The Impact of Seattle's Sweetened Beverage Tax on Alternatives to Alcoholic Beverages

Release date: January 18, 2022

https://doi.org/10.1371/journal.pone.0262578

Explanation

With adverse health effects such as type 2 diabetes, obesity, and cardiovascular disease, measures have been taken to use policy tools aimed at reducing the consumption of sugar-sweetened beverages (SSBs), but it is believed that the result could be that the tax will induce substitution to alcoholic beverages.

The purpose of this study was to investigate the impact of Seattle, Washington's sweetened beverage tax (SBT) of $0.0175 per ounce on the sales of alcoholic beverages.

The study used a difference-in-difference estimation approach, with beer (N = 1059) and wine (N = 2655) products pre-tax for one year (February-November 2017) and Portland, Oregon as the comparison site, one and two years post-tax (February-November 2018 and 2019).

The study found that over the two years post-tax, beer sales in Seattle compared to Portland increased by 7%. However, wine sales volume had declined. The total amount of alcohol sold in Seattle compared to Portland would increase by 4% (RIRR = 1.04, 95% CI: 1.01,1.07) and 5% (RIRR = 1.05, 95%) in one year after tax.

The implied SSB cross-price elasticities of demand for beer and wine were calculated to be 0.35 and -0.15, respectively.

The conclusion of this study, after the implementation of the Seattle SSB tax, showed that substitution for beer will occur.