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Study Shows Increased Price of Soda in Berkeley, California After Tax

Amy Stone
October 15, 2015

 

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The paper, Higher Retail Prices of Sugar Sweetened Beverages 3 Months After Implementation of an Excise Tax in Berkeley, California, has been released. This paper focuses on beverage pricing changes following the Berkeley excise tax on sugary drinks. The lead authors are Jennfier Falbe, ScD, MPH; Nadia Rojas, MPH; Anna H. Grummon, BA; and Kristine A. Madsen, MD, MPH. The study was supported by the Global Obesity Prevention Center at Johns Hopkins University, the National Institute of Child Health and Human Development, and the University of California Office of the President.

In March 2015, Berkeley implemented an excise tax on sugary beverages. The tax is one cent per ounce on sugary drinks.

The study examined pre and post-tax price changes of drinks considered as sugar-sweetened beverages and those that are not throughout Berkeley, Oakland, and San Francisco, California. The researchers also broke down their examination by price changes by beverage brand, size, and retailer.

“No one knew how retailers would deal with the added costs of the tax,” said Jennifer Falbe, UC Berkeley postdoctoral researcher in public health nutrition. “Increasing the price of sugary drinks is a critical first step in discouraging consumption, so it’s incredibly encouraging that we’re seeing pass-through of the tax to higher retail prices so early after implementation. We expect higher price increases in the future as small business owners learn more about the tax.”

According to the study, three months after implementation, preliminary findings show early evidence that the Berkeley SSB excise tax was passed –through to higher retail prices on sugary drinks. The study indicates that pass-through rates in Berkeley were significant for soda (69 percent), fruit-flavored beverages (47 percent), and sugary drinks overall (47 percent). The authors further explain how that translates into prices. For soda, this means that a 20-ounce soda costing $1.75 would cost an average of $1.89 after the tax. The pass-through was highest for soda, particularly for Coke (83 percent). However, they also found that the price of Diet Coke also increased more in Berkeley than in comparison cities, though only by 39 percent of the relative price increase of Coke. For larger soda sizes, the study noted that pass-through rates were lower than for 20-ounce sodas on average.

Preliminary results did not show a significant increase in price of untaxed beverages including diet soda, water, milk, and orange juice in Berkeley compared to other cities

To read the full study, visit the American Journal of Public Health article.

To learn more about ways communities can help reduce consumption of sugary drinks, check out the  Voices for Healthy Kids toolkit “Don’t Sugarcoat our Future”. 

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