Sweetened Profits: The Industry’s Playbook to Fight Sweetened Beverage Taxes

Sweetened beverage companies, often known as Big Soda, are engaging in a high stakes battle to protect their profits at the cost of public health. From sponsoring sports events to skewing scientific research, and even manipulating tax policies to favor their interests, Big Soda actively works to derail sweetened beverage (SB) taxes. Across the globe, health advocates are recognizing the threat and urging governments to take a stand.

The Problem

The sweetened beverage industry's response to SB taxes reveals a deep-seated pattern of practices aimed at protecting and increasing profits at the expense of public health and good governance. A significant part of the ultra-processed food and beverage industry actively undermines policies that threaten its interests by deploying a host of aggressive strategies.

These corporations leverage their considerable resources to gain influence over policy-making processes, effectively sidestepping regulations intended to curb the consumption of their unhealthy products. Through a mix of legal threats, economic fear-mongering and corporate washing, the beverage industry positions itself as a victim of over-regulation while simultaneously downplaying the detrimental health and environmental impacts of its products.

The industry's continued resistance to SB taxes and other regulatory measures underscores a pressing need for global action. If unaddressed, the beverage industry's interference will continue to shape and reinforce unhealthy dietary patterns, exacerbate the burden of non-communicable diseases and undermine efforts to promote a healthier, more sustainable world.

Key Findings

The report delineates the pervasive strategies used by the SB industry to oppose sugar taxes, revealing the significant impact these tactics have on public health efforts:

Strategy #1: Proposing weaker taxes tailored to favor industry interests at the risk of public health

By weakening the SB tax design, the industry influence dilutes regulations, policies and processes at the country level to delay policy implementation and protect their products.

Strategy #2: Threatening and challenging governments that have passed an SB tax

Description automatically generatedThe industry uses the threat of illegality and legal actions to challenge SB tax policies. Through this strategy, the industry abuses judicial processes to question, avoid or weaken regulation. In addition, by blocking the development and implementation of healthy policies, they imply that their products and brands contribute to health, the environment and society.

Strategy #3: Delegitimizing evidence to distort perceptions about SB taxes

The industry finances and supports studies that question the efficacy of SB taxes to promote health, creating a false narrative of consumer responsibility. They leverage this junk research in their lobbying efforts. Ultimately, this tactic protects the industry’s reputation and brands and puts the blame on consumers for their health-related decisions.

Strategy #4: Stigmatizing SB taxes through economic arguments

The industry creates confusion and panic through alarming economic claims. These tactics influence policies by threatening countries with trade and economic concerns.

Strategy #5: Taking advantage of and using vulnerable populations and environmental concerns to avoid the SB tax

The industry exploits hunger concerns, as well as other environmental, health and socio-economic issues, and casts itself as part of the solution through CSR while implying that taxes are unfair and will disproportionally affect low-income communities.

Global Examples of SB Tax Opposition

Throughout 2023, GHAI documented the SB industry's tactics to oppose SB taxes across numerous countries. This report collates instances from diverse nations, providing insight into the industry's multi-faceted approach to influence consumer behavior and policymaking.

All the information included in this report has been obtained through ongoing social listening, media monitoring and direct observations from public sources.

Some examples of SB industry’s tactics to oppose SB taxes:

Strategy #1

In 2016, the Irish government opened a consultation on the taxation of sugary drinks. In this consultation, PepsiCo recommended the exclusion of sports drinks; according to PepsiCo, these drinks are designed for elite performance and not for general snacking and are specifically formulated to meet the performance needs of athletes, which, in some cases, include sugar levels over five grams per 100 ml.

In Peru, the Abresa trade association actively opposed a sugary drinks tax and proposed alternatives to the Ministry of Health and Education that focused on individual responsibility, such as educational campaigns designed to reverse the excessive consumption of sugar and to promote sports.

Strategy #2

Multiple legal cases have been filed before the Colombian Constitutional Court to oppose the tax on sugary drinks and ultra-processed products enacted in 2022. Industry actors were not successful: The Colombian Constitutional Court delivered a groundbreaking decision, unanimously declaring the tax on sugary drinks constitutional.

In Spain in 2019, the Superior Court of Justice of Catalonia annulled the tax on packaged sugary drinks, which was imposed in 2017, after a lawsuit initiated by various trade associations due to procedural and substantive claims.

Strategy #3

The International Food and Beverage Alliance’s agenda gives countries who passed mandatory SB taxes as discriminatory “red countries” and those without tax policies as “green countries” that are industry friendly.

Eurocham in Singapore and Vietnam advocated that preventive health is the solution to reducing the prevalence of chronic diseases and the disease burden. In 2023, EuroCham attacked the SB tax in Singapore by arguing that physical activity, reformulation and changing the size of packaging are the best alternatives for achieving a healthy lifestyle while still enjoying life’s little treats. In the same vein, since 2018, EuroCham has focused its arguments in Vietnam on questioning the effectiveness of the tax where it has been implemented in countries around the world.

Strategy #4

Since the sugary-drinks tax was proposed in South Africa, industry opposition has been constant, first to prevent passage of the tax and then to prevent improvements in its design. The health-promotion tax was implemented in 2018 to reduce obesity in South Africa. However, the Beverage Association of South Africa claimed that the proposed measure would affect between 62,000 and 72,000 jobs, 10,000 small businesses and potentially reduce the country's Gross Domestic Product. In recent years the industry's objective has been to avoid increases in tax rates. Despite civil society's request to increase the tax on sugary drinks to help reduce and prevent NCDs, following strong pressure the government refused and froze the tax level for two years.

Pakistan's beverage industry warned the Federal Board of Revenu that a proposed 4-percent federal excise duty — dubbed a "sugar tax" — would raise prices and hurt the $200-million worth of investments planned by two key carbonated-soft-drink companies.

Strategy #5

In 2018, Coca-Cola in Brazil set the goal of collecting and recycling 100% of its packaging and strengthened its agenda to promote recycling.

In Vietnam, businesses claimed that their sector had been struggling to recover from the pandemic and a sugary-drink tax would add a new burden on industry by promoting higher retail prices and lower consumer demand.

For more examples, please read the report.

Call to Action

As Big Soda increases the level of sophistication in its strategies to avoid SB taxes, policymakers, advocates and the public health community must work together to protect SB tax policies to effectively defend human health over private and economic interests. Civil society and governments can defend SB tax campaigns through three critical categories:

Protect the Tax Design: ensure it will have an optimal public health outcome that guarantees the human right to food and nutrition, covers all SBs and disincentivizes the consumption of SBs without promoting reformulation.
Safeguard the Policy Decision-Making Process: prevent industry influence from undermining high standards and best practices of the tax design and opposing self-regulation solutions. Prepare to protect the SB tax from deceptive industry claims and to defend it against legal challenges.
Leverage Opportunities for Civil Society to Defend SB Taxes: expose industry interference attempts to weaken or block the tax and hold decision-makers accountable to legislate based on evidence that is free of conflict of interest. Create strong narratives that build a public debate around the need for SB taxes and harmful health and environmental impacts of SBs and SB production.

Together, by taking these steps, governments and CSOs can make significant strides in protecting public health, reducing the burden of NCDs and ensuring that health policy is made in the interest of the people, not corporations.

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Advocates share their experiences with industry interference in their countries and actions they took to counter it.