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Soda Companies Turning to Lower- and Middle-Income Countries to Replace Sagging U.S. Soda Sales

February 11, 2016
 

By Our Friends at CSPI

The world’s largest soft drink companies are following tobacco industry marketing tactics by pouring billions of dollars into lower-income countries to help counter flat sales of the sugary drinks elsewhere, according to a new report by the Center for Science in the Public Interest.

Coca-Cola and PepsiCo are investing heavily in Brazil, China, India, Mexico and other nations, building bottling plants and creating vast distribution and advertising networks, according to CSPI findings in the report, “Carbonating the World.”

The tactic follows similar efforts by the tobacco industry, which began to target the poor in foreign nations as health concerns by Americans led to a hit in U.S. tobacco revenues, the report said.

“When cigarette sales sagged in the United States and in other countries with robust tobacco control programs, the industry quickly pivoted to the developing world to maintain its profits,” said CSPI president Michael F. Jacobson, PhD,  who co-authored the report.

“The soda industry is finding that the same strategies work to sell soda. These are countries with growing populations, growing incomes, and with governments less likely to pursue aggressive strategies to deter consumption.”

In Mexico, for example, Coca-Cola plans to invest $8.2 billion by 2020, while PepsiCo plans to invest $5 billion over five years, CPSI reported. And in China, after investing $3 billion from 2009 to 2011, Coke plans to invest an additional $4 billion by 2017. PepsiCo, which has 27 percent of the carbonated soft drinks market to Coke’s 58 percent, invested $2.5 billion over a recent three-year period.

The CSPI report also found that Coke and Pepsi have skirted their pledges against marketing to children and adolescents by using cartoon characters and celebrity advertisements to reach youth abroad. In addition, they have targeted children by utilizing social media platforms and through product placement in movies and popular television shows.

The expansion into emerging markets comes at the expense of people’s lives, the report said, pointing to the link between increased consumption of soda and other sugary drinks to obesity, diabetes and tooth decay. Those and other health problems have been attributed for a steady decline of soda sales in the United States.

But they haven’t curbed sugary drink revenues in other nations. In soda-obsessed Mexico, consumption of carbonated soft drinks is among the highest in the world. But the nation also ranks among the highest in the world for its alarming prevalence rates for diabetes and obesity.

That led Mexican lawmakers in 2014 to impose a tax on soda and sugary drinks, raising their prices by 10 percent. The tax helped cut sales of such beverages by at least 6 percent, researchers discovered.

CSPI would like to see Mexico and other nations band together to share what they’ve learned to fight off aggressive marketing tactics by soft drink companies.

“We hope this report is a clarion call to nations around the world to take action and to think about banding together, as countries eventually banded together to take on tobacco control,” said Jim O'Hara, CSPI’s director for health promotion policy. “We would hope we don’t see things get to that stage the world got to, in terms of tobacco-related diseases before we start taking effective action against soda-related diseases.”

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