Philadelphia’s sweetened beverage tax takes toll
According to Bloomberg, Philadelphia’s six-week-old tax on sweetened beverages is already taking a toll on drink distributors and grocers, with some reporting sales drops of as much as 50%.
According to Bloomberg, Philadelphia’s six-week-old tax on sweetened beverages is already taking a toll on drink distributors and grocers, with some reporting sales drops of as much as 50%. Canada Dry Delaware Valley—a local distributor of Canada Dry Ginger Ale, Sunkist, A&W Root Beer, Arizona Iced Tea, and Vita Coco—said business fell 45% in Philadelphia in the first five weeks of 2017, compared with the same period last year. Total revenue at Brown’s Super Stores, which operates 12 ShopRite and Fresh Grocer supermarkets, fell 15% at its six retailers in the city.
Philadelphia became the first major U.S. city to implement a soft-drink tax when it approved a levy of 1.5 cents per ounce on sweetened beverages in June, almost doubling the price of 12 packs of cans and two-liter bottles. According to Bob Brockway, Canada Dry Delaware Valley CEO, the sales declines are hurting grocery stores and bodegas in poor neighborhoods, where shoppers tend to buy in bulk, more than convenience stores. For example, a 12-pack of cans for $2.99 is subject to a $2.16 tax, but a $1.89 single-serve 20-oz bottle is only subject to a 30-cent tax.
Philadelphia’s plan differed from about 40 other attempts to enact soda taxes in cities across the United States because Mayor Jim Kenney focused on the potential fiscal benefits of a tax, not public health. The levy is expected to generate $409.5 million over five years, and of that amount, $314 million would go to programs such as expanding pre-kindergarten and renovating recreation centers and libraries.
In a blog post on its website, the American Beverage Association (ABA) stated: “Just two months into the tax and the job losses are piling up for Philadelphians. And as other cities toy with the idea of a discriminatory tax on beverages, it’s important for voters and legislators to understand the impact of raising prices so high on one product. It hurts jobs and the economy.”