PhillyDeals: Phila. soda mogul says tax all sugary products, not just drinks

Arby's has been sold for $430 million to Roark Capital, owners of Auntie Anne's pretzels, Cinnabon bakeries, and Moe's Southwest Grill.
Arby's has been sold for $430 million to Roark Capital, owners of Auntie Anne's pretzels, Cinnabon bakeries, and Moe's Southwest Grill. (Associated Press, File)
Posted: June 14, 2011

"You want to know the difference between public school kids and private school kids?" asks caterer Robert Powers, who works a string of high school proms every May in Philadelphia's southern suburbs.

It's not so much the music, or the dresses, he told me. "The big difference is, the public school kids, they always ask for soda. It's all they'll drink," Powers said. "And the private school kids, they always ask for water, every time." (At least until they hit the Shore for Senior Week, and beer and vodka.)

It's a class thing. Poor kids still drink lots of cheap soda, which makes you fat. But rich kids are now taught, from their Montessori kindergartens to their college-prep finishing schools, to drink stuff that's less bad for you, even if it means paying a premium for something plain in a fancy bottle.

Harold Honickman doesn't dispute that. "I think you're right. The rich have better choices," says the beer-and-soda mogul, once listed by Forbes magazine as the richest man in Philadelphia.

But, class differences aside, Honickman (who is also a leading distributor of Coors beer) remains a leader in the opposition to Mayor Nutter's proposed soda tax.

Not just because Honickman's Canada Dry distributorship (which also handles Snapple, Frank's and many other brands, as well as bottled water) controls 20 percent of the metro Philadelphia soft-drink market.

But also because he's even bigger in New York, where Honickman controls both Canada Dry and Pepsi distribution, and 40 percent of the soft-drink market in that largest of U.S. metro areas.

If this soda-tax thing catches on down here, it could spread. "That's certainly a possibility," he told me.

But mostly, Honickman says, it is unfair to single out sweet drinks.

"I think there should be a sugar tax in the whole city," he told me. "Why isn't ice cream, cookies, candy part of this?"

Maybe because taxing Tastykakes and Peanut Chews would win Nutter even more opponents than the Teamsters, grocers, and bottlers he's already collected on the soda-tax plan?

"I think we'd all cooperate," Honickman insisted. "I said it to the mayor: 'What you should be looking at is a total tax on sugar being sold in the City of Philadelphia. The supermarkets, for the cakes and cookies they sell. Why not tax McDonald's for the sweeteners in the food they sell?' "

Political deal

Arby's, the 3,000-store roast-beef sandwich fast-food chain, has been sold for $430 million by owner Wendy's/Arby's Group Inc. to Roark Capital Group, the Atlanta buyout firm named by its owners, led by Neal Aronson, for Howard Roark, the architect hero in Ayn Rand's capitalist novel The Fountainhead

.

Roark Capital's other restaurant chains include Auntie Anne's pretzels, Cinnabon bakeries, and Moe's Southwest Grill.

Wendy's/Arby's, like rival Burger King, had been losing market share to industry leader McDonald's, which now controls about half of the U.S. fast-food market, according to data cited by analyst Mark Kalinowski at Janney Capital Scott.

Short of war

Writing in a column posted by the Thomson Reuters news service, Larry Summers, the Main Line-bred economist who is headed back to Harvard after serving as President Obama's top economic adviser, says cutting the federal deficit isn't nearly enough to fix the stalled U.S. economy.

He says past "overinvestment" in the bubble years gives private industry little incentive to invest now, even at today's low interest rates, given the "glut" of "vacant houses, malls without tenants, and factories without customers."

Summers says this kind of slowdown, like the Great Depression, is likely to last for years and end only with an "external event," like the World War II buildup he says stopped the Depression and kept Franklin D. Roosevelt from losing the presidency in 1940.

What can Washington do, short of attacking China? Every policy that Congress and the president adopt from now on should have one goal, Summers says: "Increasing confidence, borrowing and lending, and spending."

For example? Finance new roads and other public "infrastructure" to take advantage of today's cheap interest rates and plentiful, underemployed labor supply. (Summers doesn't say if the government or private industry should finance that effort.)

Summers also wants more payroll tax cuts, like this year's Social Security-Medicare break. He wants to promote exports and relax "inappropriate regulatory burdens," though he supports the Dodd-Frank bank reforms that have angered JPMorgan Chase & Co. chief Jamie Dimon and other bankers.

Bottom line, for Summers: "Every measure that comes out of Washington needs to be evaluated on the basis that it will not reduce the demand for goods and services at a time when America's economy has been and will remain profoundly [weak]."


Contact columnist Joseph N. DiStefano at 215-854-5194 or JoeD@phillynews.com.

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