Study: Philly shoppers bear brunt of soda tax, buy fewer sweetened drinks

(Image via Flickr Commons)

By Michael D’Onofrio

PHILADELPHIA — City retailers are stocking fewer sweetened beverages on their shelves.

They’re also passing the 1.5-cent-per-ounce sweetened beverage tax on to shoppers, who loathe it.

And that’s why Philadelphia households are buying fewer sugary drinks now than they were before the sweetened beverage tax was implemented, according to a recently updated study by Mathematica Policy Research, the University of Iowa and Cornell University.

The study looked at similar soda taxes in Oakland, California; San Francisco, California; and Seattle, Washington.

Philadelphia had the biggest decline in household purchases of sugary beverages among the group, said David Jones, a senior researcher at Mathematica who co-led the updates to the study.

Jones suggested the reason for the decline in Philadelphia was due to the tax’s unpopularity, price hikes by retailers and high consumption by residents prior to the tax.

The 2018 study looked at the effects of the sweetened beverage tax on purchasing, consumption and retailers during the first 11 months that the tax was in effect compared to the same time before it was implemented in January 2017.

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Researchers interviewed 17 Philadelphia retailers for the latest update to the study. They found that retailers passed on 105 percent of the 1.5-cent-per-ounce tax to consumers, whereas in Oakland retailers passed on only 61 percent of the 1-cent-per-ounce tax to purchasers.

The average price of taxed beverages jumped by 21 percent in Philadelphia, compared to 8 percent in Oakland, according to the study.

The tax also changed the layout of some businesses and reduced consumers’ options.

“We heard from retailers that not only did they change prices but they also changed what they stocked,” Jones said.

Retailers cut back on the number of sweetened beverages they sold; the sweetened drinks they did sell came in smaller packages, Jones said.

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Untaxed beverages became more prominently displayed inside their stores and in advertisements, and retailers made sure to post signs notifying shoppers about the tax.

Household purchases of taxed beverages decreased by nearly 9 ounces per shopping trip — or roughly two 2-liter bottles per month — on average, according to the study.

Still, overall consumption of sugary drinks in the city did not significantly change, the study found.

The beverage tax had “no detectable impact” on how often children consumed sugary drinks. Yet Philadelphia’s children, who were high consumers of sweetened beverages before the tax, saw their consumption of sugar-sweetened beverages plummet by 22 percent a day or nearly 15 grams per day, the equivalent of a 20-ounce bottle of regular soda.

And for African-American children, who have higher rates of sweetened beverage consumption and obesity nationally, Philadelphia’s tax reduced their intake of added sugars from beverages by 8 grams per day.

Adults drank less soda due to the tax, but their consumption of other sweetened beverages remained relatively unchanged.

The sweetened beverage tax is among Mayor Jim Kenney’s signature legislative achievements, which pays for pre-kindergarten, Community Schools, and an infrastructure program to improve recreation centers, libraries, parks and other public spaces. The tax has hauled in an estimated $193.8 million through June and was expected to pull in another $75.8 million this year.

Mike Dunn, a spokesman for the Kenney administration, said in an email that the tax’s impact on sugary drink purchases was an important health benefit for a city with historically high rates of diabetes and early death from heart disease.

“This study is consistent with other studies showing that Philadelphia residents have decreased their purchases of sweetened drinks since implementation of our beverage tax,” he said.

The city’s own data on the tax’s impact on residents’ health will take longer, Dunn said.

The tax has many enemies.

The beverage industry spent millions on political donations and advertisements trying to defeat the tax. The industry’s court challenge made it to the state Supreme Court, which upheld the tax in July 2018.

The Black Clergy of Philadelphia and Vicinity came out against the tax, saying the levy saddled people of color, the poor and senior citizens with higher grocery bills while dropping soda sales hurt small businesses.

City Councilwoman María Quiñones-Sánchez also is a long-time opponent of the tax. This year, the councilwoman from the 7th District introduced legislation that could kill the tax and called for an economic impact study of the tax.

Quiñones-Sánchez’s bill has stalled. Introduced in March with five co-sponsors, the councilwoman’s legislation has yet be addressed in a council committee hearing. Quiñones-Sánchez did not immediately respond to a request for comment.

Kenney’s soda tax has been caught up in the indictment of powerful Philadelphia union boss John Dougherty, whom federal prosecutors alleged was in cahoots with Councilman Bobby Henon to use the tax to exact revenge on another union.

Another study this year found that the sale sweetened beverages plummeted 51 percent at chain food retailers in Philadelphia during the first year under the tax, compared with the previous 12 months.

Michael D’Onofrio is a reporter for the Philadelphia Tribune, where this story first appeared.