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Sodas fizzing out as companies scramble to boost sales in era of soda taxes and healthier choices

Soda companies are looking for ways to increase revenue in an era of soda taxes and an emphasis on healthier lifestyles. (radub85/Getty Images)

Soda companies are trying to remake themselves in this era of soda taxes and increasing awareness of the health problems associated with a sugar-filled diet. Sugar is known for increasing the risk of obesity, diabetes and heart disease.

But critics argue that soda taxes are ineffective and simply increase the government's reach by giving it more "nanny state" powers. Additionally, business owners have said the taxes hurt their sales because higher prices drive away customers who want to purchase soft drinks.

In an attempt to offset the trend, soda giants like Coca-Cola, PepsiCo, and Dr Pepper Snapple Group are testing beverages with kombucha tea and coconut water, for example, as less-sugary alternatives to their list of traditional soft drinks, The Wall Street Journal reported.

Still, soda sales are dropping, the report stated.

PepsiCo expects its fourth-quarter revenue report to reflect revenue of $5.9 billion, compared to $6.3 billion from a year ago. The company's strategy to offset the trend includes the launch of a flavored seltzer water called Bubly, the WSJ reported.

PepsiCo blamed falling sales on “cooler summer weather and too much marketing focus on healthier brands,” according to the WSJ.

Coca-Cola, meanwhile, is planning to introduce new diet flavors, including “Zesty Blood Orange” to “help it hold on to soda drinkers a little longer,” the report stated.

What about soda taxes?

Soda taxes and an emphasis on healthier choices are not helping, and diet sodas are  linked to their own set of health concerns.

In 2016, Philadelphia became the first major U.S. city to pass a tax law for sodas and other sweetened beverages. The Pennsylvania Supreme Court recently announced it may consider the legality of the law. At issue is whether city's a 1.5-cents-per-ounce tax violates a Philadelphia law that restricts taxing items already taxed by the state.

Seattle recently came under fire for its 1.75-cent-per-ounce soda tax. The caused caused a 36-pack of sodas at Costco to skyrocket by 75 percent. The price of Gatorade increased by similar levels.

City leaders in Seattle say they are hoping to raise revenue with the tax, but business leaders have said it is hurting their sales because the higher prices are driving away customers.

Cities such as Berkeley, California, and Boulder, Colorado, have also implemented soda taxes. In Berkeley, big soda companies tried to fight the tax.

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