Follow by Email

Monday, April 12, 2010

"We want you to be healthy, so we'll encourage taking your money."

I was frustrated by a comment made by Seth Godin on his blog where he suggests that Pepsi employees should be in favor of the proposed NYS soda tax (1 cent per fluid ounce):
The benefit of a tax is that it affects you and your competitors at the same time, so you all benefit from doing the right thing, as opposed to having to compete against someone who doesn't care as much as you do.
This argument seems short sighted, or possibly idealistic. First of all, look at soda. It contains sugar (just kidding, corn syrup) and caffeine, and kids are addicted to it. Go tell those kids that their soda will cost twelve cents more .. no wait .. let me update since soda is no longer sold in 12-ounce bottles at schools, so, twenty cents .. tell those kids they have to pay another twenty cents per bottle, and see if they fall on the side of the government or the soda companies. So, campaigning against the tax can be seen as representing the best interests of their customers.

Now let's look at what might be in the best interest of the company itself: how about a tax that is applied equally to all your competitors, and your company is exempt? Well, that's probably not going to happen, but either the tax law will pass or not. In theory if it doesn't pass, things can remain status quo and still sometime in the future Pepsi may reveal an alternative plan, posing themselves as a leading crusader against obesity. If it looks as though the law will pass, Pepsi can certainly use political influence to carve out exemptions for itself so while it hurts everyone, it hurts Pepsi just a little less. (Side thought: I can't see using the tax as a way to eliminate smaller competition, you're still left after the fact with the tax. Or at least, there may be better ways to eliminate smaller competition.)

Finally, I don't see this as a deterrent for purchasing soda, but a way to raise funds for the government. (I don't have data, but do cigarette tax increases actually reduce cigarette sales?) That's just a hard thing to convince your customers to get behind. "We want you to be healthy, so we want to hurt your pocket when you buy our product."

Yes, everyone should drink less soda and drink more local water, and corn syrup has long outlived its welcome. Maybe Pepsi can come out with a "drink responsibly" education campaign, or just plain replace corn syrup with sugar, but as long as it's the profit-making venture that it is, actually endorsing the tax would be stupid.

1 comment:

schnitz said...

Suppose you think that your industry or product will become obsolete, or nearly so. Other than denial, what are you options?
* Enjoy the ride while it lasts.
* Find ways to prolong the inevitable.
* Find a replacement mission/product/industry.

It seems at least plausible that sugary drinks face some long-term challenges. If Pepsi's CEO believes this, what (tax) policies and business decisions will help change horses most successfully? The best corporate decision on this tax question is not obvious, from this perspective.