Study Reveals Tax on Sugary Drinks Leads to Decline in Sales

Boulder, Colorado, Oakland, California, Philadelphia, Seattle and San Francisco recently joined over 50 countries who raised the price of sugary beverages, including coffee, tea, energy, sports, fruit drinks and sodas. Scott Kaplan, an assistant professor of economics at the US Naval Academy, conducted a study to examine how customers’ consumption habits adjust according to price changes. Kaplan discovered that the price hike of sugar-sweetened drinks led to a 31% reduction in consumer purchases.

Kaplan’s study also revealed a direct correlation between every 1% increase in price and 1% decrease in purchases. This decline in consumer purchases was an immediate result of implementing taxes, and remained consistent over the entire three years of the study.

A 2020 study demonstrated that just one daily serving of a sugary soft drink was linked with a higher risk of cardiovascular disease, and these calorie-laden drinks contribute to heart disease, diabetes, obesity and stroke. Researchers from Tufts University discovered that a reduction in sugary beverage consumption by 15-20% could lead to significant savings in healthcare costs, as much as $45 billion.

Kaplan’s study did not directly survey the health impact of the decline of sugary drink sales, though he did surmise that a 33% drop in consumer purchases could lead to a similar positive affect on healthcare costs. His analysis was published in JAMA Health Forum, and explored the possibility of a broader scale of implementation beyond the five original cities. Kaplan suggested implementing taxes from the federal level.