Lobbyists lining up against Nutter's soda tax

The food and beverage industry is mobilizing against Mayor Nutter's proposed tax on sweet drinks, with a rush of activity that has City Hall bracing for a "madhouse."

Lobbyists are buttonholing City Council members. Trade groups and the unions have locked arms. Industry ads are sprouting on the air and in print extolling the good corporate citizenship of soft-drink companies. The public has weighed in with hundreds of calls and e-mails.

All of this one week after the mayor proposed a 2 cents-per-ounce tax on all sweetened drinks as a way to raise revenue for the 2011 budget, and to combat obesity.

"This place is going to be bombarded," predicted political consultant Maurice Floyd after Nutter's budget address last Thursday. "These guys are hardball. That's their industry out there."

Councilwoman Maria Quiñones Sánchez, whose district includes the Coca-Cola bottling plant in Juniata Park, said she didn't need a lobbyist to point out the potential downsides of the tax, which would affect the many bodegas in her district as well. The fact that the administration would use only $20 million for public health - of the $77 million to be raised annually - is only complicating the debate.

"This is going to be a madhouse, because there's an inconsistency in the message," Sánchez said.

At the exact time Nutter went public last week with his plan, a coalition of the Pennsylvania Beverage Association and the Teamsters, who deliver their products, neatly outlined their arguments.

The tax will cost jobs. Working families can't afford it. It's a "money grab" by Nutter. Soft drinks alone don't cause obesity.

The industry's lobbying arm, the American Beverage Association, on Tuesday began running full-page newspaper ads and television spots, trumpeting the success of its cooperation with President Bill Clinton's William J. Clinton Foundation and the American Heart Association in taking sweetened drinks out of schools. It announced an 88 percent calorie reduction in drinks shipped to schools since 2004.

"That's proven to be a platform which is really effective in talking with legislators and stakeholders," John Brock, chairman and chief executive officer of Coca-Cola Enterprises, told analysts in November after ensuring that a national drink-tax debate died in the House Ways and Means committee.

That's the industry's national response not just to Philadelphia but to movements across the country and in Europe to establish a "sin" tax on what was once regarded as an all-American pastime.

Jagmohan Raju, marketing professor at the Wharton School, said that could be the greatest long-term threat to the soft-drink industry: the stigmatizing of its product.

"The main issue is: Does this become a sin? I think there is a good chance of that," said Raju, who predicted that sales of sweet drinks would not drop drastically in the short term, especially at restaurants and entertainment venues where drinks are already expensive. But "they should be prepared in the long run that the demand for these products will go down."

Coca-Cola and PepsiCo, along with the American Beverage Association that represents them, spent $40.4 million on lobbying in 2009 to make sure that did not happen on a national level. That compares with $4.7 million the previous year. That money helped squash talk of funding health-care reform with a tax on soft drinks.

"It was really just off the charts from where it had been any time between 1998 and 2008," said Dave Levinthal, spokesman for the Center for Responsive Politics, which compiled the data.

National proponents of a sweet-drink tax have likened the beverage industry's tactics to those once used by Big Tobacco.

"The citizens of Philadelphia can expect the companies to swoop in with their lobbyists and try to strong-arm the government into the status quo," said Kelly Brownell, director of the Rudd Center for Food Policy and Obesity at Yale University, the chief proponent for sweet-drink taxes. "It's stall, lobby, raise doubt about the science, attack the messenger. It's all right out of the playbook."

Lawyer Edward J. Hazzouri, the lead lobbyist representing the American Beverage Association locally, objected to the characterization.

"I've been working in Philadelphia for 25 years, and in my experience, it's solid arguments and numbers that convince people," Hazzouri said.

American Beverage Association spokesman Chris Gindlesperger, who was in town yesterday to plot strategy, said, "You can't make a comparison between a cigarette, which can kill you, and a soft drink."

City Council members, who must approve Nutter's $3.9 billion budget by May 31, will have the greatest say on the beverage tax. Those with the most at stake are Sánchez and Brian J. O'Neill, whose district includes Pepsi Bottling Group.

"They were 24 hours late for me taking a position on it," said O'Neill, who was contacted by Hazzouri and Pepsi Bottling's Lana Felton-Ghee a day after he was briefed by the mayor.

"My gut instinct, without anyone telling me, is that people are going to lose jobs here in Philly," said O'Neill, the Republican minority leader, who toured the Pepsi Bottling Group plant on Roosevelt Boulevard yesterday with Pepsi lobbyists. "This isn't about health, it's about deficit reduction, and it's just another tax on the public to do it."

Hazzouri retired from Sunoco last year as a company lawyer and lobbyist after 24 years and joined powerhouse law firm Cozen O'Connor. He is at the front of a team of notable lobbyists and public relations consultants for the American Beverage Association, which includes veteran media consultant Larry Ceisler and Daniel F. McElhatton, son of the former Council member Daniel P. McElhatton; and Felton-Ghee, Mayor John F. Street's former campaign manager, who has represented Pepsi Bottling Group since the early 2000s.

"My role here is, what this tax will do to people in the community who purchase our product," said Felton-Ghee, who was in Council chambers with Hazzouri during Nutter's budget speech.

Frank Keel, a former spokesman for Street, is working for the Teamsters, who say they would lose driver-delivery jobs. The Pennsylvania Restaurant Association has Andrew Zalenski, a former City Council aide, from Greenlee Partners.

The only other place where such a steep tax has been proposed is Mississippi, documented as the nation's fattest state. There, State Rep. John Mayo wanted a similar 2 cents-per-ounce tax.

His proposal recently died a lonely death, but he did not blame the soft-drink lobby.

"The constituents weren't ready for it; I never expected to pass," Mayo said. "My goal really was to start educating the public."

Back at home, Pennsylvania Restaurant Association president Patrick Conway predicted a broad-based coalition in opposition, "because everyone's affected by this."

"I think you'll see the stakeholders who feel strongly coming together," Conway said, "to put as much effort and resources as we can muster."

There are still soldiers for hire.

Floyd, the longtime political operative and former city commissioner, said he had not yet been hired, but "I sure hope to be."