Bloomberg News

Coca-Cola Joins Subway Fat Fight as NYC Steps Up Attacks

May 09, 2012

Beverage makers are trying to reverse seven years of sales declines in the $74 billion U.S. soft drink industry, which still makes up a bulk of profits. Photographer: Emile Wamsteker/Bloomberg

Beverage makers are trying to reverse seven years of sales declines in the $74 billion U.S. soft drink industry, which still makes up a bulk of profits. Photographer: Emile Wamsteker/Bloomberg

For years, New York City has campaigned to reduce sugary soft drink consumption. Its latest ads, plastered all over New York’s subways, compare sugary drinks with globs of fat and packets of sugar.

Now, beverage makers, including Coca-Cola Co. (KO:US) and PepsiCo Inc. (PEP:US), are squaring off against city health officials with the industry’s first-ever subway ad campaign. Industry-sponsored placards inside train cars tout lower-calorie options and package sizes as progress against obesity.

The city’s anti-soft drink campaign is “discriminatory and singles out one product out of an array of foods and beverages, all of which contribute equally to this very complex issue,” said Chris Gindlesperger, a spokesman for the American Beverage Association. The ABA, the industry’s chief lobby group, placed the pro-soft drink ads.

Beverage makers are trying to reverse seven years of sales declines in the $74 billion U.S. soft drink industry, which still generates a bulk of profits. The decline came as some consumers shunned sugar and artificial sweeteners. The industry has spent tens of millions of dollars to beat back proposed sugary beverage taxes in New York state (SBNY:US) and elsewhere.

The ad campaign is part of a concerted effort by soda makers to win the public relations struggle against local and state governments. PepsiCo, Coca-Cola and the American Beverage Association have spent as much as $70 million on lobbying and issue ads since the beginning of 2009, according to the Center for Science in the Public Interest. In that time, at least 30 states proposed aggressive excise taxes on soft drinks, all of which failed amid industry push back.

Subway Ads

Since placing its first subway ads almost three years ago, New York’s health department has had the system to itself. The city’s new campaign, funded with a $100,000 federal grant, includes 1,000 placards inside about 20 percent of the system’s rail cars, said Sam Miller, a department spokesman. The subway system carries on average 5.3 million commuters each weekday.

The city’s ads, some in Spanish, depict a cloud of sugar packets spilling its contents, which transform into globs of fat oozing on beverage containers below the tagline, “Are you Pouring on the Pounds?” One says drinking three 20-ounce sports drinks or sodas, or three 16-ounce energy drinks, is like consuming 40 packets of sugar. The ads, to be posted for three months, warn that extra calories can lead to diabetes and heart disease.

New York Mayor Michael Bloomberg has advocated for state taxes on sugary beverages. His office referred questions to the health department. Bloomberg is founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.

‘Drinking Themselves Fat’

“Americans are literally drinking themselves fat,” Department Commissioner Thomas Farley said in an e-mailed statement. “To counter the industry’s irresponsible marketing, we are committed to providing New Yorkers with the facts about the dangers of this overconsumption.”

The drink makers’ ads show workers for Coke, Pepsi, Dr Pepper (DPS:US) and SunnyD side-by-side pushing hand trucks full of sodas, juices, sports drinks and waters. It reads: “More Choices. Smaller Portions. Fewer Calories. America’s beverage companies are delivering.” Another ad is headlined, “More Choices,” and says, “We’re dedicated to helping you choose what’s right for you.”

The ads are part of a nationwide public relations campaign started in February, and an offshoot of similar ABA programs in recent years.

“We need to do our part to address obesity and that’s what we are doing,” said Gindlesperger, citing clearer calorie counts on labels and the pulling of full-calorie soft drinks from schools in 2006.

Not Direct Counter

The ABA’s subway ads weren’t a direct counter to the health department’s transit blitz, Gindlesperger said. He declined to disclose the cost of the campaign or how many trains will be included. The placards cover all interior ad spots on one full side of a rail car.

Coca-Cola and PepsiCo referred questions to the ABA.

More than 35 percent of U.S. adults and about 17 percent of youths -- or roughly 90 million people -- are considered obese, according to the U.S. Centers for Disease Control and Prevention. Advocates of sugary drink taxes say it is an effective way to reverse the obesity trend.

Opponents say drink taxes are a money grab. The real cause of excessive weight, they say, are too many calories of any type going in and too few going out.

Whatever the cause, obesity in the U.S. comes at a “staggering” financial cost, the CDC has said. Everything from treatments for diabetes to lost work by obese employees cost Americans about $147 billion in 2008, according to one estimate cited by the agency.

Coca-Cola declined 0.5 percent to $76.78 at the close in New York. The shares have risen 9.7 percent this year. PepsiCo fell 0.9 percent to $65.94 and is little changed this year.

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • KO
    (Coca-Cola Co/The)
    • $42.05 USD
    • 0.26
    • 0.62%
  • PEP
    (PepsiCo Inc)
    • $93.79 USD
    • 0.42
    • 0.45%
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