Five years ago, Mayor Michael A. Nutter proposed a tax on soda in Philadelphia, and the industry rose up to beat it back.
Soda lobbyists made campaign contributions to local politicians and staged rallies, with help from allies like the Teamsters union and local bottling companies. To burnish its image, the industry donated $10 million to the Children’s Hospital of Philadelphia.
It worked: The soda tax proposal never got out of a City Council committee.
It’s a familiar story. Soda taxes have also flopped in New York State andSan Francisco. So far, only superliberal Berkeley, Calif., has succeeded in adopting such a measure over industry objections.
The obvious lesson from Philadelphia is that the soda industry is winning the policy battles over the future of its product. But the bigger picture is that soda companies are losing the war.
Even as anti-obesity campaigners like Mr. Nutter have failed to pass taxes, they have accomplished something larger. In the course of the fight, they have reminded people that soda is not a very healthy product. They have echoed similar messages coming from public health researchers and others — and fundamentally changed the way Americans think about soda.

Scaling Back

Articles in this series will examine Americans’ changing eating habits.
    Over the last 20 years, sales of full-calorie soda in the United States have plummeted by more than 25 percent. Soda consumption, which rocketed from the 1960s through 1990s, is now experiencing a serious and sustained decline.
    Sales are stagnating as a growing number of Americans say they are actively trying to avoid the drinks that have been a mainstay of American culture. Sales of bottled water have shot up, and bottled water is now on track to overtake soda as the largest beverage category in two years, according to at least one industry projection.
    The drop in soda consumption represents the single largest change in the American diet in the last decade and is responsible for a substantial reduction in the number of daily calories consumed by the average American child. From 2004 to 2012, children consumed 79 fewer sugar-sweetened beverage calories a day, according to a large government survey, representing a 4 percent cut in calories over all. As total calorie intake has declined, obesity rates among school-age children appear to have leveled off.
    The change is happening faster in Philadelphia than in the country as a whole. Daily soda consumption among teenagers, a group closely tracked by federal researchers, dropped sharply — by 24 percent — from 2007 to 2013, compared with about 20 percent for the country. Last month, the city Department of Public Health reported a sustained decline in childhood obesity over the last seven years.
    Those reductions are not accidents. The soda tax didn’t pass. But the debate about it, along with a series of related city policies, helped discourage people from drinking soda.
    At the Washington State Fair in Puyallup, Wash., last month, two diners enjoyed caloric fair food, but accompanied it with water, not soda. Ruth Fremson/The New York Times
    The Philadelphia school district forbids the sale of sugary beverages in schools and limits their availability in public vending machines. The city provides financial incentives for corner stores to highlight healthy foods. And it sends educators into public school classrooms to teach children about nutrition.
    Philadelphia, which also has one of the country’s strictest menu-labeling laws, for two years ran radio and television ads encouraging parents to think twice about serving sugary drinks to their children.
    “It’s a fight every day, and you just have to stick with it,” said Mayor Nutter, who will leave office in January. “You can’t give up, because it’s just really important.”
    But while Philadelphia’s enthusiastic attention has led to outsize results, soda consumption is declining even in cities and towns that have not made big local investments in obesity prevention and public health. The public health community has coalesced around an anti-soda message, and health officials and industry experts agree that public attitudes about soda and consumer tastes are shifting in ways that may be permanent.
    The beverage industry continues to fight these shifts — and especially to fight taxes on its products. But it is also aware that after decades of selling a handful of popular, iconic products, changing public attitudes are leading to a profound change in the nature of the business.

