Why The Soda Ban Doesn't Matter

In today's edition of "Talking Stocks," analyst Austin Smith talks about a misperceived threat to the big beverage giants.

Many investors are worried about the news that New York City will be banning sugary drinks over 16 ounces. However, the ban doesn't apply to grocery stores, New York is still a small slice of the broader beverage market, and the big soda companies have alternatives to provide consumers in place of the restricted beverages. Of course, there is always the risk that bans like this permeate society in much the same way smoking bans started small and became the norm. That's a bigger issue, but tobacco companies have still prospered under these conditions, despite not having the same flexibility as beverage companies and facing more restrictive bans. Ultimately, this is a drop in the bucket for companies like Coca-Cola and PepsiCo, and investors shouldn't be worried by the news.

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At the time thisarticle was published Austin Smith owns shares of McDonald's, The Coca-Cola Company, and PepsiCo. The Motley Fool owns shares of The Coca-Cola Company and PepsiCo. Motley Fool newsletter services recommend McDonald's, Monster Beverage, PepsiCo, and The Coca-Cola Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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