Shoppers in Berkeley, Calif., bought less soda and more water in the aftermath of a sweetened-beverage tax that went into effect two years ago, a study released Tuesday found.
The study, published by the Public Health Institute and the University of North Carolina, challenges beverage-industry assertions that such taxes drive down overall sales, threatening businesses and jobs.
“This appears to belie, at least in the chains studied, beverage industry arguments that such policies will raise grocery bills in general or that they will hurt local business,” the researchers wrote.
The findings are based on analysis of beverage prices at 26 Berkeley stores and scanner data on 15.5 million checkouts at three large grocery stores in the city and six in the Bay Area.
Research was conducted before the tax went into effect in January 2015 and afterward between March 2015 and February 2016.
“We found that the tax appears to be working within Berkeley in terms of shifting consumers away from sugary beverages and toward healthier alternatives and raising revenue in the process,” said Shu Wen Ng, associate professor in the Gillings School of Global Public Health at the University of North Carolina, who was one of the researchers. “We didn’t see meaningful change in where people reported shopping. They didn't seem to change where they shopped. But what changed was what option of beverages they pointed to.”
The study shows a 10 percent drop in ounces of sweetened beverages sold but a 4 percent boost in overall beverage sales, led chiefly by a 15 percent increase in untaxed water. Sweetened-beverage prices increased more in large supermarkets than small chains, but the study found no evidence in stores of higher overall grocery bills for customers or decreases in gross revenue.
Sale of diet drinks, untaxed in Berkeley, dropped by nine percent.
Opponents of the tax in Philadelphia noted how different the two cities are: Berkeley is about one-tenth the size of Philadelphia, higher educated with a far lower poverty rate. The tax itself is smaller — 1 cent per ounce instead of 1.5 cents per ounce — and applies only to caloric-sweetened beverages, not diet drinks.
“Philadelphia isn't Berkeley. Philadelphia struggles with the highest poverty rate of any big city in the United States,” said Anthony Campisi, spokesman for the Ax the Bev Tax coalition. “Berkeley is a small city in one of the wealthiest parts of the country. Berkeley's tax also covers many fewer products, and is smaller, than Philadelphia's tax.”
Campisi said one part of the study does jibe with an argument his group has been making: Retailers passed the tax on to consumers and some people shopped outside the city to avoid paying more.
The research included three before-and-after studies, which found that 67 percent of the tax was passed on to consumers and 100 percent of the tax was passed through in the case of soda and energy drinks. Sale of sweetened beverages rose by 6.9 percent in the surrounding Bay Area cities.
The study was funded primarily by Bloomberg Philanthropies, which has backed pro-soda-tax initiatives nationwide, including in Philadelphia. Researchers say the funders had no role in the design, management interpretation, or review of the data or approval of the results.
Philadelphia Commerce Director Harold T. Epps said the findings challenge some of the industry assertions that the tax is causing steep revenue dives, necessitating layoffs.
"With so many anecdotal and often unverified claims being pushed around by opponents of the Philadelphia Beverage Tax, this study offers encouraging scientific evidence of what we can expect to see here,” Epps said. “It’s also an important reminder that it’s difficult to truly measure the economic impact of any tax with less than a year’s worth of data."