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EXPERT REACTION: Will a sugary drink tax drive up alcohol consumption?

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A large household expenditure survey in the UK indicates that the effect of a tax on sugary drinks is far from simple and in some cases may be counter-intuitive. The researchers suggest a more nuanced approach across a range of beverages may be more effective than a single tax on sugary drinks. The scientists found increasing prices on high-sugar drinks led to an increase in beer sales but a drop in sales of spirits, while higher prices on medium sugar drinks led to a drop in beer and wine sales. They also found that increasing prices on low-sugar 'diet' drinks increased alcohol sales. A price hike for medium sugar content drinks was most effective, they say, while applying one to diet/low sugar drinks was least effective.

Journal/conference: Journal of Epidemiology & Community Health

Organisation/s: London School of Hygiene & Tropical Medicine, UK

Funder: UK Department of Health Policy Research Programme

Media Release

From: The BMJ

Sugar tax on soft drinks might drive up alcohol consumption

More nuanced approach may be more effective, suggest researchers

A sugar tax levied on soft drinks might have the unintended consequence of driving up alcohol consumption, but the picture is mixed, finds research published online in the Journal of Epidemiology & Community Health.

As many alcoholic drinks contain similar or greater amounts of sugar (43 kcals/100 ml for beer; 85 kcals for wine; 40 kcals for cola) and have other well known harms, a more nuanced approach across a range of beverages may be more effective than a single tax on sugary drinks, say the researchers.

An industry levy will be imposed on soft drinks with a high sugar content in the UK from this April in a bid to curb the rising tide of obesity and diabetes. Many other countries, including Hungary, Finland, France, Belgium, Portugal, Mexico, Chile, Thailand, Saudi Arabia and the UAE, have already gone down this route.

And certain US cities, India, the Philippines, Indonesia, Israel, and South Africa are set to follow suit.

Several financial modelling studies have shown that increasing the price of sugary drinks could make a small but significant dent in purchasing patterns, particularly among poorer households. But little is known about the potential impact of such a hike on alcohol sales.

To try and tease this out, the researchers applied a specialised tool for studying consumer demand to data on household expenditure on food and drink in 2012 and 2013 from a nationally representative sample of around 32,000 UK homes.

The data (from Kantar Worldpanel), provided complete details of each sales transaction, in addition to social and demographic information for each household.

Full data for both years were provided by 31,919 households, adding up to some 6 million drinks purchases, grouped into high (8g+/100 ml), medium (5-8g), and low (under 5g) sugar content drinks; fruit juices; milk based drinks; water; beer; lager; cider; wines; and spirits.

Low income households spent nearly half (48%) of their total drinks expenditure on all three ‘strengths’ of sugar sweetened drinks, compared with 44 percent for medium income, and 39 percent for high, income households. The trend went in the opposite direction for juice drinks.

Alcohol purchase was more sensitive to price change than soft drinks, the analysis indicated. But increases in the price of sugary drinks were associated with different purchasing patterns for other beverages, depending on sugar content and household income.

When the price of high sugar content drinks rose, so too did purchases of diet drinks, juices, and lager. But purchases of medium sugar content drinks and spirits fell.

Price rises in medium sugar content drinks were associated with falls in beer, lager, and wine purchases, while price rises in diet/low sugar drinks were associated with increases in all other types of drink, except high and low sugar content beverages.

In high income households, price hikes in high sugar content drinks were associated with a fall in sales of cider, while in the middle income group, these hikes were associated with a fall in the purchase of spirits, but an increase in those of lager. No declines in alcohol purchases were evident in low income households.

A price hike for medium sugar content drinks would seem to be most effective, while applying one to diet/low sugar drinks would seem to be the least effective, the findings indicate, suggesting that the threshold of sugar content for any price rise could be crucial, say the researchers.

And price rises may have a greater impact on reducing alcohol consumption than that of soft drinks, they suggest.

But they emphasise: “Although this analysis can highlight significant relationships between beverages purchased, it cannot explain why these relationships arise,” adding: “This mixed picture indicates the complexity of estimating the impact of a single price increase.”

They conclude: “Increasing the price of [sugar sweetened beverages] has the potential to both increase and decrease the purchase of alcohol, suggesting more nuanced price options across a range of beverages may be more effective than a single tax on high-sugar [ones].”

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Expert Reaction

These comments have been collated by the Science Media Centre to provide a variety of expert perspectives on this issue. Feel free to use these quotes in your stories. Views expressed are the personal opinions of the experts named. They do not represent the views of the SMC or any other organisation unless specifically stated.

Dr Alan Barclay is an accredited practicing dietitian and nutritionist, author and a Research Associate at the University of Sydney.

