Implications of the Philadelphia Beverage Tax on Sales and Beverage Substitution for a Major Grocery Retailer Chain

Abstract

To understand whether substitution effects occurred for a major national grocery retailer after the implementation of a beverage tax in Philadelphia, the authors used November 2015/2016 and February 2016/2017 data from a major national grocery retailer with stores alongside the borders of Philadelphia County (within 5 miles of each side). A difference in difference was conducted, a statistical technique that allows comparison among groups in an observational data setting, to understand whether the introduction of a beverage tax on January 1, 2017 would lead consumers to shift their buying habits to healthier options. Results are consistent with the notion that the implementation of a beverage tax on sweetened beverages (SBs: both sugar and artificially sweetened) did not generally lead consumers of that retailer to switch purchases to non-sweetened beverages. In contrast, data suggest that consumer purchasing of SBs and general sales increased significantly outside of Philadelphia County at that retailer. A potential explanation is that, some consumers continued buying SBs but traveled outside of Philadelphia County not just to buy the SBs but also for other grocery as well.