New York City will restrict sales of sugary soft drinks to no more than 16 ounces a cup in restaurants, movie theaters, stadiums and arenas after the Board of Health approved Mayor Michael Bloomberg's plan.
The 8-0 vote with one abstention today by the panel's members, who were appointed by the mayor and confirmed by the City Council, rejected arguments from Coca-Cola Co. (KO), PepsiCo Inc. (PEP) and restaurant companies whose coalition says the issue is about freedom to choose. The group's website says it has attracted more than 250,000 New Yorkers opposed to the plan.
"Members of New Yorkers for Beverage Choices are exploring all avenues to challenge the Board's ruling, including in court," the coalition said in a statement after the vote.
The rules are the latest of several Bloomberg nutrition initiatives during the past nine years, including a requirement that chain restaurants post calorie counts on menus. The health board and City Council banned artery-clogging trans-fats from restaurants and prepared foods, and the mayor blocked sugary soft drinks from vending machines in schools and city buildings.
"Obesity is one of America's most deadly problems, and sugary beverages are a leading cause of it," Bloomberg said Sept. 4 in Queens, where Weight Watchers International Inc. (WTW), which offers diet programs, endorsed his plan.
"Reasonable portion sizes won't prevent anyone from buying or drinking as much soda as they want, but it will help people keep from inadvertently taking in junk calories," he said.
Today's vote followed three months of public feedback. The health department said it received 38,000 comments, with 32,000 in support and 6,000 opposed.
"To not act would be criminal," said board member Susan Klitzman, a professor and director of the Urban Public Health Program at Hunter College in Manhattan.
Restaurants, movie theaters and other outlets have six months to comply or face a $200 fine each time there's a violation, the health department said. The ban doesn't apply to convenience stores and groceries, which are regulated by New York state. The regulation does allow patrons to buy as many of the smaller drinks as they want and to get refills.
A ban is "on-the-margin bad" for Coca-Cola and PepsiCo, Thomas Mullarkey, a Chicago-based analyst at Morningstar Inc. (MORN), said in an interview before the vote. "But I don't think it's bad enough to move the needle on their stock prices."
The American Beverage Association and the National Restaurant Association opposed the restrictions. Calories from sugary beverages as a percentage of Americans' diets are declining, both groups say. U.S. soft-drink sales have fallen for seven straight years, according to Beverage Digest.
"It will have a devastating effect on large businesses like beverage companies, but also mom-and-pops that rely on the profits of selling the drinks," said Eliot Hoff, a spokesman for New Yorkers for Beverage Choices.
The group says its members include Coca-Cola, PepsiCo, Dunkin' Brands Group Inc.'s (DNKN) Dunkin' Donuts stores and McDonald's Corp. (MCD) restaurants.
"We strongly encourage our guests to make choices that are right for them," Michelle King, a Dunkin' Brands spokeswoman, said in an e-mail today. "Forcing customers to purchase smaller beverages will also negatively impact small business owners like our franchisees, who are still dealing with a challenging economy."
Dunkin' Donuts, which has 478 stores in the city, won't be able to sell certain beverages in sizes larger than 16 ounces, including hot chocolate, Dunkaccino coffees and some frozen drinks, she said. Store workers won't be permitted to add sweeteners to some beverages, she said.
McDonald's, which yesterday said it would begin posting calorie counts on menus at U.S. stores, sells drinks that meet customers' "nutritional needs and taste preferences," Heather Oldani, a McDonald's spokeswoman, said in an e-mail today. McDonald's has 245 locations in New York City, she said.
"We are very disappointed this proposal passed," she said. "Public health issues cannot be effectively addressed through a narrowly focused ban."
Soft-drink makers say their products make up 7 percent of the average American's diet, too little to be the cause of obesity. Weight gain can be slowed by paying attention to the amount of calories consumed and burned through exercise, the American Beverage Association has said. Soda makers have offered smaller packages, labeled products with clearer calorie counts and agreed to stop selling sugary drinks in most schools.
"We don't believe it will do anything to impact obesity," Hoff said. "This idea that people are not educated enough to make their own decisions is wrong."
More than 35 percent of U.S. adults and about 17 percent of youths -- or roughly 90 million people -- are considered obese, according to the U.S. Centers for Disease Control and Prevention.
The largest driver of increases in obesity and caloric consumption is sugary drinks, city Health Commissioner Thomas Farley has said.
He has cited studies saying Americans now consume 200 to 300 more calories daily than 30 years ago, and that men given 18 ounces of beverage, compared with 12 ounces, drank 26 percent more while women drank 10 percent more, with no decrease in food consumption and no difference in reported fullness or thirst.
Recent efforts to tax soft drinks have foundered in at least 30 states. Last year, the federal government rejected an attempt to bar purchases of sugared drinks with food stamps.