Sugary beverages

Sweetened-drinks. — AP Photo/Frank Augstein

Philadelphia’s tax on sweetened beverages has slashed consumption but led to “significantly higher beverage prices” at the checkout counter and pushed shoppers to go outside the city to seek refuge from the tax, according to a new study.

Sales of sweetened beverages plummeted 51% at chain food retailers in Philadelphia during the first year under the tax, compared with the previous 12 months, according to the study from Penn Medicine published in the Journal of the American Medical Association Tuesday.

But an uptick in sales outside the city resulted in a reduction in overall sales of sweetened beverages of 38%, according to the study. The study also did not find an increase in the sales of non-sugary beverages.

Anna Adams-Sarthou, a spokeswoman for pro-beverage industry group Ax the Bev Tax Coalition, said in an email the study shows why Philadelphians want the tax to be repealed.

“It has caused punishing price hikes that have hurt working families and sent shoppers to stores outside the city,” she said. “As a result, we’ve seen local businesses close and employees lose jobs and work hours.”

Adams-Sarthou said Mayor Jim Kenney was “looking for the support of an outside billionaire” before the primary because “the mayor knows this tax is unpopular.”

“This is 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want this unfair tax eliminated, and now, thanks to this study, we have even more data to support the need for it to be repealed,” she said.

Black leaders, including the Black Clergy of Philadelphia and Vicinity, have come out against the tax because they say it disproportionately affects low-income people and people of color. And a recent poll found that Blacks overwhelmingly disapprove of the tax.

The city’s 1.5-cent-per-ounce tax on sweetened beverages took effect on Jan. 1, 2017, and remains Kenney’s signature achievement. The tax is levied on distributors, but businesses have passed the costs onto consumers. The tax pays for pre-kindergarten, Community Schools, and a $500 million program to renovate public spaces known as Rebuild.

Mike Dunn, a spokesman for Kenney’s administration, said in an email the administration supported the independent study, which increases transparency.

Dunn said the tax is not regressive “because it is a product that no one is forced to buy, and because the tax on distributors need not be passed on to consumers.”

He said many distributors and retailers were not passing the full cost on to consumers, and the industry can afford to help pay to send children to pre-kindergarten.

“But we have no doubt that the beverage industry will spin this study to be more than it is,” he said.

A group of researchers from the University of Pennsylvania, Johns Hopkins University and Harvard University conducted the study. The study was supported by Bloomberg Philanthropies, which had “no role in the design and conduct of the study.”

Researchers analyzed the beverage price and sales data of 291 chain retailers in Philadelphia and bordering ZIP codes during the year before and after the city implemented the tax and compared the data with Baltimore, which does not have a beverage tax. Sales in Baltimore remained relatively unchanged during that time.

The study used data from 54 supermarkets, 20 mass merchandisers (such as Walmart) and 217 pharmacies, which accounted for the largest sources of sweetened beverage sales.

Sales dropped precipitously in areas of West, South, Southwest, Northeast and Northwest Philadelphia, but remained relatively unchanged in Center City and areas of lower North Philadelphia, the study found.

Sales skyrocketed in border ZIP codes in Bucks and Montgomery counties, and there was an uptick in sales outside the border of West Philadelphia in Lower Merion Township.

The study noted that supermarkets might have experienced larger sales decreases than other store types because they displayed more in-store signage about the tax, among other reasons.

The study also found no change in new monthly unemployment claims for industries most likely affected by the tax, such as supermarkets, 14 months after the tax was put into place.

The Penn Medicine study is among the largest studies of the city’s beverage tax and the first peer-reviewed study to examine the association between tax implementation and changes in beverage sales.

The study had its limitations, however.

The 291 stores included in the study reflected only 25% of taxed beverage ounces sold in Philadelphia. The study did not include restaurants or independent stores, nor data from New Jersey.

The study shows residents gulped down nearly a billion fewer ounces of sweetened drinks in 2017 compared with the previous year when there was no tax.

And while they were buying fewer sweetened beverages, they were paying more for them.

Consumers paid 1.6 cents per ounce more at pharmacies for sugary drinks in 2017 than they did in the previous year in Philadelphia, the study says. The price jumped 0.9 cents and 0.7 cents per ounce at mass merchandisers and supermarkets, respectively, during the same period, according to the study.

Christina A. Roberto, a co-author of the study, said the huge reduction in sales appeared to show progress in the fight against diseases associated with consuming sugary drinks “that are making us sick.”

“Sweetened beverage taxes are probably one of the most effective policies we can have to try to improve the health of our people,” said Roberto, a professor in the Department of Medical Ethics and Health Policy at the University of Pennsylvania Perelman School of Medicine.

Frequent consumption of sugary beverages is associated with numerous diseases, including obesity, type 2 diabetes, kidney diseases and more, according to the Centers for Disease Control and Prevention. Many of these diseases already plague the African-American community.

The consumption of sugary beverages is higher among Blacks of all ages (young people, adolescents and adults), according to the CDC.

The study did not analyze economic or racial groups and their buying habits, but Roberto believed the findings could show that the policy benefits low-income people.

By purchasing fewer sugary beverages, low-income people will have more money in their pockets and reduce health risks associated with consumption of the drinks, as well as benefit from the new city programs, Roberto said.

“If low-income individuals are not spending that money on sugary drinks and they’re not buying other non-taxed beverages, they are actually saving money,” Roberto said.

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