Flickr/Evan
They chafe at being vilified, but the higher retail price is not too hard to swallow

Policy Shelf

We all know what the big soda makers think of taxes on sugary beverages: they’re against them. Vehemently.

But what do smaller, independent soda makers think of the kinds of taxes that have been passed in Philadelphia and Berkeley, and are being considered in a bunch of other cities? Also against, if not always as vehemently.

This is no surprise—who wants to be taxed? But the independents face a quandary: they position themselves as “alternative,” and they tend to go after consumers who are generally of a more liberal bent. If they align themselves too closely with the Cokes and Pepsis of the world, they risk alienating some of those customers.

“I have mixed feelings,” says Jennifer Cue, CEO of Jones Soda, the Seattle-based company whose motto is “Run with the little guy… create some change.” She, like every other soda maker we interviewed, thinks the taxes are unfair in singling out one type of product. But she acknowledges that the aim of the taxes—to reduce the incidences of obesity and diabetes—is a good one, and one that many of her customers support.

“I’m the mother of a nine-year-old,” she says. “I understand the motivation behind it. But why just soda? Why not candy bars?”

Other things are just as sugary. But we’re getting singled out as an easy target by politicians

That sentiment is echoed, in far more colorful terms, by Chris Reed, the founder of Reed’s Inc., the San Diego company best known for its Ginger Brew. “The taxes are completely lame,” he says. And, he asks, why are they levied only on beverages? “Why not candy? Why not junk food of all kinds?”

Carleton Johnson, a co-founder of the Minnesota-based Boundary Waters Brands, agrees. “Other things are just as sugary,” he says. “But we’re getting singled out as an easy target by politicians.” Boundary Waters makes Joia Life All Natural Soda. “There’s sugar in beer, there’s sugar in kids’ juice drinks, and they’re not being taxed.”

The argument for singling out beverages with added sugar, including soda, flavored waters, and sports drinks, is that a huge proportion of the calories from sugar consumed by Americans comes from such beverages. Nonetheless, it’s a fair argument: why not tax all sugar-containing products?

In the long run, I don’t care.

Reed, though opposed to any new taxes on principle, would rather that a sugar tax be applied at the source—on sugar producers, and producers of high fructose corn syrup. Though that would raise his own costs, Reed believes it would nonetheless be more equitable.

Either way, though, Reed says: “In the long run, I don’t care.” That’s because of another big difference between the independents and the soda giants—the former are far less affected by such taxes. They make high-end products that are consumed in small amounts, and they don’t really compete on price. A few pennies on top of an already pricy bottle of Ginger Brew won’t make much difference. The soda taxes are aimed more at the people who consume in large quantities, and who buy products that very much do compete on price. “Nobody’s buying 2-liter bottles or 64-ounce Big Gulps” of Reed’s products, he notes.

Cue makes the same point. “We’re a premium soda company,” she says. “Our business model isn’t set up on the assumption that people are going to be consuming huge amounts. If every American had one Jones Soda a year, we’d be off to the races.” Other producers say the same: Joia sodas “are a nice treat,” Johnson says, and aren’t meant for daily consumption. 

Yet another thing that sets the independents apart: they don’t do a lot of lobbying. None of the producers interviewed for this article is a member of the American Beverage Association, which has spent millions to fight against soda taxes in cities across the country, often successfully. On its own, Boundary Waters “isn’t big enough to have a bullhorn,” says Johnson.

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Dan Mitchell

Dan Mitchell is our West Coast editor. A journalist based in Oakland, Calif., he has written for The New York Times, Fortune, Wired, Slate, the Chicago Tribune, Civil Eats, Modern Farmer, and many other publications. Follow him @thefoodeconomy