Exciting Challenges in 2008

The beverage industry experienced an intense year in 2007 with the introduction of many exciting, functional beverages and continued focus on health and wellness, packaging and the industry’s environmental impact. This year promises to be equally interesting as we face a host of critical issues and opportunities. The following is a sneak peek at topics the American Beverage Association and beverage companies large and small will tackle in the weeks, months and possibly years ahead:

Health and Wellness

• National School Beverage Guidelines:

Last fall the beverage industry produced its first report outlining the success of implementation of the industry’s guidelines, which saw a 41 percent reduction in beverage calories shipped to schools. This fall, our industry will document its progress in its second report of the three-year implementation period. With the help of parents, teachers and school administrators, we anticipate continued success.

• 2010 Dietary Guidelines:

While it may seem far off, preparations already have begun for selecting the advisory committee for the next Dietary Guidelines for Americans. The Dietary Guidelines play a critical role in how legislators, policy-makers, dietitians and the international community view foods, beverages and ingredients. The beverage industry will work to inform the committee about the proven science that supports the safety of our products and their ingredients.

• Caffeine:

In December, the Developmental and Reproductive Toxicant Identification Committee (DARTIC) of California’s Office of Environmental Health Hazard Assessment (OEHHA) recommended that eight chemicals, including caffeine, undergo further review under Proposition 65. The review could, confusingly, lead to warning labels on certain drinks containing caffeine, such as energy drinks and soft drinks, but not be required on coffee (which have much higher caffeine levels than soft drinks), due to an exemption for “naturally occurring” caffeine. OEHHA plans to move ahead with the review and likely will conduct more hearings and further analysis. The American Beverage Association will follow this process closely and continue to defend the safety of caffeine for all populations, which is supported by sound science.

First-of-its-kind Bottled Water Tax

Under the guise of supporting recycling efforts, on Jan. 1, the city of Chicago implemented a 5-cent tax on bottled water containers to encourage consumers to instead purchase tap water. However, the money goes into a general fund and is not directed for specific environmental programs. In response, the American Beverage Association, along with the Illinois Beverage Association, Illinois Retail Merchants Association, Illinois Food Retailers Association and International Bottled Water Association, filed a lawsuit seeking to invalidate the tax and protect the industry’s customers, both retailers and consumers, from paying a tax against a healthy beverage in containers that are 100 percent recyclable. Developments in this precedent-setting case are sure to be watched by industry as well as local policy-makers throughout the country.Federal Landscape

Not surprisingly, federal legislators will most likely focus on environmental initiatives this year as policy-makers attempt to embrace initiatives that will lessen environmental impacts. This could mean an emphasis on beverage packaging despite industry efforts to promote recycling and lightweight its packaging.

• Bottle Recycling Climate Protection Act:

Last November, Rep. Ed Markey, D-Mass., used the popular environmental drumbeat to introduce this Act. If passed, it would apply a 5-cent deposit on all beverage containers aside from milk, wine and liquor and a 3-cent handling fee paid to retailers by bottlers. The Act further calls for unclaimed deposits to be granted to states to “combat global warming.” The bill has been referred to the Environment and Hazardous Materials Subcommittee of the House Energy and Commerce Committee. The beverage industry will be watching the bill closely and stands firm behind the fact that comprehensive recycling, which addresses all packaging, is a better approach that would have a more lasting environmental impact than piecemeal methods such as deposit legislation.

• School Nutrition Standards:

Left unresolved in 2007 was legislation concerning nutrition standards for beverages and foods sold in schools – an amendment to the Farm Bill sponsored by Sen. Tom Harkin, D-Iowa, and others, which failed to be considered. The beverage industry supported the measure, which would have codified the industry’s National School Beverage Guidelines, with some minor modifications. ABA will be visiting with members of Congress this year to advocate that the amendment be turned into a free-standing bill.
• Dollar Coin:

The beverage industry avoided spending more than $20 million dollars and countless hours unnecessarily retrofitting vending machines starting January 1, thanks to the industry’s work to pass legislation exempting our industry from the federal “dispensing” requirement of the Presidential $1 Coin Act. Earlier last year, an interim regulatory rule was issued that would have required vending machines on federal property to both accept dollar coins and dispense them as change – even if the vend price would never warrant distributing a dollar’s worth of change. However, due to legislation passed in December, the regulation does not apply to vending machines on federal property that do not receive denominations higher than $1 in their bill validators.

State Landscape

The beverage industry anticipates increased action from states as legislators throughout the country search for unique ways to tackle health issues, score environmental points with constituents and raise funds to boost state coffers. The following are some challenges the beverage industry anticipates facing:

• Deposit legislation:

As state legislators attempt to address environmental issues, they may look to expand or create deposit legislation to improve recycling rates, despite the fact that they have proven to have little impact and ignore more than 90 percent of materials in the waste stream. The industry is nevertheless dealing with attempts to create new deposit laws in several states around the country. In 2008, the industry will continue actively participating in coalitions with grocers, retailers and others to stop these proposals. In conjunction with national initiatives such as the National Recycling Partnership, the industry will spearhead efforts to present credible alternatives to deposit proposals in state legislatures. These alternatives will seek to increase recycling rates and minimize our environmental footprint through ways other than deposit mandates.

• Taxes:

Proposals to impose beverage taxes on soft drinks and bottled water remain a threat. Last summer’s intense media coverage of issues regarding bottled water and the environment raise the possibility that the industry will see many more onerous tax proposals on bottled water in states during the 2008 legislative sessions. In addition, several governors and legislators plan to attempt to solve their state’s health care access problems through major state initiatives that need funding. The industry remains vigilant in fighting these proposals.

While these are issues the beverage industry expects to contend with in 2008, as other developments occur the American Beverage Association will keep you updated in this column throughout the year.