    The New Tobacco

    This summer, executives from the beverage industry gathered at the Harvard Club in New York City. The annual event, hosted by the trade magazine Beverage Digest, featured speakers from the three largest soda makers — Coca-Cola, PepsiCo and the Dr Pepper Snapple Group — along with smaller upstarts, like SodaStream, the home seltzer maker company, and Talking Rain, which makes no-calorie carbonated fruit drinks called Sparkling Ice.
    Along the wood-paneled walls, croissants, fruit and silver urns of coffee were laid out. But the hot drinks were largely ignored. The industry’s rapidly expanding bounty was displayed in the center of the room. In an array of ice buckets were Snapple Sorta Sweet, Squirt, Tropicana Farmstand juices, Lipton Sparkling Iced Tea. In a back corner, attendees could make their own lime-basil and coriander apple blossom sodas with a SodaStream machine.
    Such events give companies a chance to show their stuff and brag about their successes, but there was nothing bubbly about the atmosphere. This is an industry grasping to master the shifting market.
    As John Sicher, Beverage Digest’s publisher, put it in his blunt opening remarks: “It’s been a really challenging decade. It would have been a lot rougher if not for bottled water.”
    At the Washington State Fair in Puyallup, Wash., last month, lining up for water.Ruth Fremson/The New York Times
    As sales of the companies’ mainstay products have declined in the United States, the companies have scrambled to offer new products better suited to consumer tastes. Iced teas, sports drinks and flavored waters are smaller but fast-growing segments of the beverage industry. Coca-Cola, for example, has nearly doubled the number of individual products it offers, to 700 this year from 400 in 2004. And companies are increasingly experimenting with smaller packages for sodas, for which customers will pay a higher price per ounce. At the Harvard Club, there was a 7.5-ounce Pepsi minican, which promised “real sugar” instead of high-fructose corn syrup, and a diminutive eight-ounce bottle of Sprite.
    “There’s consumers out there that don’t want to consume too much,” said Regan Ebert, the senior vice president for marketing at Dr Pepper Snapple Group, in her presentation on how the company markets its products to Hispanic audiences. The small cans, she said, “do a good job of solving that need for consumers.”

    Water Is Gaining on Soda

    Gallons per capita
    50
    40
    30
    20
    10
    0
    All soda
    Bottled water
    Reg. soda
    Diet soda
    1985
    1990
    1995
    2000
    2005
    2010
    2014
    Source: Beverage Marketing Corporation
    In explaining the disdain for sodas — sometimes called C.S.D.s, for “carbonated soft drinks” — industry executives have noted that consumers these days seem more interested in healthier or natural products. They are also frank about other attitude changes that are a threat to their businesses. “Obesity concerns may reduce demand for some of our products” was the first “risk factor” for Coca-Cola’s business and profitability listed in the company’s most recent annual report filed with the Securities and Exchange Commission. PepsiCo and Dr Pepper Snapple name similar concerns.
    “Health and wellness is a major enduring trend, and each brand has to compete in that environment,” said J. Alexander M. Douglas Jr., president of Coca-Cola North America, at a Goldman Sachs investor event in May. He described a “secular decline in carbonated soft drinks.”
    The changing patterns of soda drinking appear to come thanks, in part, to a loud campaign to eradicate sodas. School cafeterias and vending machines no longer contain regular sodas. Many workplaces and government offices have similarly prohibited their sale.
    Bottlers are feeling the changes. “We’re losing, I would say, 1.5 to 2 percent of our business every year,” said Harold Honickman, the chairman of the Honickman group of companies, one of the largest soda distributors in the mid-Atlantic region.
    Mr. Honickman was an active opponent of the Philadelphia soda tax, though he said he might have supported a national sugar tax: “People are blaming a lot of the overweight on sugar-sweetened beverages, but there’s ice cream and cake, and everything else that adds to the problem.”
    For many public health advocates, soda has become the new tobacco — a toxic product to be banned, taxed and stigmatized. It’s clear that soda’s calories contribute to weight gain and obesity, but whether its impact is greater than that of other unhealthy foods has not been conclusively demonstrated. Nevertheless, the change is already underway.
    “There will always be soda, but I think the era of it being acceptable for kids to drink soda all day long is passing, slowly,” said Marion Nestle, a professor of nutrition at New York University. “In some socioeconomic groups, it’s over.” Ms. Nestle’s latest book, which will be published this month, is called “Soda Politics: Taking On Big Soda (and Winning).”
    The subtitle reflects her view that “Big Soda” is an enemy to be vanquished, and that the industry is already losing ground to its public health foes. Though the sharpest declines are happening among richer, white populations, Ms. Nestle said she expected that poor and minority customers would also reduce their soda intake over time, just as tobacco declines occurred first among educated consumers and then spread to a larger population.
    On board a Coast Guard cutter off the coast of Alaska, a crew member got water, while the soda machine seemed to have no takers. Ruth Fremson/The New York Times
    In Philadelphia, city officials are proud that the recently published reductions in childhood obesity seem to be affecting minority children, and not just white children. The prevalence of obesity among African-American boys declined by 11.3 percent, compared with 8.1 percent for all boys from 2006 to 2013.
    Dr. Giridhar Mallya, who was until recently the director of policy and planning for the city’s health department, credits that change to the efforts of the public schools, which educate a disproportionate number of minority children. Schools have overhauled menus, removed sodas from vending machines and introduced nutrition education programs.
    Donna Smith, principal of John Wister Elementary School in North Philadelphia, has been promoting that change for years. Her school is in one of the poorest neighborhoods in the city — more than 96 percent of its students qualify for free lunches. When she started there, children often came to school carrying shopping bags from local corner stores, full of chips and sodas or sugary fruit drinks.
    She arranged for classroom breakfast service and banned junk food. She went to the corner store owners and asked them not to sell anything to children in the early morning. She sent letters home. She told her teachers they could not eat snacks in front of their students. While schools citywide have changed their vending machine offerings, her school has no vending machines at all, just water fountains. She told her students she would do “whatever it is going to take to get you not to eat that junk.”

