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

Abstract

Background

Taxes on sugar-sweetened beverages (SSBs) meant to improve health and raise revenue are being adopted, yet evaluation is scarce. This study examines the association of the first penny per ounce SSB excise tax in the United States, in Berkeley, California, with beverage prices, sales, store revenue/consumer spending, and usual beverage intake.

Methods and findings

Methods included comparison of pre-taxation (before 1 January 2015) and first-year post-taxation (1 March 2015–29 February 2016) measures of (1) beverage prices at 26 Berkeley stores; (2) point-of-sale scanner data on 15.5 million checkouts for beverage prices, sales, and store revenue for two supermarket chains covering three Berkeley and six control non-Berkeley large supermarkets in adjacent cities; and (3) a representative telephone survey (17.4% cooperation rate) of 957 adult Berkeley residents.

Key hypotheses were that (1) the tax would be passed through to the prices of taxed beverages among the chain stores in which Berkeley implemented the tax in 2015; (2) sales of taxed beverages would decline, and sales of untaxed beverages would rise, in Berkeley stores more than in comparison non-Berkeley stores; (3) consumer spending per transaction (checkout episode) would not increase in Berkeley stores; and (4) self-reported consumption of taxed beverages would decline.

Main outcomes and measures included changes in inflation-adjusted prices (cents/ounce), beverage sales (ounces), consumers’ spending measured as store revenue (inflation-adjusted dollars per transaction) in two large chains, and usual beverage intake (grams/day and kilocalories/day).

Tax pass-through (changes in the price after imposition of the tax) for SSBs varied in degree and timing by store type and beverage type. Pass-through was complete in large chain supermarkets (+1.07¢/oz, p = 0.001) and small chain supermarkets and chain gas stations (1.31¢/oz, p = 0.004), partial in pharmacies (+0.45¢/oz, p = 0.03), and negative in independent corner stores and independent gas stations (−0.64¢/oz, p = 0.004). Sales-unweighted mean price change from scanner data was +0.67¢/oz ( p = 0.00) (sales-weighted, +0.65¢/oz, p = 0.003), with +1.09¢/oz ( p < 0.001) for sodas and energy drinks, but a lower change in other categories. Post-tax year 1 scanner data SSB sales (ounces/transaction) in Berkeley stores declined 9.6% ( p < 0.001) compared to estimates if the tax were not in place, but rose 6.9% ( p < 0.001) for non-Berkeley stores. Sales of untaxed beverages in Berkeley stores rose by 3.5% versus 0.5% (both p < 0.001) for non-Berkeley stores. Overall beverage sales also rose across stores. In Berkeley, sales of water rose by 15.6% ( p < 0.001) (exceeding the decline in SSB sales in ounces); untaxed fruit, vegetable, and tea drinks, by 4.37% ( p < 0.001); and plain milk, by 0.63% ( p = 0.01). Scanner data mean store revenue/consumer spending (dollars per transaction) fell 18¢ less in Berkeley (−$0.36, p < 0.001) than in comparison stores (−$0.54, p < 0.001). Baseline and post-tax Berkeley SSB sales and usual dietary intake were markedly low compared to national levels (at baseline, National Health and Nutrition Examination Survey SSB intake nationally was 131 kcal/d and in Berkeley was 45 kcal/d). Reductions in self-reported mean daily SSB intake in grams (−19.8%, p = 0.49) and in mean per capita SSB caloric intake (−13.3%, p = 0.56) from baseline to post-tax were not statistically significant.

Limitations of the study include inability to establish causal links due to observational design, and the absence of health outcomes. Analysis of consumption was limited by the small effect size in relation to high standard error and Berkeley’s low baseline consumption.

Conclusions

One year following implementation of the nation’s first large SSB tax, prices of SSBs increased in many, but not all, settings, SSB sales declined, and sales of untaxed beverages (especially water) and overall study beverages rose in Berkeley; overall consumer spending per transaction in the stores studied did not rise. Price increases for SSBs in two distinct data sources, their timing, and the patterns of change in taxed and untaxed beverage sales suggest that the observed changes may be attributable to the tax. Post-tax self-reported SSB intake did not change significantly compared to baseline. Significant declines in SSB sales, even in this relatively affluent community, accompanied by revenue used for prevention suggest promise for this policy. Evaluation of taxation in jurisdictions with more typical SSB consumption, with controls, is needed to assess broader dietary and potential health impacts.

Abstract

The effects of a sugar-sweetened tax on beverages in Berkeley, USA are revealed by Barry Popkin and colleagues. In this before and after analysis set in an affluent area, sales of sweetened beverages fall.

Author summary

Why was this study done?

• Berkeley passed the first large (one cent per ounce) tax on sugar-sweetened beverages (SSBs) in the United States in November 2014, affording a unique opportunity for evaluation.

• It was unknown to what extent people would change beverage purchasing in response to a tax, especially in a relatively prosperous community.

• Few high-quality evaluations from other countries existed; studies of Mexico’s tax (implemented starting January 2014) found substantial but not complete “pass-through” of the tax to consumers for taxed beverages, a 6% reduction in sales in the first year, and a 9% decrease in sales to lower-income households.

What did the researchers do and find?

• Three before-and-after studies were carried out: one of store scanner records from 15.5 million checkouts in two chains of large groceries in Berkeley and comparison cities; one of 26 stores of various types in Berkeley; and one random digit dialing telephone survey of consumption by Berkeley residents.

• In the 15.5 million supermarket checkouts studied, 67% of the amount of the tax was passed on to consumers across all SSBs, and the tax was fully passed through for sodas and energy drinks; in the 26-store survey, the tax was more than fully passed on in Berkeley large and small chain groceries and gas stations, especially for carbonated beverages; partially passed on in pharmacies; and not passed on in small independent gas stations and corner stores.

• Sales in ounces of taxed SSBs fell by 9.6% in relation to predicted sales in the absence of the tax, while sales of untaxed beverages rose 3.5% and total beverage sales rose in Berkeley. Consumer spending per transaction (average grocery bill) did not increase, nor did store revenue fall more in Berkeley, while SSB sales rose 6.9% in comparison cities.

• Berkeley residents were low consumers of SSBs at baseline (consuming only 34% of the national average of SSBs). Dietary intake surveys found shifts of −19.8% ( p = 0.49) in mean daily SSB intake (grams) and −13.3% ( p = 0.56) in mean calories from SSBs that were not statistically significant, while caloric intake of untaxed beverages (milk and other diary-based beverages) increased.

What do these findings mean?

• Berkeley’s innovative tax on SSBs was mostly, though not uniformly, passed through to consumers, and sales of SSBs declined significantly, consistent with published price elasticity estimates.

• There was no evidence in studied chains of higher grocery bills for consumers, loss of gross revenue per transaction for stores, or decreases in overall beverage sales for stores. While telephone respondents did not report changes in shopping location, scanner data were consistent with some increased purchasing of SSBs in neighboring cities.

• The findings of this study, while limited by its observational design, suggest that SSB taxes may be effective in shifting consumers to purchase healthier beverages without causing undue economic hardship and while raising revenue for social objectives.

• Population-based findings on SSB consumption were not definitive, and consumption should be further evaluated in more typical communities and with larger samples.