Sugary tax legislation is a tricky thing.
While health advocates and legislators note it's a win-win that both promotes public health and raises revenue from the government, industry operators argue such legislation puts an uneccessary strain upon their businesses. Since the inception of Philadelphia's version of the law, industry advocates have argued it will hurt their bottom lines.
So, it's somewhat interesting to note that figures released by the city's Department of Revenue indicate it brought in a higher-than-expected total in February. The soda tax generated $6.4 million in February, up from the projections of $6.3 million. The numbers are not as drastic as the $5.9 million generated in January, which was more than double the city's prediction of $2.3 million, reported The State (March 23). Clearly, people are still willing to purchase sugary beverages.
When you add the numbers up, Philadelphia is looking at nearly $12.3 million in extra tax revenue within the city. The money is intended to fund pre-K and community schools, and renovations for recreation centers, libraries and parks. Clearly, these dollars will go a long way in the community, and if citizens in the city continue to purchase at a similar rate, the law could be an outstanding success for the city.
However, PespiCo still maintains that it is losing out under the legislation. The company pulled 2-liter bottles and 12-packs of its products from Philadelphia grocery shelves. It will begin offering products and package sizes that working families can better afford, reported Yakima Herald-Republic (March 21). The move might be a smart one: as the first company to change its product packaging in Philadelphia, PepsiCo could improve its market share.
As Jennette reported in February, the tax isn't simply affecting manufacturers. Supermarket retailers reported overall drops in sales after the institution of the tax, arguing that people were leaving the city limits to get their groceries. It remains to be seen if this is an initial aftershock to the tax or a longer-lasting effect.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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