    Water on the Rise

    The current anti-soda sentiment has the big soda makers worried. Even diet sodas are experiencing a sharp decline in sales.
    At the Beverage Digest conference, an entire presentation was devoted to the diet soda problem. John Faucher, an analyst at J.P. Morgan, described the situation as a crisis. The health-conscious consumers who chose diet sodas in the past have become increasingly suspicious of anything that seems artificial. Concerns about the safety of artificial sweeteners run high, despite scant evidence they are dangerous. As consumers increasingly see soda as a vice or a luxury, they appear to be fleeing the category altogether.
    “People go toward diet, and then ‘other,’ ” said Barry M. Popkin, a professor of nutrition at the University of North Carolina, who has measured the calorie declines. Lately, he said, people are simply switching to water.
    Water has been the runaway success story of the industry. Gary A. Hemphill, an industry consultant, projects that in 2017, water will surpass soda in sales and become the largest beverage category in the United States.
    Turning away from soda does not always mean making a healthy choice. A young customer at a corner store in Philadelphia buys a fruity drink sweetened with high-fructose corn syrup.Jessica Kourkounis for The New York Times
    Although the big three soda companies all sell bottled water, they are not that excited about the trend. Bottled water is a less reliable line of business for them. Single-serving bottles of water, like Aquafina from PepsiCo and Dasani from Coca-Cola, earn margins similar to those of soda, but customers appear to have less brand loyalty to water brands than to Coke or Pepsi. It’s harder for the companies to compete in the grocery store, where low-margin companies that specialize in water are able to price large multipacks much lower than the soda bottlers want to sell them.

    Less Soda, Fewer Calories

    The daily total of calories consumed by children is falling, thanks mostly to changing beverage tastes.
    Change in daily calories, 2004 to 2012
    Desserts
    Fruits and vegetables
    Mixed dishes with meat
    Nuts, beans and legumes
    Fast food
    Salty snacks
    Milk and unsweetened beverages
    Meat, poultry, fish and eggs
    Refined carbohydrates
    Other foods
    Sugar-sweetened beverages
    Total
    +20
    +16
    -4
    -10
    -10
    -11
    -20
    -21
    -26
    -30
    -79
    -186
    Source: University of North Carolina Food Research Center analysis of Centers for Disease Control and Prevention data.
    Generally, these companies worry about holding on to customers. The companies are expanding sales overseas, which has helped buoy their stock performance over the period. But in the United States, they all worry about losing even nontraditional drink sales to a competitor. Someone might be a die-hard Coke fan, but prefer Snapple iced tea to Honest Tea, which is a Coca-Cola brand.
    That anxiety may help explain the industry’s vehemence about fighting soda taxes. The three largest soda manufacturers have entered a voluntary agreement that requires each company to reduce the total number of calories per person it sells by 20 percent by 2025. They have also made investments in obesity research and have spoken about their commitment to offering healthy choices.
    Executives at all the companies are eager to point to their lower-calorie and all-natural products as profitable lines of business. PepsiCo, for instance, often says that carbonated soft drinks represent only 25 percent of the company’s net revenue. But the industry still fights any public policy efforts to discourage customers from consuming sodas. “That’s existential,” said Hank Cardello, a former food industry executive who is now a senior fellow at the conservative Hudson Institute.
    But there is another existential threat that could be much more hazardous to the soda makers than a tax. Historically, beverage preferences are set in adolescence, the first time that most people begin choosing and buying a favorite brand. But the declines in soda drinking appear to be sharpest among young Americans.
    “Kids these days are growing up with all of these other options, and there are some parents who say, ‘I really want my kids to drink juice or a bottled water,’ ” said Mr. Hemphill, managing director of research for the Beverage Marketing Corporation. “If kids grow up without carbonated soft drinks, the likelihood that they are going to grow up and, when they are 35, start drinking is very low.”

