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Philadelphia Soda Tax Leads to Workforce Reduction at Grocery, Distributors

Meanwhile, Mexican soft drink sales continue to decline.
February 24, 2017

​PHILADEPHIA – Jobs will soon be cut at grocery stores and beverage distributors because of Philadelphia’s newly enacted tax on soft drinks, the Allentown Morning Call reports. Those businesses say beverage sales have dropped between 30% and 50%—higher numbers than the city estimated (27% decrease).

Jeff Brown, who owns six ShopRite stores, said he would let 300 workers go, while Bob Brockway, COO with Canada Dry Delaware Valley, has estimated a 20% reduction in staff by next month. Brockaway said that Philadelphia sales plummeted 45% for his company’s products, while Brown said his stores registered a 50% drop in beverage sales compared to a similar period in 2016. “People didn't change what they drink. … They changed where they're buying it,” Brown said.

The city’s response is that business will recover once customers get used to the tax. The 1.5-cents-per-ounce tax is placed on sweetened and diet drinks.

Meanwhile, for the second year since enacting a hefty tax on soft drinks, sales of soda have plummeted in Mexico, the New York Times reports. In 2014, Mexico’s soda tax took effect on all drinks with added sugar, such as carbonated soft drinks, sweetened iced teas and fruit drinks.

New research published this week showed that declining sales continued the second year of the tax. The study, based on a large sample of Mexican household shopping data, found that sugared beverage sales dropped by 5.5% in 2014 compared to 2013, and by 9.7% in 2015 compared to 2013. The largest decrease in both years was in lower-income households.

“Like with tobacco, we’re seeing what we call a real habituation effect. … Over time people seem to get more weaned away from the sugary beverages, and that increases the impact of the tax,” said study author Barry Popkin, a professor of nutrition at the University of North Carolina.

However, decline hasn’t necessarily translated into a drop in obesity rates, as the International Council of Beverages Association pointed out: “Obesity rates have not gone down as proponents vowed they would under the tax.”