David Frisvold
August 25, 2016
Tricia L. Nadolny

As Philadelphia prepares for the January launch of its tax on sweetened beverages, a new study found low-income residents in Berkeley, Calif., home of the nation's first "soda tax," are not just consuming fewer sugary drinks. They are making a healthy substitution - water.

The study by University of California, Berkeley researchers found sugary drink consumption in low-income neighborhoods fell by 21 percent five months after the tax went into effect, while water consumption rose by 63 percent.

"People are switching to the healthiest possible beverage," said Kristine Madsen, one of the authors. "Which is exactly what we'd like to see."

The researchers concluded that such taxes, like the one on the horizon in Philadelphia, "could have considerable fiscal and public health benefits."

Berkeley's one-cent-per-ounce tax was passed by voters in 2014 and implemented the following year. The researchers studied its impact by interviewing consumers on high-traffic corners in low-income neighborhoods, first before the tax was levied and again after it was implemented. For comparison, they did the same in neighborhoods with similar demographics in nearby San Francisco and Oakland.

While Berkeley saw a decrease in sugary drink consumption, those nearby communities saw consumption go up by 4 percent, the study found. Water consumption went up in San Francisco and Oakland, but by only a third of the increase in Berkeley.

The study also found only 2 percent of those interviewed in Berkeley said they had left the city to buy drinks as a way to avoid the tax, something the beverage industry has warned will happen in Philadelphia.

Lauren Kane, a spokeswoman for the American Beverage Association, challenged the findings, calling the study a "street survey." In a statement, she said taxes on "common grocery items" do not improve public health, and said the industry is committed to real solutions, including an initiative to reduce beverage calories in the American diet by 20 percent by 2025 through measures such as smaller package sizes.

She added that while Berkeley and Philadelphia are very different cities, "we know that taxes like this, regardless of location, do not improve public health."

Philadelphia's 1.5-cent-per-ounce tax is similar to Berkeley's in that both are levied on distributors, not at the point of sale.

But the tax differs from Berkeley's - and its impact might differ, too - because it hits a broader base of products, essentially anything with added sugar or artificial sweetener. That means Philadelphians looking to avoid the tax will have fewer options, something Jennifer Falbe, one of the study's authors, said could result in an even more dramatic increase in water consumption here.

"It's possible in Philly that because diet beverages are also taxed, people may be even more likely to switch to water," Falbe said.

David Frisvold, a researcher from the University of Iowa who authored another study on Berkeley's tax, called the drop in consumption "promising" for public health, but noted that the interviews were done just a few months after the tax went into effect. He said that to gauge the wider public health impact, researchers will need more data, including whether the drop in beverage consumption was tied to a drop in overall calorie intake.

"You want to see how the total diet changes," he said. "And I think once we have a better sense of that, then we'll have better information about the potential of these policies going forward."