First US sugar tax sees soft drink sales fall by almost 10%, study shows

The first sugar tax to be introduced on soft drinks in the United States to fight obesity has cut sales by nearly 10% and apparently increased the numbers of people buying water instead, a study has shown.

Berkeley, California, introduced a substantial tax on sugar-sweetened beverages on 1 March 2015. At the rate of 10% – or one penny per fluid ounce – it adds 12 cents to a 12 ounce can of soda priced at $ 1, or 68 cents to a two litre bottle costing just over $ 2 before the tax.

Experts hope that sugar taxes will hike the prices of unhealthy drinks and reduce the number of people who consume large quantities of them. Sugar-sweetened drinks are known to be a significant contributor to obesity, particularly in children and young people.

But taxes have only been introduced after battles with the industry. The latest tax to be introduced – in Philadelphia, in January, where unlike Berkeley incomes are low and obesity rates high – is still being challenged in the courts.

Berkeley is unlike most cities in America, with far higher levels of wealth and education and low consumption of colas and other sugary drinks. Yet Barry Popkin of the Carolina Population Center at the University of North Carolina at Chapel Hill, USA and Lynn Silver from the Public Health Institute found that, even there, the tax had changed people’s behaviour.

“This surprised me,” Popkin told the Guardian. “I didn’t think we’d get much effect at all.” The debate around obesity and the sugar tax had already brought consumption down in Berkeley – and yet the introduction of the tax appears to have brought it down further.

One year after the introduction of the tax, their paper in the journal Plos Medicine shows that sales of sugary drinks in Berkeley fell by 9.6%, while sales in surrounding areas with no tax rose by 6.9%.

While the academics cannot prove that consumers bought water instead, bottled water sales in Berkeley increased by 15.6% after the introduction of the tax. Sales of other non-taxed drinks such as unsweetened teas, milk and fruit juices also rose. But diet drinks and energy drinks appeared not to be so popular – those declined by 9.2%.

Shopkeepers did not lose out because the average grocery bill remained the same. The authors of the study suggest it is possible that consumers are shifting away from sugary drinks to healthier ones – and without causing undue economic hardship because spending did not drop.

In the first year, the tax was levied only in the chain supermarkets and chain petrol stations, so there is still scope for a bigger effect when independent and small shops also bring it in. The money raised is going to child health programmes.

Popkin expects the impact of the tax to be far greater in Philadelphia, where it has been set higher, at 15%, and where incomes are some of the lowest in the USA and consumption of sugary drinks and obesity are high. Proceeds from the tax are going to pay for much needed daycare centres for children. “That was how they sold it,” said Popkin. “The revenue has been double what they expected. Daycare centres have doubled and tripled in size.”

The battle for sugar taxes has not yet been won in the USA, he said. “The industry is still fighting tooth and nail. We have reached a turning point, but the industry is still fighting. They are fighting desperately in Philadelphia because it is a low-income and very high-purchasing city. The implications are quite profound.”

The American Heart Association praised study and the sugar tax.

Its CEO, Nancy Brown said: “This study adds to the compelling evidence that simply cannot be ignored. The residents of Berkeley, who voted for a sugary drink tax in their community, are now seeing the benefits of significantly reduced consumption of sugary drinks, significantly increased consumption of water and consumers are switching to healthier drinks.

“Additionally, Berkeley small businesses have not seen a drop in overall sales. This positive impact is magnified by the fact that the revenue from the tax is being invested in health and wellness across the city.”

But the American Beverage Association said: “This study acknowledges that taxes do not demonstrate a meaningful reduction in obesity rates. A beverage tax that increases the price on certain beverages by more than 50 percent only yields a reduction of 6.4 calories per day.

“America’s beverage companies know we must play a role in improving public health, which is why we are taking aggressive actions to help people reduce the sugar and calories they get from beverages.”

First US sugar tax sees soft drink sales fall by almost 10%, study shows