $1,132,692 (2016)

According to its latest available tax filing (2015), the ABA had a total of $78.9 million in revenue, $75.3 million in expenses, and $34.1 million in net assets. The ABA also has a number of related organizations including: American Beverage Foundation for a Healthy America; Americans Against Food Taxes; Americans for Food and Beverage Choice; American Beverage Association Fund for Consumer Choice; and American Beverage Association PAC.

Led by the ABA, the soda industry spent $48.9 million on recent soda tax opposition campaigns in Cook County, IL; Philadelphia, PA; Boulder, CO; San Francisco, CA; Oakland, CA; Seattle, WA, Santa Fe, NM; and Albany, California, according to a November 2017 report by the watchdog group Center for Science in the Public Interest.

Recent Campaign Websites

The ABA itself maintains a strong internet presence with a website, Twitter account, Facebook account, and YouTube account. In addition, the organization creates and maintains a large number of “campaign websites” with linked social media accounts.

Below is a list of the some of the more recent ABA campaign websites.

• No on V, Enough is Enough: Don’t Tax Our Groceries (San Francisco)
• Ax the Bev Tax (Philadelphia)
• No on HH: No Grocery Tax (Oakland)
• Can the Tax Coalition (Cook County)
• Better Way for Santa Fe & Pre-K
• Keep Seattle Livable for All
• No on 2H: Stop the Beverage and Grocery Tax (Boulder)

Tactics in the ABA Playbook

Because most of the soda taxes that have been implemented were enacted by ballot initiative, the ABA has spent most of this money on television advertising campaigns. When the fight shifts to a state measure to preempt these local ordinances, it is likely that the ABA will inflate campaign and lobby spending as well in an attempt to influence state lawmakers.

In each locality that introduces a soda tax, the ABA quickly sets up a “grassroots” public relations front group whose primary purpose is to shields brand-name soda companies, like Coke and Pepsi, from responsibility and culpability. The Center for Media and Democracy calls the practice of a big dollar PR industry campaigns acting like an organic grassroots operation “astroturfing.”

In Richmond in 2012 for instance, the ABA front group fighting a soda tax referendum on the ballot was called “Community Coalition Against Beverage Taxes.” In El Monte in 2012 the ABA front group was called “El Monte Citizens Against Beverage Taxes.” The overall PR campaign is also given a name, and TV ads, campaign websites, and social media accounts are created and commonly themed. Because residents only see the front group name or campaign name such as “Can the Tax Coalition,” the public is not generally aware of that it is industry behind the ads.

If one industry tactic is to hide behind a front group with a diverse array of spokespersons, another is to use the front groups to shift the terms of the debate or refocus the debate on a different topic altogether. Thus, we see ABA front groups and ad campaigns working hard to shift the discussion from “soda tax” to “grocery tax” and from the public health impacts of sugary drinks to the “high cost of living.” Many ABA ads in soda tax campaigns across the nation pound the “grocery tax” theme, claiming that it hurts small business and all consumers, even those who don’t drink soda.

State Preemption of Local Ordinances

When all else fails, powerful industries sometimes move to ban local control of policies they do not like, including nutrition-related policy. In this tactic, industry is taking a page from the big tobacco playbook. Tobacco has battled across the nation to preempt all sorts of local tobacco controls, for instance, twelve states preempt local smoke-free ordinances that are stronger than state standards.

There has already been preemption of local ordinances related to nutrition in nine states.

• Alabama
• Arizona
• Florida
• Georgia
• Kansas, 2016
• Mississippi
• Ohio
• Utah
• Wisconsin
• Michigan, 2017
• Arizona, 2018

Below we detail recent fights.

1. 2016 Kansas bill HB 2595/SB 366 preempted local regulation of “food nutrition information, consumer incentive items, food-based health disparities, the growing and raising of livestock or crops, and the sale of foods or beverages,” according to Grassroots Change. The author of the bill was Rep. Gene Suellentrop (R-27), a member of the American Legislative Exchange Council (ALEC). Campaigners report that some of the language and concepts in this large bill appear to be borrowed from a 2012 ALEC “model bill” called “The Food and Nutrition Act,” which was a response to the Mayor Bloomberg’s effort to get calorie count labelling in the city of New York. Learn more about this bill here.
2. 2017 Michigan House Bill 4999 sponsored by Rep. Rob Verheulen in the House and R-Walker, Sen. Peter MacGregor, R-Rockford, was introduced Sept. 20 and signed into law on Oct. 31. The bill bans an excise tax “on the manufacture, distribution, wholesale sale, or retail sale of food for immediate consumption or nonimmediate consumption.” A host of agricultural interests registered in favor of the bill including the Michigan Farm Bureau, Michigan Sugar Company, Michigan Sheep Producers, Michigan Soybean Association, Michigan Cattlemen’s Association, Michigan Potato Growers and more making it a “farm interests” bill. In addition, the Michigan Manufacturers Association was involved as was the National Federation of Independent Businesses. NFIB testified in favor of the bill and was credited by the media as being a major play. NFIB is a large trade association that has worked to preempt paid sick days and city-based minimum wage hikes.
3. 2018 Arizona HB 2484, authored by Rep. T.J. Shope. This bill broadly discusses food taxation not just a beverage tax or a soda tax. The groups registered against the bill include: Arizona Retailers Association, Arizona Restaurant Association, Arizona Beverage Association, Arizona Food Marketing Alliance, Arizona Free Enterprise Club, Arizona Tax Research Association, Arizona Chamber of Commerce and Industry, United Dairymen of Arizona. CMD has submitted an open records request to the bill authors for more information.
4. In Washington State, industry started a state wide ballot initiative campaign that would prevent other cities in the state from implementing a similar tax. The initiative committee Yes! To Affordable Groceries was registered February 26, 2018.

Other Groups Involved

The ABA is getting help from many groups who have been previously involved in preemption battles. Affiliates of the U.S. Chamber of Commerce have been active in local fights along with restaurant and grocers associations. Front group propagator and master propagandist Richard Berman cut ads in Sante Fe for a State Policy Network “think tank,” prompting an ethics complaint. State Policy Network groups have been producing and promoting questionable research saying that the soda tax harms the economy. An ALEC legislator successfully preempted local food and nutrition policies with an ALEC “model bill” in Kansas. And the National Federation of Independent Businesses, which has been battling paid sick leave ordinances, lobbied in favor of soda tax preemption in Michigan.

Financials

The American Beverage Association was a $79 million dollar operation as of 2015 according to their IRS 990.

Resources

1. Center for Media and Democracy articles:
   Bills to Ban Local Soda Taxes Are Moving In the States, Coke and Pepsi Borrow from the Tobacco Playbook
   Soda Money Flows Into Cook County Races, But Comes Up Flat
2. Website of Grassroots Change and the “Preemption Watch” newsletter
3. Website of Local Solutions Support Center

References