What does Berkeley's soda tax mean for the U.S.?

The soda industry suffered a setback Tuesday night when Berkeley, California, became the first city in the country to approve a sin tax on soda sales.

Large beverage companies fought hard against the tax proposals in Berkeley and in San Francisco, where a similar bill lost. Berkeley's proposed tax of a penny per ounce required only a majority of the vote, while San Francisco's tax of 2 cents per ounce required a two-thirds vote.

Now, the price of a 20-ounce Coca-Cola will rise by about 20 cents in the city. The tax also covers energy drinks, sweet teas and the sweet beverage syrups used to flavor beverages. Diet drinks, milk products, all-juice drinks and baby formulas are excluded.

Similar proposals have failed in two dozen other cities and states, raising questions about how significant Berkeley's vote might be. Is the city -- one of the most progressive in the country -- simply an outlier, or will the election encourage activists to press the issue elsewhere?

The soda industry, which spent some $2.4 million to oppose the proposal in Berkeley and $9.1 million in San Francisco, says that Berkeley is a political oddity. "People don't support taxes and bans on common grocery items, like soft drinks," said the American Beverage Association in a statement after the election results were announced. "That's why the public policy debate has largely moved on from taxes and bans." The association added that it is working with lawmakers and other leaders to address the issue of obesity.

Advocates of the Berkeley tax were thrilled. "The tides have turned on Big Soda," a spokesman for the campaign supporting the tax told The Contra Costa Times. But organizers of the effort said they didn't create a cookie-cutter formula for success that will play out across the rest of the country. The Berkeley campaign was specifically crafted to address local concerns, including the impact of diabetes on African American residents.

Still, observers said the Berkeley vote and its aftereffects will be analyzed by both sides moving forward. "A lot of people out there who are in contact with a lot of grassroots groups are watching Berkeley very closely," Robert Reich, a professor at University of California, Berkeley, told Reuters.

  • Kim Peterson

    Kim Peterson is a financial journalist covering business and the economy. She has written for several online and print publications, including MSN Money and The Seattle Times.