Sales of Sweetened Drinks Fell 38% After Philadelphia Beverage Tax

Sales of sweetened drinks with high sugar content significantly fell after Philadelphia passed a beverage excise tax of 1.5 cents per ounce, according to a study published today in JAMA.

Consumption of sugary drinks are linked to higher rates of diabetes and obesity, and long-term consumption is associated with death from cardiovascular disease, which is among the leading causes of death in the United States.² Findings from the study suggest that increased taxes could help reduce the consumption of sweetened drinks, which could potentially result in better health and lower overall healthcare costs. Philadelphia became the second city in the US to apply a tax on the distribution of sweetened beverages on January 1, 2017.

"Philadelphia's tax on sweetened drinks led to a huge reduction in sales of these unhealthy drinks one year after it was implemented and generated revenue for thousands of pre-K slots. That's great news for the well-being of the people of Philly," said the study’s lead researcher, Christina Roberto, PhD, assistant professor of Medical Ethics and Health Policy in the Perelman School of Medicine at the University of Pennsylvania, in a statement.

Researchers reviewed sales of sugary beverages at 291 stores, including 54 supermarkets, 20 mass merchandisers, and 217 pharmacies. Differences by store type, beverage sweetener status, and beverage size were examined.

The study was conducted to review changes in beverage sales and prices following the implementation of the Philadelphia tax. The figures were compared to those from the city of Baltimore, which had no beverage tax and served as the study’s control, to determine the occurrence of cross-border shopping in areas with neighboring zip codes in order to avoid the tax.

Researchers used a difference-in-differences approach and analyzed sales data to compare changes in purchases made between January 1, 2016, before the tax, and December 31, 2017, after the tax. Researchers also calculated price increases after the tax. The sales data accounted for about 25% of the total ounces of taxed beverages sold throughout Philadelphia. Data were obtained from Information Resources Inc, a company that tracked and amassed sales data from United States retailers.

The cost of sugary and artificially sweetened drinks increased by 0.65 cents at supermarkets, 0.87 cents at mass merchandisers, and 1.56 cents at pharmacies 1 year after the tax was implemented.

The study found that sales of sugary and artificially sweetened drinks fell by 38% in chain food retailers 1 year after Philadelphia passed the tax. The total volume of sales of taxed beverages in Philadelphia fell by 1.3 billion ounces, from 2.5 billion to 1.2 billion, or by 51% after the tax was implemented. Occurrences of cross-border shopping were found to increase, considering the volume of sales in the Pennsylvania border ZIP codes increased by 308.2 million ounces, from 713.1 million to 1.021 billion, and offset the decrease in Philadelphia's volume sales by 24.4%.

Researchers, as well as authors of an accompanying editorial,³ say that more information is needed about how beverage excise taxes could affect consumption of sweetened beverages, diets, health outcomes, employment, business revenue, and community benefit programs that would receive funding from the taxes collected. However, they believe that enough evidence has been gathered to move forward with the implementation of additional sugary beverage taxes.

"Taxing sugar-sweetened beverages is one of the most effective policy strategies to reduce the purchase of these unhealthy drinks. It is a public health no-brainer and a policy win-win,” Roberto said. “It's likely to improve the long-term health of Philadelphians, while generating revenue for education programs in the city of Philadelphia."

Reference

1. Roberto CA, Lawman HG, LeVasseur MT, et al. Association of a beverage tax on sugar-sweetened and artificially sweetened beverages with changes in beverage prices and sales at chain retailers in a large urban setting. JAMA. 2019;321(18):1799-1810. doi: 10.1001/jama.2019.4249.

2. Malik VS, Li Y, Pan A, et al. Long-term consumption of sugar-sweetened and artificially sweetened beverages and risk of mortality in US adults [published online March 18, 2019]. Circulation. doi: 10.1161/CIRCULATIONAHA.118.037401.

3. Madsden KA, Krieger J, Morales X. Sugar-sweetened beverage taxes: emerging evidence on a new public health policy. JAMA. 2019;321(18):