Coca-Cola, Pepsi Will Pull 2-Liters From Philadelphia Over Soda Tax

Image courtesy of Mike Mozart

The recently enacted sugary drink tax in Philadelphia has not been without controversy, including a soda industry lawsuit, unhappy consumers, and push back from lawmakers. The two biggest names in soda are now making drastic changes to the products they offer — and the people they employ — and blaming it on the tax.

The Philadelphia Inquirer reports that in the face of falling sales Pepsi and Coca-Cola are removing larger containers of soda and other sugary drinks from stores and replacing them with smaller versions.

The idea behind the switch is that consumers will be more willing to buy smaller containers because they come with less of a tax.

Under the city’s sugary drink tax, soda and other sweetened beverages are now subject to a tax of $.015 per ounce. While the tax is applied at the distributor level, some of the cost has been passed along to customers.

If the full tax is passed on to customers, that means the tax imposed on a 20-ounce bottle would be $.30, while the tax on a 2-liter bottle of soda carries a tax of $1.

However, as the Consumerist’s Philadelphia bureau can attest, some stores have increased their soda prices beyond the amount added by the tax.  It’s not uncommon to now see retailers — particularly smaller shops and takeout restaurants — charging $4 or more for a 2-liter of soda that previously sold in the $2-$2.50 range.

A spokesperson for Pepsi says that by replacing 2-liter bottles of soda with 1-liter bottles the company is providing “products and packages sizes working families are more able to afford.”

While Pepsi contends that it is saving customers money by offering the smaller-sized beverages, reports have previously found that companies use the beverages as a way to offset falling consumption with packages that cost more per ounce.

Still, Pepsi says its recent change in Philadelphia was made as the sale of larger packages of soda and other drinks were down by “more than 50%” in the city.

At Coca-Cola, the Inquirer reports, things are bit different, as the company says it is switching sizes because it’s simply what people want.

While sales are down overall, a rep says smaller-sized products have become more popular. By offering smaller sizes the company say it can “give people more choices and to help people manage their sugar consumption.”

This isn’t the first time a soda company has made its displeasure with the tax known. The Inquirer reports that Pepsi is threatening to eliminate 80 to 100 positions in the city over the next few months if the tax isn’t changed.

It is unclear if the potential layoffs are the same or in addition to the 80 to 100 workers the company said it would lay off from three distribution centers in the city in early March.

“Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles,” the company told the Inquirer at the time.