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National Journal's Under the Influence

Friday, January 29, 2010 4:06 PM

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To battle an "unprecedented threat" to the beverage industry, the American Beverage Association spent significantly more than it ever had on lobbying and advertising last year -- nearly 30 times what it spent in 2008, said ABA spokesman Kevin Keane.

The dramatic increase, from $667,590 on total lobbying activities in 2008 to $18.9 million in 2009, reflects the industry's concerted efforts against inclusion of a proposed sugary beverage tax in health care reform legislation. The $18.9 million included an advertising campaign costing about $11 million during the second half of the year. The firm Goddard Claussen handled the ad campaign.

"This was a situation we found ourselves in as an industry. There was talk about a discriminatory tax on our products, and there was a very active set of advocates for the tax that were out there," Keane said. "We did the logical due diligence to get our message out and make sure that people understood the facts on the issue."

The tax floated around in conceptual form as a way to raise money to fund the bill while simultaneously encouraging healthier behaviors. In a December 2008 report, the Congressional Budget Office suggested a national excise tax of 3 cents per 12 ounces of sugary beverage would raise $50 billion over 10 years, while potentially reducing health care costs related to conditions like diabetes and obesity.

But the beverage group argued that the tax would hit middle-class families hardest and wasn't an effective way to address obesity. "We had a different approach than traditional Washington. We took a productive tone in our messages," Keane said. "Our approach, our tone, our giving fact-based information out, really helped influence the debate and how lawmakers viewed this tax idea."

The group reported just $140,000 in lobbying expenditures in the first quarter of 2009. Then, the Senate Finance Committee discussed a sugary beverage tax at its May roundtable discussion on how to pay for reform. "That's when we ramped into action to a higher degree," Keane said.

Rivals within the beverage industry, including Coca-Cola and Pepsi, banded together to fund the effort. The ABA also created a coalition, Americans Against Food Taxes, specifically to combat the tax. Money spent by the coalition was included in the ABA's lobbying disclosure.

The ABA's previous years' lobbying expenditures have been in the same ballpark as 2008, with an average lobbying total of $718,905 between 2003 and 2008, according to data from the Center for Responsive Politics.

So far, the ABA says its investment has paid off. Though a sugary beverage tax was discussed in various committees, it was never put into legislation. But the health care debate remains in limbo today, and the ABA will remain engaged as long as it takes, Keane said. The group is also involved in efforts in individual states where similar taxes are under consideration, including New York, where Gov. David Paterson (D) has proposed a one-cent-per-ounce tax on sugary drinks.

"We're hearing more and more from lawmakers and others that there's not a great appetite for this type of tax on consumers." Keane said. "But we're going to remain vigilant."

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