I've recently been spending some time clicking around the site of the American Beverage Association (ABA), and I've come to a realization: For a group of lobbyists backed by sugar-water titans Coke (NYSE:KO), Pepsi (NYSE:PEP), and many more, this organization -- surprisingly -- lacks a catchy tagline.
Might I suggest the following? "ABA: We don't come cheap, but we earn our keep."
Not only does it rhyme, but it's also a pretty accurate description of the organization's workload over the past couple of years. Last August, the ABA was thrown into full-scale damage control mode, responding to a Harvard School of Public Health study linking soft drink consumption to adult-onset type 2 diabetes. Not all soft drinks, mind you -- just the ones that taste good, filled to the brim with high-fructose corn syrup.
The Harvard study stirred up a real hornet's nest over at the ABA. Nearly a year after the story broke, this Fool still feels a bit dizzy from all the spin thrown his way after penning a column describing the study and its implications for Motley Fool Inside Value recommendation Coke, Pepsi, and their peers.
And now, the spinning has begun again. Last week, the Center for Science in the Public Interest (CSPI) petitioned the Food and Drug Administration (FDA) to place warning labels on non-diet soft drink containers describing the terrible, terrible dangers of ... soda pop. Wasting no time, the ABA issued its own press release, ridiculing the CSPI's proposal and arguing that consumers should be allowed to exercise common sense in choosing to whether to have a Coke.
On the one hand, this Fool would love to root for the underdog -- CSPI, a non-profit organization that, in contrast to the ABA, clearly describes its sources of funding (primarily individual donors and subscribers to CSPI's newsletter). But on the other hand, I have to admit that the ABA has the better argument. Does drinking carbonated, caramel-colored sugar water make you fat? Indubitably. It is so self-evident, in fact, that requiring beverage manufacturers to slap on labels repeating the obvious seems a bit silly.
And then there's the third hand -- my investing hand. As an investor, it's worth weighing the likely consequences for companies like Coke and Pepsi, should CSPI's proposals become law. Because CSPI isn't just asking for warning labels. It also wants soda pop banned from sale in schools and wistfully muses about how nice it would be if the federal government would impose a $0.02 tax on every can of soda sold.
Do I think any of this will happen? Call me crazy, but, no -- I think (or rather, hope) the FDA has enough common sense to realize that American consumers have some, too. Even so, the potential impact on sales and profits makes this a story that investors in the industry should monitor.
Want to learn more about what you're drinking? Let the Fool be your guide:
- Tom and David Gardner advise avoiding corn syrup-sweetened foods.
- Brian Gorman reviews one of the nation's largest corn syrup producers.
- Brian Gorman tells Coke to cut out the sweeteners.
- Alyce Lomax reports on how Coke and Pepsi are already moving to offer healthier sodas.
Coke is a recommendation of Philip Durell's Motley Fool Inside Value newsletter. You can take a free trial today. Just clickhere.
Fool contributor Rich Smith owns no shares of any company mentioned in this article.
