Soda Under Attack: Can Ad Industry Save One of Its Most Important Clients?

Philadelphia's Soda Tax Is Meant to Raise Revenue for Childhood Development, Education

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Soda drinkers in Philadelphia will face a steep tax.
Soda drinkers in Philadelphia will face a steep tax. Credit: Kelsey Dake
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Here's a challenge for all the creative heavyweights swanning around Cannes next week: Come up with a campaign to save soda.

Granted, there are many other things worthier of saving: whales, seals and other cute mammals. Perhaps trees and wetlands too.

But I'm rather a fan of soda. Soda tastes great and brings me joy, until the carbonation starts backing up half an hour later.

Soda is also a crucial player in the advertising ecosystem. Soda giants spend billions a year on advertising. They keep entire agencies afloat. Not only that, they're often pioneers in creativity, creating legendary print and TV campaigns, experimenting with branded content, testing the waters of ad-free marketing and coming up with downright delightful experiential efforts.

That's now all under attack.

By the time you read this, soda companies may have suffered one of their biggest defeats in quite some time. Philadelphia is set to approve a resolution that would levy a 1.5 cent-per-ounce tax on soda -- or $2.16 for a 12-pack of 12-ounce cans.

Philly would be the first major city to pass such a law. Berkeley, Calif., has a soda tax, but no one took those guys seriously. It wasn't like Berkeley had an overflowing population of soda drinkers to begin with. Taxing soda in Berkeley is about as game-changing as taxing kale in New Orleans.

Now that Philly has succeeded where former New York City Mayor Michael Bloomberg failed (the effort did get his financial support), rest assured that the Big Apple will take another stab at it. Then perhaps the feds. And why not? We are a nation of fatties and all levels of government are broke, so a tax that supposedly saves the children (which in turn saves money on health costs) and raises revenue is a win-win. Especially because soda is so easy to blame. It's the most efficient sugar delivery system short of spooning tablespoons full of the stuff directly into your cake hole. (Full disclosure: I'm so obsessed with this topic I wrote an entire novel, called "Bacon & Egg Man," in which the main character is a bacon, egg and soda dealer in a future in which Bloomberg got his way.)

So what's a Coca-Cola or a PepsiCo to do? You could argue that Coke's got a juice portfolio to fall back on and PepsiCo a snack one. But if you broke into Big Nanny's office and looked at the Master List of Things to Ban or Tax, both of those have got to be in the top 10, right between bacon and fun. Both companies also have fairly solid water businesses, but at some point, those will fall prey to environmentalists worried about plastic bottles and rational people who realize they're paying three bucks for tap water.

What about diet sodas?

Yeah, about that. One of the interesting things about the Philly soda tax is that it includes diet sodas. So what if diet sodas don't include sugar? Let's not bring logic to a governmental debate. Apparently, poorer people (and me) over-index on full-calorie sodas. So in order not to look like they were slapping yet another sales tax on only the people who can't really afford it, Philly's leaders included diet sodas, the favorite drink of corporate drones and both Beyoncé and Becky with the good hair.

You might be wondering how they justified that on health grounds. In fact, Philly's main positioning for this had little to do with health. It wasn't pitched as a tax scheme for the good of the children. The revenue, you see, will be used for universal prekindergarten, community schools and park improvements, areas where Philadelphia is seriously suffering.

But it doesn't take a great deal of foresight to see the stupidity of such a tax. Assuming it curbs soda consumption, the tax revenue will go down. And then what? Sure, you might save some money on healthcare costs -- not to mention saving some folks' actual health -- but are those savings going to be redirected to schools? Of course not. Already, there are signs the tax revenue will be redirected to plug holes in the city's budget.

This didn't happen without a fight. There was even an ad battle, with the "beverage industry, the Teamsters union and local grocers . . . spending millions of dollars on advertisements and lobbyists," The New York Times reported. You know the drill. People will lose jobs, local stores will lose business. And, borders being what they are, families that buy soda in bulk are simply going to drive over to the next city to do their shopping.

There are probably legal points to be made as well, about selective taxation of perfectly legal goods. But that ship sailed a long time ago. Just ask the alcohol and tobacco companies.

The arguments have been had and Team Soda has lost. If this spreads to other cities, and it will, soda sales are going to fall faster than they already were. And it won't just be bottlers and bodega owners losing jobs. Ad agencies are going to feel the pain as well.

So put your thinking caps on, folks. And start pondering new, exciting ways to sell soda. I've got no brilliant ideas. The major players have already tried going social or making soda look like part of a healthy lifestyle. (Apparently Michelob Ultra drinkers are the only ones to fall for that sort of foolishness.)

Perhaps the only route left is to own the perception of danger. If the do-gooders want to lump soda in with the likes of alcohol and tobacco, then run with it. Nothing says cool like danger. Look at Red Bull. I assume people drink Red Bull because of the extreme sports, jumps from space, airplane races and the slight chance of a heart attack. It's certainly not for the taste.

Whatever marketing route you decide on, you'd better hurry it up. Because once soda has been deemed dangerous enough to tax, we know what the next step is: It'll be considered too dangerous to advertise.

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Ken Wheaton is the editor of Advertising Age.