    Change at the Corner Store

    When Mr. Nutter was fighting the soda tax battle, he kept a bottle of Mountain Dew and a container with 17 teaspoons of sugar — the amount in the bottle — on the table in the center of his office. It was a good “conversation piece,” he said, about the surprising number of calories in a typical soda.
    “Who in their right mind would ever put this much sugar into something you’re going to drink?” he said.
    Now the soda — and sugar — are tucked away in a back closet of his office. During a recent interview, he had to ask an intern to hunt them down.
    A prop has been shelved, but the city does seem to have changed. On a recent afternoon, I visited the Corner Food Market, a store in a poor, largely African-American neighborhood in North Philadelphia. Fresh apples, peaches, lettuce and green peppers were displayed on a counter near the front of the store, in bright green baskets provided as part of a grant program. Signs attached to the shelves highlighted low-sodium canned goods and whole-grain products.
    Rosaria Diaz, the store’s owner, said the story of her customers’ beverage tastes could be seen in nine refrigerated cases. At the back of the store were her most popular items — small, sugary fruit drinks called Little Hugs and the cheapest soda for sale — made by the Philadelphia-based private-label company Day’s Beverages. Next was the case of traditional sodas. And then came a similar-size display of bottled waters — with products sold by a dozen brands. Next fruit juices, and then fruit punches and iced teas.
    A girl buying fruit punch at a corner store in Philadelphia.Jessica Kourkounis for The New York Times
    Taped on the glass refrigerator doors were signs warning customers about the calories contained in the products inside. “Did you know it takes 65 minutes of dancing to work off a bottle of soda?” one said. The signs are part of the healthy corner store initiative sponsored by the Food Trust, a local nonprofit that works to promote nutritious food and coordinates closely with the city. (“Choose water!” urged another, handwritten sign.)
    Many urban residents do their shopping in corner stores, and the Food Trust certifies stores, helping them find and sell healthier foods.
    “We don’t do much with campaigns to decrease soda,” said John Weidman, the organization’s deputy executive director. “These guys have such small profit margins that you have to couch everything in terms of, ‘This will help your bottom line.’ ” In other words, the organization doesn’t urge stores to stop selling soda. Instead, he said, the goal is to nudge customers toward healthier options, like water and low-fat milk. “It’s mostly about getting them to try healthier alternatives,” he said.
    Ms. Diaz’s customers are not health-obsessed. At the front of the store, shelves were packed with cakes and cookies. There were racks of chips, an array of candy bars and a popular freezer case of ice cream. “They eat a lot of sweets,” she said. Tobacco products, too, are a big part of Ms. Diaz’s business.
    But Ms. Diaz said that fresh produce, a recent addition, had been a hit. She restocks twice a week. And when it comes to beverages, she said water sales were picking up.
    “When we opened, we didn’t have the flavored water,” Ms. Diaz said. “Now we sell a lot of them.”
    Hanif Tucker, 17, stepped in and bought a large bottle of Rock Creek soda to take home. But he said he had cut down on his soda drinking, at the urging of his football coach. “I used to just drink straight soda all day,” he said. He was especially fond of cream soda. “I started slowing down about two years ago.” Now he estimates he has about two sodas a week, and drinks mostly water and juice. “They said too much soda isn’t good for you,” he said.
    A vending machine at Lincoln High School in Tacoma, Wash., featured bottled water instead of soda.Ruth Fremson/The New York Times