Why local businesses oppose sugar drink tax

Posted 6/10/21

By ARDEN BASTIA The Rhode Island Public Health Institute has launched an initiative to nourish Rhode Island through a tax on sugary drinks. For local businesses however, the proposed sugar drink tax would do more harm than good. Bills, H-5715 and

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Why local businesses oppose sugar drink tax


The Rhode Island Public Health Institute has launched an initiative to nourish Rhode Island through a tax on sugary drinks. For local businesses however, the proposed sugar drink tax would do more harm than good.

Bills, H-5715 and S-0327, received considerable pushback from Pepsi and Coke during testimony before the Senate and House Finance Committees in May.

Eli Berkowitz, owner of Little Rhody Foods, and Judy Chin, owner of Warwick’s Jade Dragon, are two small business owners opposed to the proposed tax.

Over 20 Warwick businesses that are against the Sugary Drink Tax, including Axelroad’s Fry Shack, California Taco Shop, Cosmic Pizza, Conimicut Variety, DePetrillo’s Pizza, Dockside Seafood, Ronzio’s Pizza & Subs, Mousie’s Deli, and Gel’s Kitchen.

The bills, which went before both the House and Senate Finance Committees in May, would add 1.5 cents per ounce to any sports drink, soda, or other beverage made with added sugar.

During the testimonies, representatives from beverage companies like Pepsi and Coca-Cola spoke out against the tax.

The Sugary Drink Tax would generate $40 to $45 million in revenue that would be used to address the hunger crisis in the state by funding a retail SNAP incentive program, providing low-income families with a 50 percent discount on their fresh fruit and vegetable purchases.

Little Rhody Foods, located in Foster, distributes over 300 local brands like Del’s Lemonade, Autocrat, Granny Squibb’s, and Yacht Club Soda, to restaurants and grocery stores throughout the state.

In Warwick, Little Rhody Foods provides Dave’s Marketplace, Market Basket, and other independent grocery stores with these Rhode Island treats.

However, the tax on sugary drinks would mean the fruition of one of Berkowitz’s “biggest fears”: an impact to distribution and selling.

“It doesn’t happen overnight to make these drinks without sugar,” he said in an interview on Tuesday. “Sugar impacts the flavor profile, which is important for people. Pepsi and Coke are multibillion-dollar industries that can turn on a dime and develop something with less or without sugar. They even own multiple companies, so they’ve got sugar on one side, and no sugar on the other.”

Berkowitz is fearful that grocery stores will stop supplying, or supply in a reduced capacity, the goods that he distributes.

“As a small company, do you know what that would do to me? We work here seven days a week. And especially with COVID, we have had to work all the time,” he said.

Little Rhody Foods distributes throughout the Northeast, but with the threat of a sugary tax on the horizon, Berkowitz is concerned he’ll have to sell elsewhere out of state, even considering getting to New York. Like the more than 70 members of the Stop the RI Beverage Tax coalition, Berkowitz predicts that consumers will do their shopping out of state to avoid the tax.

According to Berkowitz, Little Rhody Foods was established by his parents in the mid-1950s and has been serving the state ever since. Now in his mid-60s, Berkowitz says he’s seen it all, “The good and the bad.” Let the consumer decide

Berkowitz believes that a tax is not what people need, but instead time to make their own choices.

“We look at the numbers and follow the trends,” he said. “People are choosing more healthier options, whether that’s food or drink. Today, we have so many choices. There are enough products out there; we just need more education. If people are educated properly, they’re going to make their own choices.”

During the interview, he referenced one particular drink, Zyn. This juice drink is made with super foods like ginger and turmeric, which makes it a healthier alternative to soda. But the drink contains five grams of sugar and therefore would be taxed under proposed legislation. According to the Zyn website, a variety 12-pack costs $39.99. With the proposed tax, the cost would increase to approximately $42.

“This is a healthier alternative drink, and a product that’s reasonably priced,” said Berkowitz. “But now you’re making it that more unaffordable to drink that product.”

While an additional $2 or $3 on a 12-pack of sugary drinks may not seem like much, Berkowitz pointed out that it’ll “add up” over time.

Judy Chin, owner of Jade Dragon, shares similar thoughts to Berkowitz. In an interview on Tuesday, she also called the tax “unfair”.

“Yes it’ll hurt my business, but the most important thing is that it’s government and politicians interrupting our private life,” she said. “Let the families and parents educate their children. Why do we need politicians telling us what to do?”

Chin questions just how far these sugar taxes will go.

“Are they going to shut down fast food? Bakeries? This will become more than beverages. It’s just the beginning,” she said.

Currently, there is nothing before Rhode Island legislature to tax bakeries or do away with fast food.

For Chin, it isn’t necessarily about the loss of profit, but instead the principle of the matter. “This is my private life. I don’t want the government to say do this, do that. I thought this was a democracy. This has gone too far.”

Both Chin and Berkowitz believe that the funds from the proposed tax could have better uses.

“The money would be better used elsewhere. The SNAP program is there and has a lot of good, but we should use the funds to educate consumers about their choices. If you look at the statistics, you’ll see where the trend of health food is going. We don’t need to force people into it,” he said.

Berkowitz and Chin both support a tax on other substances, like cigarettes, which Berkowitz says has “considerable education” that lets consumers make a personal choice.

“If you want to buy lemonade or a Coke or cage-free eggs, that’s the beauty of the American way,” said Berkowitz. “If you want something, you’re going to buy it.”

Chin had a shared point of view. “If people are going to drink, they’re going to drink. They don’t care how much sugar is in it, they’ll buy it.”

Both the House and Senate Finance Committees have recommended the bills be held for further study after the hearings in May. No additional action has been set at this time.

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