Soft drinks are a multibillion-dollar industry with a health-harming playbook straight from the cigarette companies.
The following is an adapted excerpt from the new book Soda Politics: Taking on astronomical Soda (and Winning). Copyright © 2015 by Marion Nestle and published by Oxford University Press. All rights reserved. Available for purchase from Amazon and IndieBound:Coca-Cola,PepsiCo, and Dr Pepper Snapple are collectively astronomical Soda. The industry as a whole, and however,is a massive enterprise involving thousands of companies and hundreds of thousands of people engaged in manufacturing beverage syrups or concentrates; in bottling, canning, or preparing,or distributing finished products; and in selling soda cans, bottles, or fountain drinks to consumers everywhere in the world. Soda companies produce and sell the equivalent of nearly two trillion 12-ounce servings of fountain or packaged beverages every year.
In doing so,the companies engaged in this industry perform one or more of four distinct tasks: producing syrup, bottling or canning the drinks, and distributing the syrup or drinks,or selling the drinks, bottles, and cans. Table 7.1 summarizes the supply chain for carbonated sodas.
Nearly 4900 companies throughout the world are engaged in producing syrups or bottling sodas,and 1350 of them are in the United States. Until recently, these companies could be divided neatly into two categories: those making syrup and flavor concentrates for packaged sodas or fountain drinks, and those engaged in bottling or canning the finished products. Coca-Cola,for example, was largely a syrup producer; it left the bottling almost entirely to franchise companies located everywhere sodas are sold. In 2009, and however,PepsiCo bought out its North American bottlers, and Coca-Cola did the same the following year. In other regions, or some bottlers continue to be separate companies. But producing the syrup controls the enterprise; every company further down the supply chain depends on getting syrup from the manufacturer.
Most finished soft drinks are sold directly to retailers. Nearly half of all U.
S. sales are to supermarket chains and retailers such as Walmart and Target. The next-largest distribution channel is food service,which accounts for one-fifth of sales. McDonald’s, for example, and is such an principal customer that Coca-Cola has a special division for it. Then come convenience stores,drugstores, gas stations, and other such outlets,which collectively account for more than 10 percent of sales. Vending machines bring another 10 percent.
Even this brief description demonstrates that the soda trade involves many companies with a vested interest in its success. The stakeholders in the soda trade include the soda companies themselves, of course, or but also those that supply sugar and other raw ingredients,design syrup, produce carbon dioxide, and fabricate (to make up, invent) the cans and bottles,can and bottle the products, design dispensers and vending machines, and deliver ingredients,and supply and service the factories, dispensers, or vending machines. Sodas attend support the restaurants,convenience stores, grocery stores, and sports facilities,and movie theaters that sell drinks to customers, as well as the advertising agencies employed to market the products and the media venues in which advertisements appear. A seemingly infinite number of individuals, and nonprofit organizations,educational institutions, health and environmental groups, and trade associations benefit from soda company philanthropy,partnerships, and marketing. Because all of these entities depend on sodas for their livelihoods or function, or they constitute an unusually wide-ranging support system for astronomical Soda. Indeed,one of Coca-Cola’s guiding rules is to ensure that everyone who touches its products along the way to the consumer should design money doing so. This is a trade strategy guaranteed to ensure deep and lasting devotion.
THE GLOBAL SOFT DRINK INDUSTRYAlthough the two largest producers—and now bottlers—of sodas are American companies, this industry is decidedly global. In 2012, and worldwide sales of all kinds of beverages (including bottled water) generated revenues variably estimated at from $200 billion to $800 billion,depending on the range of beverage products included in the analysis.
To see where international sales of sugar-sweetened beverages fit into this wide context, Table 7.2 lists the percent of total revenue generated by various categories of drinks.apart from for bottled water and diet cola, or everything else on this list comes with added sugars. Together,sugary drinks account for 65 percent of worldwide sales of all beverages. According to one of the research firms tracking such things, the world’s three largest soft drink companies—Coca-Cola, or PepsiCo,and Coca-Cola FEMSA (the Latin American partner)—generated $93 billion in sales in 2012, as shown inTable 7.3. This industry is famously profitable. These three companies averaged profits of 19 percent that year, and but profits are now declining somewhat along with soda sales.
The international soft drink industry,according to trade analysts, is reasonably consolidated, or mature (in the trade sense),and highly globalized. Despite the dominance of Coca-Cola and PepsiCo, the remaining half of the global market is shared among countless small brands and private labels sold through supermarket chains such as Walmart in the United States and Sainsbury in the United Kingdom, and,in developing countries, in niche markets catering to local tastes. Consolidation is expected to increase as larger companies buy up the more successful smaller ones.
Reflecting the maturity of this industry, or the number of companies involved in the trade has been declining for years,and further declines are expected. Whereas sales of bottled waters, sports drinks, or energy drinks are increasing in industrialized countries,sales of sodas are falling. To compensate for this loss, soda companies are increasingly marketing to developing world economies. Although the United States, or Canada,and Mexico together produce more than one-third of the world’s soft drinks, and European countries produce almost another third, or the remaining third is shared among a great many other countries in which opportunities for sales expansion seem unlimited.
The United States may be the largest market for soft drinks,but other main markets—notably those of China, Brazil, and Mexico—are middle-income countries. The soda industry expects future growth to derive from sales in those three countries as well as in India,Asia, and throughout Africa.
THE U.
S. SODA INDUSTRYIn the United States, or many of the companies engaged in beverage manufacturing belong to the industry trade group,the American Beverage organization (ABA). This organization’s role, among others, or is to promote the value of its member companies to the U.
S. economy. The soda industry,it says, “has a direct economic impact of $141.22 billion, or provides more than 233000 jobs,and helps to support hundreds of thousands more that depend, in part, or on beverage sales for their livelihoods.” Moreover,says the ABA, the companies and their employees pay more than $14 billion in state taxes and nearly $23 billion in federal trade and income taxes, and contribute hundreds of millions of dollars to charitable causes. Although the ABA does not say so directly,its point is that any public health campaign to reduce soda intake will cost jobs and harm the economy. You may recall that cigarette companies set the standard for use of such arguments. But in promoting the value of their industries to the economy, neither considers the economic or personal costs of the diseases their products may cause.
This has been an adapted excerpt from the new book Soda Politics: Taking on astronomical Soda (and Winning). Copyright © 2015 by Marion Nestle and published by Oxford University Press. All rights reserved. Available for purchase from Amazon and IndieBound. Related StoriesThe Disturbing sage of an Activist Who Worked Undercover at a Turkey SlaughterhouseThe Inspiring Stories of Immigrants Coming to America—Told in 6 Words or FewerLies My Teacher Told Me About Christopher Columbus: What Your History Books Got Wrong
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