New York Mayor Michael Bloomberg intends to restrict sales of sugary soft drinks to no more than 16 ounces a cup in city restaurants, movie theaters, stadiums and arenas, administration officials said.
The Health Department plans to propose the ban as an amendment to the Health Code at a June 12 meeting of the Board of Health, according to Samantha Levine, a mayoral spokeswoman.
The move to ban super-sized sugared soft drinks, first reported in the New York Times yesterday, is the latest of several anti-obesity and nutrition initiatives undertaken by the administration. It is among strategies to combat what the administration has described as an epidemic of obesity and related illnesses such as heart disease and diabetes.
“People will come to see this very much in the interest of public health,” Deputy Mayor Howard Wolfson said today at a press conference. “This is going to start a nationwide movement toward this, a nationwide trend. I think it will prove to be very popular.”
The city’s health department has posted anti-sugary drink ads inside subway trains for three years. In 2008, the city required restaurant chains to post calorie-counts on menus. In 2006 and 2007, the Board of Health and City Council banned artery-clogging trans-fats from restaurants and prepared foods. In 2003, Bloomberg blocked the beverages from vending machines in schools and city-owned buildings.
“The people of New York City are much smarter than the New York City Health Department believes,” Kirsten Witt Webb, a Coca-Cola Co. (KO:US) spokeswoman, said today in an e-mail. “They can make their own choices about the beverages they purchase. We hope New Yorkers loudly voice their disapproval about this arbitrary mandate.”
Jeff Dahncke, a spokesman for PepsiCo Inc. (PEP:US), referred questions to the New York City Beverage Association. A spokesman for Starbucks Corp. (SBUX:US) didn’t immediately respond to e-mails and calls for comment.
“Public health issues cannot be effectively addressed through a narrowly focused and misguided ban,” Heather Oldani, a McDonald’s spokeswoman, said today in an e-mail. “This is a complex topic, and one that requires a more collaborative and comprehensive approach.”
The law would allow patrons to buy as many of the smaller drinks as they wanted and get refills. The ban would not apply to convenience stores and groceries, which will blunt any financial toll on soft drink makers, according to Thomas Mullarkey, an analyst for Morningstar Inc. (MORN:US) in Chicago.
“The proposal probably won’t have too big an impact on the likes of Coke and Pepsi,” Mullarkey said in a telephone interview. “Most of their volume sales goes through convenience and grocery stores.” He rates both companies as three stars out of five, meaning they are fairly valued.
Soft drink profit margins are largest on smaller packages including 20-ounce bottles, Mullarkey said. Larger fountain and bottled drinks generate incremental dollar sales for retailers, Peter Saleh, a New York-based analyst at Telsey Advisory Group said in a telephone interview.
Super-sizing drinks and food is “a way for them to move the average check a little bit higher,” Saleh said. “There are definitely ways to work around getting to a higher check without having the larger beverage.”
Coca-Cola has added smaller packages, including 12-ounce and 16-ounce bottles, that will make it easier to respond to proposals such as New York’s, said Caroline Levy, a New York- based analyst for Credit Agricole Securities USA Inc. While PepsiCo has been slower to respond, it’s catching up, she said.
The risk is low that other cities will follow with similar bans, said Levy, adding, “People will see it as an infringement on their personal liberties.”
She rates Coca-Cola and PepsiCo shares the equivalent of “buy.”
The American Beverage Association and the National Restaurant Association also said they oppose Mayor Bloomberg’s proposal. Both lobbying groups said calories from sugary beverages as a percentage of Americans’ diets are declining. U.S. soft drink sales have fallen for seven straight years, according to Beverage Digest.
Once the proposal has been introduced, the health board will vote on it after three months of public comment, Levine said. No other authorization from the state or city would be required. Restaurants and other outlets would have six months from the date of adoption to comply or face citations, she said.
The largest driver of increases in obesity and caloric consumption is sugary drinks, according to New York city officials. Americans now consume 200 to 300 more calories daily than 30 years ago, they said. Men given 18 ounces -- compared with 12 ounces -- of beverage drank 26 percent more while women drank 10 percent more, with no decrease in food consumption and no difference in reported fullness or thirst, city health officials said.
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.
“We have an obligation to warn you when things aren’t good for your health,” Bloomberg said today in an interview on MSNBC.
A growing body of medical research at leading universities and government laboratories suggests that sugary drinks made by the likes of PepsiCo and Coca-Cola can hijack the brain in ways that resemble addictions to cocaine, nicotine and other drugs. At least 28 scientific studies and papers on food addiction were published last year, according to a National Library of Medicine database.
Soft drink makers say their products make up 7 percent of the average American’s diet, too little to be the cause of obesity. Weight gain can be slowed by paying attention to the amount of calories consumed and burned through exercise, the American Beverage Association has said. Soda makers have offered smaller packages, labeled products with clearer calorie counts and agreed to stop selling sugary drinks in most schools.
Since the beginning of 2009, PepsiCo, Coca-Cola and the American Beverage Association have spent as much as $70 million on lobbying and issue ads, according to the Center for Science in the Public Interest, a proponent of soda taxes. Recent efforts to enact levies on soft drinks have foundered in at least 30 states. Last year, the federal government rejected an attempt to bar purchases of sugared drinks with food stamps.
The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.
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