By Martinne Geller
NEW YORK (Reuters) - Coca-Cola Co and McDonald's Corp slammed Mayor Michael Bloomberg's proposed ban on large soft drinks in New York City, arguing for freedom of choice and saying it would not effectively curb obesity.
"New Yorkers expect and deserve better than this. They can make their own choices about the beverages they purchase," Coca-Cola said in a statement on Thursday.
The world's largest soft-drink maker, which would be most affected by the ban, said it already puts calorie counts on the front of its bottles and cans and noted that restaurants post calorie content for all their offerings, including soft drinks.
Bloomberg's assault on super-sized sodas opened a new front in the battle over how local governments regulate in the name of health what people eat and drink.
"You can still be a beast. We're not keeping you from eating fattening foods or drinking 32-ounce bottles of full-sugar drinks," Mayor Bloomberg told the All Things Digital gathering in Rancho Palos Verdes, California via video conference on Thursday. "We are just telling you that this is detrimental to your health and making you understand that by portion size."
On Wednesday, Bloomberg proposed amending the city's health code to prohibit many places from selling soft drinks in cups larger than 16 ounces.
It was not immediately clear how much fountain soda is sold in large cups in New York City, but experts agree that such a ban could trigger similar actions elsewhere.
"This raises the specter of this going to other cities as well," said Bernstein Research analyst Ali Dibadj. "These companies may have to start playing whack-a-mole if this gains momentum."
The ban would apply to restaurants, mobile food carts, delicatessens and concessions at movie theaters, stadiums and arenas where sales of fountain drinks are common. It would not apply to convenience, grocery or drug stores, which mostly sell beverages in bottles and cans.
Targeting cup sizes is the latest effort to cut the calories Americans consume, and is part of a broader fight against obesity, which is a burden on the country's healthcare system.
"Public health issues cannot be effectively addressed through a narrowly focused and misguided ban," said McDonald's USA spokeswoman Heather Oldani. "This is a complex topic, and one that requires a more collaborative and comprehensive approach."
For years, advocates and health experts have focused on adding taxes to certain foods to reduce consumption and raise billions of dollars.
Studies have shown that higher taxes on sugary beverages lower consumption, helping to prevent diabetes and ease health care costs. Critics have said the taxes are unfair.
PepsiCo declined to comment, referring questions to the New York City Beverage Association. Dr Pepper Snapple Group Inc did not immediately return a call for comment.
Other Bloomberg initiatives to improve public health, such as forbidding smoking in restaurants and requiring chain restaurants to post calorie counts, were the subject of lawsuits, but the city prevailed.
Regardless of whether the beverage or restaurant industries raise a legal or constitutional challenge against the latest proposal, they are likely to spend a lot of money fighting it, said Tom Pirko of Bevmark Consulting.
"This is a challenge to the basic premise of their business plan, all predicated on selling sweet drinks in the largest volumes possible," Pirko said.
Coke dominates the country's soda fountains with a 70 percent share of the market, according to Beverage Digest, followed by PepsiCo Inc with 19 percent and Dr Pepper Snapple with 11 percent.
Fountain business accounts for about 24 percent of the 9.3 billion cases of soda sold a year, Beverage Digest said. The total market is worth about $75.7 billion.
Beverage Digest publisher John Sicher said the effect of such a ban would not be known for years. "We're really not going to know until we can gauge the impact in New York and see whether it spreads," he said.
Profit margins could also be squeezed, said Edward Jones analyst Jack Russo, since fountain drinks are often more profitable for suppliers than bottles or cans because they require less packaging and often sell at higher prices.
Russo said a ban could hurt chains like McDonald's, which he estimated derives about 5 percent of its U.S. sales from soft drinks.
The proposal is to be submitted to the New York City Board of Health on June 12. The board will have a three-month comment period and then vote on the proposal.
(Additional reporting by Dhanya Skariachan, Edith Honan and Joseph Ax in New York, Susan Heavey in Washington, D.C. and Alexei Oreskovic in Rancho Palos Verdes, California; Editing by Maureen Bavdek and Sofina Mirza-Reid)