BERKELEY, Calif. -- A new study shows sales of sugar-sweetened beverages in Berkeley, Calif., have decline almost 10% in the year since the city enacted a tax on the drinks.
“Changes in prices, sales, consumer spending and beverage consumption one year after a tax on sugar-sweetened beverages in Berkeley, California, US: A before-and-after study” is the largest-to-date evaluation of the nation’s first sugar-sweetened-beverage tax, covering 15.5 million supermarket checkouts.
The study found that the volume of sugar-sweetened beverages sold in Berkeley declined by 9.6% in the year following implementation. Because sales for healthier beverages, including water and milk, increased, there was no negative effect on overall beverage sales at studied local businesses. Overall grocery bills (consumer spending per checkout) did not go up.
Here's a look at some of the top findings of the study ...
1. Purchases decline
Purchases of sugary drinks declined
Sales (in ounces per transaction) of taxed beverages fell by 9.6% in Berkeley, while they rose by 6% in other Bay Area stores without a tax (compared to predicted sales based on pre-tax trends). Sales of diet soft drinks and diet energy drinks also fell, by 9.2%.
2. Healthier options grow
Purchases of healthy beverages increased
Sales of untaxed beverages rose 3.5%, and overall beverage sales went up in Berkeley, according to the report. Sales of water increased by 15.6% (more in ounces than the decline in sugary drinks); untaxed fruit, vegetable or tea drink sales increased by 4.37%; and sales of plain milk ticked up 0.63%.
3. Total grocery bills not effected
No negative effect on store revenue or consumer grocery bills
Although overall store revenues per transaction in the studied chains dropped slightly across the Bay Area during the study period, store revenues in Berkeley fell by 18 cents less (-36 cents) compared to non-Berkeley stores (-54 cents). This same indicator—store revenue per transaction—is also what consumers spent on average for each checkout or “grocery bill” at the participating stores, indicating that their average grocery checkout bill did not increase at these stores.
4. Health initiatives win
Investments in health increased
In spite of low consumption of sugary drinks, the city’s revenue from the first year of the tax was $1.4 million—or $12 per capita. Funds raised went to nutrition and obesity prevention activities in schools, child care and other community settings.
5. Tax pass-through varied
The tax costs were passed through to taxed products in many, but not all, stores
In the 15.5 million transaction study, about two-thirds of the penny-per-ounce levy (0.67 cents per ounce) was passed through to consumers by pricing increases on the taxed drinks. For soda and energy drinks, it was fully passed through (1.09 cents per ounce). In the 26-store study, it was fully passed on in large (1.07 cents per ounce) and small chain supermarkets and chain gas stations (1.31 cents per ounce), partially in pharmacies (0.45 cents per ounce), but not in smaller independent corner stores and independent gas stations. Prices on nontaxed beverages did not increase more in Berkeley than in comparison stores.
“Berkeley’s per capita sugar-sweetened-beverage consumption is significantly lower than the country as a whole,” said Shu Wen Ng, Ph.D., University of North Carolina research associate professor of nutrition and co-first author on the study. “This suggests we will see a much larger tax impact in other U.S. cities with similar or higher tax levels.”
The tax, approved by Berkeley voters in November 2014, is a penny-per-fluid-ounce of sugary drinks, paid by beverage distributors. Revenues from the tax are placed in the general fund and an advisory committee recommends to the city how to spend the resources to improve health.
About the study
The study, published in PLOS Medicine by the Public Health Institute and the University of North Carolina, evaluated changes during the first 12 months of implementation (March 2015-February 2016) from three data sources. Data analyzed included:
- Beverage prices at a sample 26 Berkeley stores of varying types
- Point-of-sale scanner data on beverage prices, sales in ounces and store revenue per transaction on 15.5 million checkouts in three Berkeley and six control non-Berkeley large supermarkets in nearby cities
- A smaller before-and-after representative telephone survey of 957 adult Berkeley residents
Similar taxes were recently passed in San Francisco, Oakland and Albany, Calif.; Philadelphia; Cook County in Illinois; and Boulder, Colo. They are under consideration now in Santa Fe, N.M.; Connecticut; West Virginia; Illinois; Massachusetts; and Washington.