BERKELEY — A year after voters here overwhelmingly approved a tax on the distribution of sodas and other sugary drinks, several academic studies have noted a hike in retail prices, indicating that the tax, or at least part of it, is being passed along to consumers.
Whether Measure D is actually achieving its underlying purpose of reducing consumption of sugary drinks and striking a blow against obesity and diabetes, however, is hard to quantify, given that actual figures of local beverage sales are not available. And even if prices overall are being passed on to consumers, bargain prices on soda in Berkeley are still not hard to find.
The success of the groundbreaking, first-in-the-nation Berkeley tax could determine whether it will pave the way for similar measures elsewhere, as was predicted in some corners after its passage.
Despite the lack of hard data so far, researchers are drawing a connection between higher soda prices and reduced consumption, enough so for one, Jennifer Falbe, of the UC Berkeley School of Public Health, to proclaim, “I would say there is evidence that (the tax) is beginning to work, that it’s going in the right direction.”
Another researcher, Lynn Silver, of the Public Health Institute in Oakland, observed, “The tax is successfully raising money for city programs for improving nutrition and health” — $693,000 in the first six months of collection beginning in March, on track to surpass proponents’ earlier predictions of $1.2 million in the first year.
Silver’s team from the Public Health Institute and the University of North Carolina presented interim results to the American Public Health Association in Chicago on Nov. 3, concluding that “the 1-cent-per-ounce tax has been fully passed on to the retail pricing of sugar-sweetened beverages in large and small chain supermarkets and chain gas stations, a prerequisite for taxes to reduce consumption.”
Also this month, Falbe and her team from UC Berkeley and the University of North Carolina reported that soda prices in Berkeley had gone up compared with nearby cities, “marking a step in the causal pathway to reduced (sugar-sweetened beverage) consumption.”
But an earlier study, by Cornell University and the University of Iowa, came up with a different result: Soda prices rose by less than half the amount of the tax since it was implemented in March.
And a recent tour of retailers by this newspaper found that while small stores in Berkeley generally pass along the new tax, you can still buy a 2-liter bottle of Coca Cola, Pepsi, Dr Pepper or 7-Up — or 2.5 liters of Shasta Cola — for a buck (plus 10 cents sales tax and 10 cents deposit) at the 99 Cents Only store.
CVS had an even better bargain, for those with a discount card: 2-liter bottles of nondiet Pepsi, Dr Pepper and other sodas, normally $2.19, were on sale for 79 cents. With the 10-cent deposit and sales tax, the total came to just 97 cents.
On the other hand, Dollar Tree stopped selling sugar-sweetened sodas at its Berkeley store by January.
Measure D, a 1-cent-per-ounce tax on the distribution of sugary beverages, passed by a 3-1 margin on Nov. 4, 2014, despite a more than $2.4 million campaign by the soda industry to derail it.
Competitive advantage
The ability of some larger retailers to swallow the extra cost and offer bargain prices gives them a competitive advantage over smaller outlets. Owners of neighborhood convenience and grocery stores complain that, unlike chain stores, they cannot afford to absorb the tax.
“It only hurts the small businesses in Berkeley — that’s what I believe,” said Ali Mohammed, a principal at Sacramento Market. “If they need to help the people with the sugar, they should put less sugar in the soda and talk in the school about junk food, about diabetes.”
Mohammed and other shopkeepers said many of their customers just buy their sodas in neighboring Albany, Emeryville and Oakland, where there is no soda tax.
Although the proceeds of the tax go into the city’s general fund, officials have promised to spend them on education and health programs with the advice of a Sugar-Sweetened Beverage Product Panel of Experts appointed by the City Council. In May, the council allocated $500,000 to community-based healthy child/family programs and recommended that half, or $250,000, go to the Berkeley Unified School District’s Cooking and Gardening Program.
Mexican lesson
If the true measure of success of a beverage tax is whether people are consuming less soda, perhaps Mexico offers a lesson. When that nation implemented a nationwide one-peso-per-liter tax on sodas in January 2014, there was a reduction in purchase and consumption of 6 percent over the first year, and by the end of that year, it stood at 12 percent, said Dr. Kelly Henning, head of the public health program at Bloomberg Philanthropies, which supported Measure D last year and funded the Public Health Institute study, which is ongoing.
Falbe, of the UC Berkeley-UNC research team, said that “just having a campaign could have an effect on social norms and public awareness.”
That effect could be far-reaching when ground zero is Berkeley, which spawned other progressive social measures such as curb cuts for wheelchairs, indoor no-smoking ordinances and fast-food packaging regulations.
“The Berkeley soda tax is the policy that changed the public health world,” said Dr. Harold Goldstein, executive director of the California Center for Public Health Advocacy. “There will be soda tax initiatives and proposals all over the country in the next few years. Guaranteed.”
William Dermody, vice president for policy at the American Beverage Association, the leading soda industry trade group, disagrees.
“Berkeley is not representative of the rest of the country,” Dermody said. “It’s a pro-tax city, whose leaders applaud themselves for making people pay more.”
Dermody cited 29 cities and states that he said have rejected soda taxes since 2008, some more than once.
But regardless whether Berkeley’s tax spawns copycat taxes elsewhere, there is evidence soda consumption is on the decline nationally by dint of changing tastes and greater awareness. The New York Times reported in October that even as soda taxes have gone down to defeat — including a San Francisco measure that fell short in the November 2014 election — soda sales in the United States have dropped by more than 25 percent in the last 20 years. In that time, soda manufacturers have branched off into bottled water, more diet drinks and other beverages.
And today, the industry seems to be trying to cast itself as a champion of reduced soda calorie consumption. Last year, the three largest soda manufacturers, Coca-Cola Co., PepsiCo and the Dr Pepper Snapple Group, pledged to cut the number of sugary drink calories that Americans consume by one-fifth by 2015.
Contact Tom Lochner at 510-262-2760. Follow him at Twitter.com/tomlochner.
