What retailers can do as Philadelphia's new soda tax causes sticker shock at checkout

Dive Brief:

  • Philadelphia's sugary beverage tax went into effect Jan. 1, and consumers are already speaking out about the price hikes the tax has caused for various products in the grocery store, NBC 26 reported.
  • Some price increases were less noticeable, such as a $0.30 increase for a 20-ounce bottle of soda. But larger products, such as a 12-pack of 12-ounce cans of soda, increased $2.16, and a gallon of Arnold Palmer iced tea and lemonade now costs $1.92 more. The government calculates the tax per ounce.
  • Outreach workers have begun informing consumers about the impact of the tax and what to expect when they visit grocery retailers and convenience stores, according to The Philadelphia Inquirer.

Dive Insight:

While consumer and public health advocates may be telling the public what to expect, retailers should be doing their own public information campaigns to inform consumers about the increased prices, why they're happening and how the tax calculation works. Methods could include signage throughout the store, communication online via email, website or social media, or direct interaction with consumers, with staff on hand to address questions and concerns.

Retailers can also communicate the tax information directly on receipts. They could highlight where the tax is coming from with a different or larger font, or they could print an explanation and the method of tax calculation at the top or bottom of the receipt. This could be particularly effective because higher prices for the same groceries may lead to consumers reading their receipts more carefully. 

Ultimately, retailers are likely to take a sales hit because some regular consumers will be unable or unwilling to pay higher prices for their typical purchases. They may have to cut back on how much they buy or completely remove the products from their diets. It may happen more quickly here, especially since reducing sugary beverage consumption aligns with the type of health-related resolutions consumers often make at the start of a new year.

Filed Under: Grocery Policy