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Under soda tax, beverage sales at chain stores in Philly dropped 51%, new study finds

Laura McCrystal, The Philadelphia Inquirer on

Published in Business News

PHILADELPHIA -- Sales of soda and other sweetened beverages have declined by 51% at chain stores in Philadelphia since the city's controversial tax on beverages took effect in 2017, according to a study released Tuesday, one week before city primary elections in which the tax is a key issue.

Total sales of beverages, food and household products decreased by 8.1% at supermarkets, said the report in the Journal of the American Medical Association.

"Part of this is not at all surprising," said Christina Roberto, the lead author on the paper and an assistant professor of medical ethics and health policy at the University of Pennsylvania's Perelman School of Medicine. "There's a mountain of literature from economics that if you raise the price of something, people will buy less. We've all been curious how beverage taxes actually play out in the real world."

While beverage sales in the city dropped, the study found that sales outside the city increased by more than 24%. Because that increase does not fully offset the sales reductions in the city, Roberto said, it is evidence that the tax resulted in less sweetened beverage consumption -- a good outcome in the view of public health advocates.

Supporters and opponents of the tax -- which funds pre-K, community schools, and improvements to parks, recreation centers and libraries -- interpreted the findings differently.

The stakes are high for both sides in the debate. Mayor Jim Kenney, who touts the 1.5-cent-per-ounce tax as the signature achievement of his first term, is facing two Democratic primary challengers who oppose the tax. Candidates for City Council are split on the issue, according to their responses to a Philadelphia Inquirer survey.

 

The research was funded by Bloomberg Philanthropies, through which former New York City Mayor Michael Bloomberg makes charitable contributions. Bloomberg supports soda taxes; he recently donated $1 million to a political action committee supporting Kenney's reelection effort.

Bloomberg's contributions to Kenney are "an effort to thwart the will of Philadelphians who want this unfair tax eliminated, and now, thanks to this study, we have even more data to support the need for it to be repealed," said Anna Adams-Sarthou, a spokesperson for the Ax the Bev Tax Coalition. The coalition has maintained that the tax hurts businesses and consumers.

Mike Dunn, a spokesperson for Kenney, said the tax is achieving its goal of funding important programs, and that the city had predicted a decline in beverage sales after the tax went into effect. He said the study is a good way to increase transparency about the tax. He added that the study shows distributors and retailers do not have to pass the full tax through to consumers, because it found varying price increases on taxed beverages.

"We have no doubt that the beverage industry will spin this study to be more than it is," Dunn said. "That is a false narrative."

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