Sugar industry sour on sugar tax

Gary L. West/Capital Press Soft drinks line the shelves at a Fred Meyer store. I new study by the Economic Research Service indicates that a 20-percent tax on sweetened drinks might lead to a reduction in weight for adults and children if it leads then to drink fewer sweetened beverages.

Study indicates 20 percent tax would reduce calorie consumption, weight

By DAVE WILKINS

Capital Press

A study released this summer by USDA's Economic Research Service indicates that a 20 percent tax on sweetened beverages would reduce consumption and lead to weight reduction in adults and children.

The sugar industry and makers of competing sweeteners are skeptical and remain united in their opposition to a tax on sweetened beverages.

"Such a tax wrongly demonizes sweetened products and ignores the fact that obesity rates continue to rise as the per capita consumption of caloric sweeteners has declined 9.7 percent over the last 10 years," The Sugar Association said in a statement.

Obesity correlates with other factors such as the decline in physical education classes in schools and increased video game sales, said Robert Floor, general sales manager for The Amalgamated Sugar Co. in Idaho.

"We don't think it's just the soft drinks," Floor said in an interview. "It's the new sedentary lifestyle. Kids don't go outside and play anymore. They sit inside and play video games."

A 20 percent tax would add $1 to the cost of a 12-pack of soda with a retail price of $5.

Research indicates that existing taxes on soft drinks have had relatively little impact on people's weight. Proponents of a "soda tax" say it will take much higher tax rates to curb consumption.

The ERS study, released in July, determined that a 20 percent tax on sweetened soft drinks, fruit drinks, powdered mixes, energy and sports drinks would be enough to trigger changes in consumer behavior.

The study determined that consumers would react to the higher price by switching to alternative beverages such as diet drinks, bottled water, juice, coffee, tea or milk.

A 20 percent increase in the price of caloric sweetened beverages could reduce net calorie intake from all beverages by 37 calories per day for the average adult, the study found. The effects for children were estimated to be larger -- an average reduction of 43 calories per day.

The estimated reduction in caloric intake would translate into an average reduction of 3.8 pounds of body weight over a year for adults and 4.5 pounds for children, ERS researchers found.

The ERS based its study on grocery store purchases of beverages as reported by Nielsen Homescan data from 1998 to 2007. Using the data, a demand system was specified to estimate how purchase decisions would change as a result of a price increase for sweetened beverages.

The study did have some limitations, the ERS acknowledged. About half of all caloric sweetened beverages are consumed away from home, and the study didn't factor in the difference in pricing structure in restaurants compared with grocery store purchases.

For instance, many fast food restaurants offer meal combos that include beverages. Some restaurants also offer free beverage refills, which skews the relationship between the quantity purchased and price.

"Because of these marketing conditions, consumers are likely to react differently to a price increase on foods in grocery stores than at other locations," the ERS noted in its report.

No surprisingly, beverage makers have strongly opposed soda taxes and insist that it would be an ineffective way to curb obesity.

"Singling out one item as the cause of obesity completely misses the mark," Susan Neely, president and CEO of the American Beverage Association, said earlier this summer in a press release.

A comprehensive approach that includes nutrition education and a focus on total diet and exercise is needed, she said.

Association officials said that soda, along with sweetened waters, sports drinks and energy drinks, contribute only 5.5 percent of the calories in the American diet, according to government data presented last year to the U.S. Dietary Guidelines Advisory Committee.

Moreover, Americans have no appetite for a tax hike on sweetened beverages, association officials said.

A recent Adweek/Harris Poll conducted by Harris Interactive showed that 56 percent of Americans are opposed to a tax on soft drinks. Less than a third support the idea.

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