- A 1.5-cent-per-ounce tax on sweetened beverages instituted in Philadelphia in 2017 has caused sales to drop in some grocery stores by as much as 50%, according to Bloomberg.
- Distributor Canada Dry Delaware Valley, which distributes about a fifth of the city's soft drinks, said business decreased 45% in Philadelphia in the first five weeks of 2017, compared to last year. Meanwhile, Brown’s Super Stores reported a 15% decrease in sales in its dozen supermarkets it operates.
- Philadelphia officials note that the levy is assessed at the distributor level, so it’s not really a tax, and blame higher shelf prices on distributors who pass along the increase to their customers.
Just six weeks into the new soda tax, things have gotten so bad that the CEO of Brown’s Super Stores called the decline in sales “devastating.” For some items, like a 12-pack of soda or a gallon of iced tea, the post-tax prices have caused steep increases in the prices consumers pay. Because of the declines, Canada Dry Delaware Valley announced it's laying off about 20% of its workforce the first week of March.
Taxes on sugary beverages are collected or are in the pipeline in several cities. Voters in Berkeley, CA passed a one cent per ounce tax in 2014, and it has been collected since 2015. John Cawley, an economist policy analysis professor at Cornell University studied the impact of Berkeley's tax, and found that many retailers chose not to pass the entire tax on to consumers. The reason is complicated, but he guessed it was a combination of trying to keep shoppers' business, since people have been known to drive to different towns or states for better deals on groceries.
Cawley thinks that the results from his study show targeting price is an effective way to get people not to buy soda. Berkeley's retailers would be more apt to pass the entire tax on to consumers otherwise, because people would buy soda anyway, he said.
A recent report from the Tax Policy Center questions the way that taxes are currently imposed. Analysts weigh whether these taxes should be based on product volume or on sugar content — which many believe would be more effective. Taxing based on sugar content would incentivize brands that have worked to reduce sugar content in their offerings, such as PepsiCo has committed to do recently.
In November, new soda taxes were approved in San Francisco; Oakland, CA; Boulder, CO and Albany, CA. Other cities are considering similar taxes, with both Seattle and Santa Fe currently considering them. In Santa Fe, the tax would be used to pay for preschool for more than 1,000 3- and 4-year-olds.
Regardless of taxes, soda sales had not been thriving. The industry has been on a downward trend the last couple of years, forcing soda companies to add other beverage options, like premium bottled water.