Consensus Building Among Fierce Competitors

How the American Beverage Association is uniting industry giants to fight obesity with guidance from GC Amy Hancock

Doctors aren’t the only professionals encouraging healthier eating—and drinking—habits. In 2015, the American Beverage Association (ABA), and three of its leading member companies—the Coca-Cola Company, PepsiCo, and Dr. Pepper Snapple Group—joined the Alliance for a Healthier Generation to reduce the beverage calories consumed by the average American.

Deemed the “Balanced Calories Initiative,” the program builds upon the ABA’s efforts to provide consumers with information, such as voluntary front-of-bottle calorie labels. The initiative marks the largest voluntary effort to fight obesity by an industry. The ABA, which provides a neutral forum for beverage manufacturers and distributors to discuss common issues while maintaining a “tradition of spirited competition,” has pledged to help its members reduce by 20 percent the amount of beverage calories consumed by Americans by 2025. General counsel Amy Hancock discusses how the ABA is uniting fierce competitors to fight obesity.

Modern Counsel: What was the impetus for the launch of the Balanced Calories Initiative (BCI)?

Amy Hancock: We view the Balanced Calories Initiative as a continuation of the industry’s history of coming together to take strong leadership positions. Back in 2006, we launched the “School Beverage Guidelines,” a voluntary industry initiative to remove full-calorie sodas from K–12 schools and replace them with lower-calorie, smaller-portion options. We listened to parents, who told us they wanted more control over what their children and teens ate and drank in the school environment. We partnered with the Alliance for a Healthier Generation, the Clinton Foundation, and the American Heart Association to agree that only water, milk, and portion-controlled juice would be available in elementary and middle schools with additional calorie-capped beverages at the high school level. It was the first of our leadership initiatives acknowledging that the beverages we sell have calories and that the industry is willing to work together to support its consumers in their choices and be part of real health solutions. With the launch of the “Clear on Calories” effort in 2010, the nonalcoholic-beverage industry became the first in the country to put clear calorie information right on the front of the products it sells. The BCI was the logical next step in the tradition of our industry and its trade association to support consumers with both choice and information.

MC: The initiative adds a layer of accountability to beverage production, which usually means added cost. What is the benefit of the initiative for the American Beverage Association and its members?

AH: The BCI provides a message, or a nudge, that consumers will start to associate with our products. It reminds them to balance their calories—including from beverages. It’s information that consumers understand and want and that our member companies want to provide.

MC: Were there any risks that had to be mitigated before agreeing to the initiative?

AH: There are always things we have to consider when discussing competitive issues, but I wouldn’t consider them risks—more like “watch outs” that we need to be aware of.

MC: What concerns, specifically, did the ABA view as “watch outs?”

AH: I concentrate on competitive issues with all of our initiatives. Our large member companies are well-known household names and are fierce competitors in the marketplace. In the association, we build consensus among them to create industry positions and, when appropriate, advocate for the industry. So when they voluntarily agree to take action together, we have to consider any potential competitive implications of those actions.

MC: Are there other legal issues—either for the association or its member companies—that you had to consider?

AH: The competitive issue is always the issue that gets most of our focus, but there are other legal considerations that most trade organizations have to face. For instance, the BCI spurred legal considerations with regard to contracts, documents, and other technical issues.

MC: Did the association face any pushback from member companies?

AH: No, it didn’t. One of the biggest challenges of working for a trade association, and one of our main jobs, is to bring well-known, fierce competitors together and unite them in common goals and policy work. That can be tricky, but we are very fortunate at ABA to have forward-leaning member companies who are willing to be part of—and drive—meaningful solutions. This was one of those issues in which the member companies recognized the value of the initiative and committed to the effort.

MC: You mentioned the Alliance for a Healthier Generation. What kind of collaboration did this initiative require?

AH: The Alliance for a Healthier Generation is a joint venture between the Clinton Foundation and the American Heart Association. The organization has a model of working with different industries to achieve a variety of goals and policies and is particularly focused on ending childhood obesity. The School Beverage Guidelines came from a partnership with the alliance, as did the Balanced Calories Initiative. And the outcomes of the two programs have been consistent with both of our missions.

MC: Let’s talk about the Food and Drug Association’s (FDA) nutritional labeling regulation that was proposed late last year, which requires calorie information to be listed on menus in chain restaurants. What role is the American Beverage Association playing in amending or tweaking these and other recent FDA regulations?

AH: We are very supportive of some of the proposed changes. One change in particular—to make calories more prominent—is totally consistent with our position. Other proposed changes, like changing the serving size for beverage labels from 8 ounces to 12 ounces and providing clear calorie information on self-serve fountain equipment, is also true to our mission. Many of our members have already been labeling serving sizes up to 12 ounces, and some have been labeling up to 20 ounces. As for labeling on self-serve fountains, we had already intended to do that as part of our Clear on Calories initiative and now with the BCI. So we’re obviously very supportive of these types of regulations.

Some of the proposed changes don’t have our support. One thing we were opposed to, for instance, is a rule that would require an additional line on the nutrition facts panel for the number of grams of added sugars because we think total sugars—and total calories—are the relevant nutritional claims. We are opposed to that change, so we filed comments and are waiting to hear the outcome.

MC: What about the FDA’s recently finalized policy that requires many vending machine manufacturers to provide visible nutritional information before the point of purchase. Are you working on amending those regulations?

AH: Again, our industry is very committed to providing clear calorie information, so we’re supportive of the vending labeling rule. There are technical difficulties in the way the FDA wrote the rule pertaining to how calories will be visible in glass-front vending machines and the cost associated with that, but we’re working with the agency for guidance. Overall, our position on most of the FDA’s vending labeling
regulation is a supportive one.