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Original Investigation
May 14, 2019

Association of a Beverage Tax on Sugar-Sweetened and Artificially Sweetened Beverages With Changes in Beverage Prices and Sales at Chain Retailers in a Large Urban Setting

Author Affiliations
  • 1Department of Medical Ethics and Health Policy, University of Pennsylvania Perelman School of Medicine, Philadelphia
  • 2Division of Chronic Disease Prevention, Philadelphia Department of Public Health, Philadelphia, Pennsylvania
  • 3Department of Biostatistics, Epidemiology and Informatics, University of Pennsylvania Perelman School of Medicine, Philadelphia
  • 4Department of Health Policy and Management, Johns Hopkins Bloomberg School of Public Health, Baltimore, Maryland
  • 5Department of Health Policy and Management, Harvard T.H. Chan School of Public Health, Boston, Massachusetts
JAMA. 2019;321(18):1799-1810. doi:10.1001/jama.2019.4249
Key Points

Question  What was the association between a beverage excise tax on sugar-sweetened and artificially sweetened beverages implemented in Philadelphia in 2017 with changes in beverage prices and volume of sales?

Findings  In this difference-in-differences analysis of retailer sales data in the year before and the year after implementation of an excise tax of 1.5 cents per ounce on sugar-sweetened and artificially sweetened beverages, the tax was associated with significant increases in price-per-ounce of 0.65 cents at supermarkets, 0.87 cents by mass merchandise stores, and 1.56 cents at pharmacies. Total volume sales of taxed beverages in Philadelphia decreased by 1.3 billion ounces after tax implementation (51%), but sales in Pennsylvania border zip codes increased by 308.2 million ounces, partially offsetting the decrease in Philadelphia’s volume sales by 24.4%.

Meaning  A beverage excise tax on sugar-sweetened and artificially sweetened beverages in a large urban setting was associated with a significant increase in beverage prices and a significant reduction in volume sales of taxed beverages, although changes in sales volume were partially offset by purchases in neighboring areas.

Abstract

Importance  Policy makers have implemented beverage taxes to generate revenue and reduce consumption of sweetened drinks. In January 2017, Philadelphia, Pennsylvania, became the second US city to implement a beverage excise tax (1.5 cents per ounce).

Objectives  To compare changes in beverage prices and sales following the implementation of the tax in Philadelphia compared with Baltimore, Maryland (a control city without a tax) and to assess potential cross-border shopping to avoid the tax in neighboring zip codes.

Design, Setting, and Participants  This study used a difference-in-differences approach and analyzed sales data to compare changes between January 1, 2016, before the tax, and December 31, 2017, after the tax. Differences by store type, beverage sweetener status, and beverage size were examined. The commercial retailer sales data included large chain store sales in Philadelphia, Baltimore, and the Pennsylvania zip codes bordering Philadelphia. These data reflect approximately 25% of the ounces of taxed beverages sold in Philadelphia.

Exposures  Philadelphia’s tax on sugar-sweetened and artificially sweetened beverages.

Main Outcomes and Measures  Change in taxed beverage prices and volume sales.

Results  A total of 291 stores (54 supermarkets, 20 mass merchandise stores, 217 pharmacies) were analyzed. The mean price per ounce of taxed beverages in Philadelphia increased from 5.43 cents in 2016 to 6.24 cents in 2017 at supermarkets; from 5.28 cents to 6.24 cents at mass merchandise stores, and from 6.60 cents to 8.28 cents at pharmacies. The mean price per ounce in Baltimore increased from 5.33 cents in 2016 to 5.50 cents in 2017 at supermarkets, from 6.34 cents to 6.52 cents at mass merchandise stores, and from 6.76 cents to 6.93 cents at pharmacies. The mean per-ounce difference in price between the 2 cities was 0.65 cents (95% CI, 0.60 cents-0.69 cents; P<.001) at supermarkets; 0.87 cents (95 % CI, 0.72 cents-1.02 cents; P<.001) at mass merchandise stores, and 1.56 cents (95% CI, 1.50 cents-1.62 cents; P<.001) at pharmacies. Total volume sales of taxed beverages in Philadelphia decreased by 1.3 billion ounces (from 2.475 billion to 1.214 billion) or by 51.0% after tax implementation. Volume sales in the Pennsylvania border zip codes, however, increased by 308.2 million ounces (from 713.1 million to 1.021 billion), offsetting the decrease in Philadelphia's volume sales by 24.4%. In Philadelphia, beverage volume sales in ounces per 4-week period between before and after tax periods decreased from 4.85 million to 1.99 million at supermarkets, from 2.98 million to 1.72 million at mass merchandise stores, and from 0.16 million to 0.13 million at pharmacies. In Baltimore, the beverage volume sales in ounces decreased from 2.83 million to 2.81 million at supermarkets, from 1.05 million to 1.00 million at mass merchandise stores, and from 0.14 million to 0.13 million at pharmacies. This was a 58.7% reduction at supermarkets (difference-in-differences, −2.85 million ounces; 95% CI, −4.10 million to −1.60 million ounces; P < .001), 40.4% reduction at mass merchandise stores (difference-in-differences, −1.20 million ounces; 95% CI, −2.04 million to −0.36 million ounces; P = .001), and 12.6% reduction in pharmacies (difference-in-differences, −0.02 million ounces; 95% CI, −0.03 million to −0.01 million ounces; P < .001).

Conclusions and Relevance  In Philadelphia in 2017, the implementation of a beverage excise tax on sugar-sweetened and artificially sweetened beverages was associated with significantly higher beverage prices and a significant and substantial decline in volume of taxed beverages sold. This decrease in taxed beverage sales volume was partially offset by increases in volume of sales in bordering areas.

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