Memorandum
A recent paper reveals that sugar sweetened beverage (SSB) sales have declined nearly 10% in Berkeley, California since the November 2014 implementation of the city’s SSB tax, the first of its kind in the US. Meanwhile, untaxed beverages such as milk and water saw a 4% rise in sales according to point-of-sale scanner data from two large Berkeley grocery stores, supporting the hypothesis that people, once presented with the right economic incentives, will replace soda with water and other non-sweetened alternatives. Dietary intake telephone surveys of a representative sample of the Berkeley population further revealed a nearly 20% decline in mean daily SSB consumption and 13% drop in mean calorie intake from SSBs, though notably (and surprisingly) these did not achieve statistical significance (p=0.49 and 0.56, respectively). Contrary to the concerns of critics opposed to SSB taxes, the Berkeley tax had substantial pass-through (revenue-growth due to increased costs) to consumers: 67% of the tax was passed on to consumers for all SSBs and 100% of the tax was passed on to consumers for soda and energy drinks specifically, dispelling concerns that the tax would not truly create a change in price and thus fail to alter consumer behavior. Also, counter to the expectations of many opponents of the bill, store revenue remained unchanged after the implementation of the tax, and total beverage sales in Berkeley actually increased slightly.
Although this data is of course limited by its observational nature, we find these trends notable. Indeed, it does appear that at least in Berkeley and Mexico (see below), sugar-sweetened beverage taxes do change consumption habits. What’s next? The extent to which these contribute to lower incidence of type 2 diabetes and obesity remains to be seen, of course, but we certainly hear positivity stemming from various respective quarters, including the National Academy of Medicine, the WHO, and several diabetes/obesity thought leaders. The news in Berkeley is also consistent with the two-year success of Mexico’s nation-wide soda tax, which reduced SSB purchases by 5.5% in 2014 and an even greater 10% in 2015. Of course, though Berkeley’s pioneering of a soda tax was vitally important in the US, there are some limitations with using this city as a model for soda tax implementation. Berkeley had a low baseline SSB consumption (only 34% of the national average!) to begin with prior to the implementation of the tax and is furthermore an affluent community, which may protect against the risk of negative health consequences from excessive SSB consumption. Luckily we expect more data in the coming years: Philadelphia, Boulder, San Francisco, Albany, Oakland, and Cook County (including Chicago) have also passed SSB taxes and New Mexico may be on the cusp with a vote on May 2. We believe the momentum is on and that we’ll look back upon this time and see it as a period of tremendous success.
-- by Jacqueline Anders, Abigail Dove, and Kelly Close