New York City OKs Soda Restrictions

"Supersize me" just got a lot more complicated in New York City. The city's Board of Health today approved a ban of sales of non-diet soft drinks over 16 ounces. The restriction is meant to address obesity concerns, but doubts about its effectiveness and anxiety about the government's role in daily life have loomed large since its initial proposal by Mayor Michael Bloomberg earlier this year.

Some proponents of the ban view it as an education tactic, more than a direct channel to trim New Yorkers' soda consumption. The city spends around $4 billion on direct medical costs every year, and 58% of adult New Yorkers are considered overweight or obese, according to the mayor. It's a national issue.

Source: cdc.gov

Opponents of the ban include fast-food companies, which view the policy as sloppy and misguided. While restaurants, movie theaters, and mobile food carts are among the venues that will have to adhere to soft-drink size limitations, convenience stores and grocery stores will be able to sell any size soda they wish. In addition, certain exceptions would allow milk-heavy drinks to avoid the calorie cap.

While soda giants Coca-Cola (NYSE: KO  ) and PepsiCo (NYSE: PEP  ) seem to be on the front line here, the ban likely won't affect their bottom lines too much, although the companies will surely be watching to see if other municipalities follow suit. A Bloomberg news report quoted a McDonald's (NYSE: MCD  ) spokeswoman as saying "We are very disappointed this proposal passed. … Public health issues cannot be effectively addressed through a narrowly focused ban." McDonald's has somewhat embraced recent health trends, announcing earlier this week that calorie counts would be included on its menus nationwide.

Coffee shops like Starbucks and Dunkin' Brands could actually increase their drinks' milk content (and thus, caloric content) to qualify for an exception to the ban. Free refills will be allowed, meaning that Yum Brands' restaurants and other fast-food joints could see consumers doubling up on 16 oz. servings, rather than purchasing a single 20 oz. beverage.

Fool contributor Justin Loiseau owns none of these stocks. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.

The Motley Fool owns shares of Starbucks, McDonald's, and Whole Foods Market. Motley Fool newsletter services have recommended buying shares of Whole Foods Market, McDonald's, and Starbucks. Motley Fool newsletter services have recommended writing covered calls on Starbucks. Motley Fool newsletter services have recommended writing naked calls on Dunkin Brands Group. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (5) | Recommend This Article (2)

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  • Report this Comment On September 16, 2012, at 8:23 PM, neamakri wrote:

    So Billy is a street vendor who cannot sell a 20oz soda, while across the street Willy has a convenience store and can sell a 20oz soda.

    It is nice to see that New York has solved all of their city's problems and can now attack the rampant proliferation of sodas over 16oz. !!

  • Report this Comment On September 16, 2012, at 8:53 PM, SuntanIronMan wrote:

    @neamakri

    No worries. Billy the Street Vendor can still sell numerous smaller bottles/cans of soda that will end up equally MORE than 20oz when all is said and done. The Coca-Cola Company already launched 12.5oz bottles and 7.5oz mini-cans last year in anticipation of a shortsighted ban like this. Awesome job, Nanny Bloomberg.

  • Report this Comment On September 16, 2012, at 9:36 PM, NOTvuffett wrote:

    We should all have politicians and bureaucrats as nannies, lol.

  • Report this Comment On September 16, 2012, at 9:43 PM, NOTvuffett wrote:

    p.s. what kind of metric is self-reported obesity anyway? that kind of sounds like 'jobs saved or created', a term totally devoid of meaning.

  • Report this Comment On September 16, 2012, at 9:52 PM, Melaschasm wrote:

    If I owned a restaurant in NY, I would offer a six pack of 16 oz fountain drinks for $1, then get the word out to the media. The free advertising would more than make up for the lost profits.

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