This new research based on dietary modelling in the UK considers the inter-relationships between the subject of the tax (sugar-sweetened beverages) and other drinks, and has demonstrated that, in theory, increased taxation of some soft drinks may unintentionally increase the purchase of some alcoholic beverages, offsetting health benefits.

In Australia, consumption of sugar-sweetened soft drinks is declining while consumption of alcoholic beverages is increasing. These new data suggest that an increase in the sugar-sweetened beverage tax (sugar-sweetened beverages are already subject to the 10 per cent GST) in Australia may increase these trends. Alcoholic beverages are the primary source of discretionary kilojoules in Australia, providing more than twice as many as soft drinks (4.8 per cent vs 1.9 per cent of energy).

In 2010, the Henry Tax Review recommended changes to the way alcoholic beverages are taxed in Australia, but these changes have not been implemented. Based on this new modelling from the UK, it would seem wise that if an additional tax was introduced on sugar-sweetened beverages, taxation of alcoholic beverages would also need to be reviewed, to minimise the risk of unintended consequences.

In summary, the authors conclusion that “...a more nuanced approach across a range of beverages may be more effective than a single tax on sugary drinks“ is sage advice

Last updated: 24 Jan 2018 11:02am

Julia Stafford is the Alcohol Program Manager at Cancer Council WA.

This research adds to our knowledge of how price changes for sugary drinks and alcohol can be designed to have the greatest overall public health benefit. The results suggest that increasing the prices of some sugary drinks could encourage reduced consumption of sugary drinks and alcohol products. As might be expected, the associations between price and consumption can be complex across product types and population groups, so modelling studies like this one can help us understand the range of potential impacts that policy options may have.

There is a solid evidence base showing that alcohol taxation is one of the most effective ways to reduce how much people drink and harms from alcohol. Health groups in Australia and elsewhere are rightly keen to explore the potential of price controls on sugary drinks. Even modest price rises could influence consumers away from these drinks and generate much needed funding for prevention programs, so they are worth considering.

Getting pricing policy right for alcohol and sugary drinks is very important for the health of the community, and should be supported by restrictions on marketing and availability. For governments concerned about the health harms from alcohol and sugary drinks, there is much more that can be done to control how the products are promoted, especially in terms of kids’ exposure to advertising. A comprehensive policy approach which considers the price, promotion and availability of these products will have the greatest health benefits.

While international research is important to consider, there are differences between Australia and the UK that may mean the results are not directly relevant here. For example, how alcohol is made available and how alcohol is taxed are different, so outcomes could be different for Australia.

Last updated: 23 Jan 2018 1:45pm

Professor Robin Room is a sociologist at the Centre for Alcohol Policy Research at La Trobe University and has been an advisor to the World Health Organization on drug and alcohol related issues since 1975. He is Editor-in-Chief of the peer-reviewed journal, Drug and Alcohol Review.

This study raises interesting issues, but its answers should not be relied on for policy. The data treats the family as a unit, but the sugary drink and the lager may well go down different throats. Consumption at a bar or restaurant is missing from the data. And cross-sectional data on how much is bought at different prices is being interpreted causally – the study has no direct measure of how purchasing changes if a price changes.

Thinking about the prices of sugar and alcoholic beverages in a common frame raises important issues for Australian policymaking.

A minimum floor price for alcohol is going into effect this year in Scotland, and should be adopted in Australia. This would have more effect in reducing overconsumption of alcohol than any conceivable sugar tax.

The paper gives the average kilocalories for alcoholic beverages – at least as high per litre as well as for sugary drinks. In Australia, this information is on every other drink and food product, but not on alcoholic beverages. Changing the policy so the information is on the label would be a good first step in getting us all thinking about the contribution of alcohol drinking to weight gain.

Last updated: 24 Jan 2018 11:05am

Dr Lennert Veerman is Professor of Public Health at Griffith University. He has published on a broad range of topics including obesity and other risk factors for chronic disease.

This study tries to answer an interesting and very policy-relevant question: if we increase the price of sugared drinks to decrease people’s sugar consumption, how will their wider consumption of drinks change?

The findings raise the possibility that alcohol consumption might change, but there is no consistent pattern and (hence) no theory that makes sense of it all. And since the data are observational, only include drinks consumed at home, and the analysis compares expenditures from different households who decide on many other aspects beside price, we have to be extremely careful in drawing any conclusions from this study, other than that higher prices tend to correlate with lower sales. Better data are needed, and this underlines the importance of rigorous evaluation of the impact of the new taxes on sugared drinks around the world.

Last updated: 24 Jan 2018 11:04am

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