David Brancaccio: If the mayor of America's largest city has his way, there will be no more very big sugary drinks on sale at restaurants, delis and movie theaters in New York. It would be out with the 20-ounce bottles and out with the big cups. The worry is obesity, Type 2 diabetes and other expensive health effects. Even beyond New York, the beverage industry believes this should be a matter of personal choice and labeled the proposal "zealous."
Tom Pirko analyzes this industry for Bevmark. Mr. Pirko thanks for joining us.
Tom Pirko: Good morning.
Brancaccio: Tom, give me a sense of how the industry's adapting in responding to this idea that what they sell isn't so healthy.
Pirko: Well, it's the ultimate existential challenge for the industry. The soft drink industry has been immensely successful because of volume. We have become a nation of people who've been literally addicted to sugar. So, they're worried about taxing beverages, but something like what Mayor Bloomberg has done can be devastating if it goes from city to city.
Brancaccio: Because a business model that relies on volume, that's just what this new strategy seems to attack.
Pirko: Well, our problem in the industry -- and we advise on this -- is we are in the business of selling sugar drinks, and the obesity epidemic certainly has some direct correlation to those empty calories. But then if you move it back and try to say that the beverage business will then move on to a diet drink scenario, that doesn't solve the problem of obesity either. So then, what other drinks do you sell? Well, this creates an enormous issue for the business because, again, the business model is based upon selling volume, and large consumption of sugar drinks and the fallback is diet drinks, and if you lose there, then you have a huge issue with some of the biggest and most prominent beverage companies in the world.
Brancaccio: Beverage industry analyst Tom Pirko of Bevmark. Thank you very much.
Pirko: Thank you, I enjoyed it.