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Here in Ireland, Doctors have demanded a 20% tax hike on soda in the forthcoming budget to tackle the obesity epidemic.

Their intention is noble, except that, they have got their analysis wrong. It’s not just about price elasticity.

It’s about monopolies of attention.

Coca Cola is surprisingly cheap to make

What most people don’t know and never seem to talk about is that sugar-flavoured water, like Coca Cola, is very very cheap to make.

Coca Cola doesn’t want you to know that large retail chains can buy coke for the wholesale price of several cents per can.

This means, the cost to make coca cola is literally a couple of cents per litre.

If this amount seems disproportionately low, keep in mind, soda is just flavoured sugar water and it’s made using the cheapest sugar available called HFCS: high fructose corn syrup.

On the open market, in relatively low quantities, HFCS can be purchased for $400 USD per metric tonne. Thats enough for 10,000 litres of coke.

*BUT*

My guesstimate is, with it’s optimised supply chains and often GMO corn, the Coca Cola company can probably source HFCS for $200 USD / metric tonne and maybe less.

This would mean the main ingredient other than water would cost them less than 2c per litre. If the other flavourings and caffiene costs 0.5c per litre, and mixing them costs another 0.5c per litre, that would make the cost of per litre of coke 3 cents. It might be even less.

This means that there is a MASSIVE MARKUP:

if you buy a large bottle of coke in a supermarket for €1 per litre, from cost of production of coke to sale, there is a markup of over 3000%

if you buy a 200ml drink of coke in a bar for €3 euros, from the cost of production of coke to sale, there is a markup of over 50,000%

Underwriting Monopolies of Attention

And from this massive markup, there is enough money to pay for ubiqutious marketing and lobbying .

This high profitability is why:

When we watch the olympics, our brains are beseiged with coke ads When we go to the cinema, our brains are beseiged with coke ads When we walk into a news agents, our brains are beseiged with coke ads

These ads feature very sophisticated misleading psychological tricks to get us to drink coke, and share coke with friends.

These ads are incredibly insidious and obnoxiously constructed, often featuring sports models with 8% bodyfat who ALMOST NEVER drink coke.

They use happy music and sunshine to suggest a factually false association with ultra-health and bright days, when in fact the average long term high consumer of coke has poor teeth, would wobble if he took is shirt off, and doesn’t have a nutritional profile that matches the people we see in those ads. This is just deliberate misreprentation and it’s wrong. And it’s making lots of people fat. And it’s addictive and habit forming and has an ingenius perceptual trap built into the experience of consuming it – that most people feel and incorrectly rationalise that coke gives them energy. These messages play happy music and sunshine in a blatant attempt to hypnotise us to keep consuming cheap flavoured sugar water that is a major cause of obesity and a major factor in diabetes. They attempt to trick our brains to associate happiness with soda and we’re exposed to hundreds of these images each day – paid for by the high markup.

This high markup underwrites the organisation phrase of “always at arms reach” so that everywhere you go, coke is there. But if we designed a healthy society with a food supply aimed at the well being of people, no way should coke be everywhere.

What can we do?

If you want to change behaviour at scale, you need to change influence at scale.

If you want to make a proper difference towards reducing obesity – there is a very easy solution.

Firstly, add 20% tax to soda, so price elasticity plays it’s natural part, and reduces the sheer quantity consumed. This will help, a bit.

But you need to go further.

You need to go for the jugular and balance the information peoples brains are exposed to, because for decades, soda companies have had so much money that have monopolised everyones attention and abused this power to mis-teach people what soda does via hundreds of ads each day.

I suggest that in addition to 20% tax on consumption, a 100% tax is applied to any forms of advertising activity including creatives, media buying, product placement and event sponsorship and this tax money is directly assigned to to fund communications campaigns based upon peer reviewed science that help people think intelligently about what they consume and communicates accurately the real effects of habituated soda consumption, instead of the illusions painted by adverts that have misled them all their life.

I’d like to see ads that clearly explain that if you drink a lot of coca cola for 20 years, you’ll probably end up super obese with bad teeth, and you may be insulin sensitive or diabetic.

These same ads should argue that a very valid route to happiness is by avoiding drinking coca cola and eating more healthily.

It is super important that we do this – so that the people we know – in years to come, enjoy their health.

Here is the Irish Times article that in part, inspired this post:

http://www.irishtimes.com/news/health/doctors-seek-20-hike-in-tax-on-sugary-drinks-1.1551873