Sugared beverages are marketed extensively to children and adolescents, and in the mid-1990s, children's intake of sugared beverages surpassed that of milk. In the past decade, per capita intake of calories from sugar-sweetened beverages has increased by nearly 30% (see bar graphDaily Caloric Intake from Sugar-Sweetened Drinks in the United States.)3; beverages now account for 10 to 15% of the calories consumed by children and adolescents. For each extra can or glass of sugared beverage consumed per day, the likelihood of a child's becoming obese increases by 60%.4
Taxes on tobacco products have been highly effective in reducing consumption, and data indicate that higher prices also reduce soda consumption. A review conducted by Yale University's Rudd Center for Food Policy and Obesity suggested that for every 10% increase in price, consumption decreases by 7.8%. An industry trade publication reported even larger reductions: as prices of carbonated soft drinks increased by 6.8%, sales dropped by 7.8%, and as Coca-Cola prices increased by 12%, sales dropped by 14.6%.5 Such studies — and the economic principles that support their findings — suggest that a tax on sugared beverages would encourage consumers to switch to more healthful beverages, which would lead to reduced caloric intake and less weight gain.
The increasing affordability of soda — and the decreasing affordability of fresh fruits and vegetables (see line graphRelative Price Changes for Fresh Fruits and Vegetables, Sugars and Sweets, and Carbonated Drinks, 1978–2009.) — probably contributes to the rise in obesity in the United States. In 2008, a group of child and health care advocates in New York proposed a one-penny-per-ounce excise tax on sugared beverages, which would be expected to reduce consumption by 13% — about two servings per week per person. Even if one quarter of the calories consumed from sugared beverages are replaced by other food, the decrease in consumption would lead to an estimated reduction of 8000 calories per person per year — slightly more than 2 lb each year for the average person. Such a reduction in calorie consumption would be expected to substantially reduce the risk of obesity and diabetes and may also reduce the risk of heart disease and other conditions.
Some argue that government should not interfere in the market and that products and prices will change as consumers demand more healthful food, but several considerations support government action. The first is externality — costs to parties not directly involved in a transaction. The contribution of unhealthful diets to health care costs is already high and is increasing — an estimated $79 billion is spent annually for overweight and obesity alone — and approximately half of these costs are paid by Medicare and Medicaid, at taxpayers' expense. Diet-related diseases also cost society in terms of decreased work productivity, increased absenteeism, poorer school performance, and reduced fitness on the part of military recruits, among other negative effects.
The second consideration is information asymmetry between the parties to a transaction. In the case of sugared beverages, marketers commonly make health claims (e.g., that such beverages provide energy or vitamins) and use techniques that exploit the cognitive vulnerabilities of young children, who often cannot distinguish a television program from an advertisement.
A third consideration is revenue generation, which can further increase the societal benefits of a tax on soft drinks. A penny-per-ounce excise tax would raise an estimated $1.2 billion in New York State alone. In times of economic hardship, taxes that both generate this much revenue and promote health are better options than revenue initiatives that may have adverse effects.
Objections have certainly been raised: that such a tax would be regressive, that food taxes are not comparable to tobacco or alcohol taxes because people must eat to survive, that it is unfair to single out one type of food for taxation, and that the tax will not solve the obesity problem. But the poor are disproportionately affected by diet-related diseases and would derive the greatest benefit from reduced consumption; sugared beverages are not necessary for survival; Americans consume about 250 to 300 more calories daily today than they did several decades ago, and nearly half this increase is accounted for by consumption of sugared beverages; and though no single intervention will solve the obesity problem, that is hardly a reason to take no action.
The full impact of public policies becomes apparent only after they take effect. We can estimate changes in sugared-drink consumption that would be prompted by a tax, but accompanying changes in the consumption of other foods or beverages are more difficult to predict. One question is whether the proportions of calories consumed in liquid and solid foods would change. And shifts among beverages would have different effects depending on whether consumers substituted water, milk, diet drinks, or equivalent generic brands of sugared drinks.
Effects will also vary depending on whether the tax is designed to reduce consumption, generate revenue, or both; the size of the tax; whether the revenue is earmarked for programs related to nutrition and health; and where in the production and distribution chain the tax is applied. Given the heavy consumption of sugared beverages, even small taxes will generate substantial revenue, but only heftier taxes will significantly reduce consumption.
Sales taxes are the most common form of food tax, but because they are levied as a percentage of the retail price, they encourage the purchase of less-expensive brands or larger containers. Excise taxes structured as a fixed cost per ounce provide an incentive to buy less and hence would be much more effective in reducing consumption and improving health. In addition, manufacturers generally pass the cost of an excise tax along to their customers, including it in the price consumers see when they are making their selection, whereas sales taxes are seen only at the cash register.
Although a tax on sugared beverages would have health benefits regardless of how the revenue was used, the popularity of such a proposal increases greatly if revenues are used for programs to prevent childhood obesity, such as media campaigns, facilities and programs for physical activity, and healthier food in schools. Poll results show that support of a tax on sugared beverages ranges from 37 to 72%; a poll of New York residents found that 52% supported a “soda tax,” but the number rose to 72% when respondents were told that the revenue would be used for obesity prevention. Perhaps the most defensible approach is to use revenue to subsidize the purchase of healthful foods. The public would then see a relationship between tax and benefit, and any regressive effects would be counteracted by the reduced costs of healthful food.
A penny-per-ounce excise tax could reduce consumption of sugared beverages by more than 10%. It is difficult to imagine producing behavior change of this magnitude through education alone, even if government devoted massive resources to the task. In contrast, a sales tax on sugared drinks would generate considerable revenue, and as with the tax on tobacco, it could become a key tool in efforts to improve health.
The price of green Arabic coffee is at a 13-year high, and other ingredients such as dairy, sugar and cocoa have experienced market volatility. That means the company is upping the price of some of its more complicated beverages and considering raising the price of packaged coffee.
“Over the last six months a highly speculative green coffee market and dramatically increased commodity costs have completely altered the economic and financial picture of many players in the coffee industry,” said Starbucks CEO Howard Schultz. “And while many, if not most, coffee roasters and retailers began raising prices months ago, we have thus far chosen to absorb the price increases ourselves and not pass them on to our customers.”
Not anymore. Schultz said the “extreme nature of the cost increases” is forcing the Seattle-based coffee company to raise prices.
Starbucks officials said Wednesday the company will maintain or lower the price of some of its most popular beverages, including its $1.50 tall coffee. But more “labor-intensive and larger-sized beverages” will cost more.
If green coffee prices continue to rise, it’s possible Starbucks will charge more for packaged products, too.
Other retailers, including Green Mountain Coffee Roasters and Dunkin’ Donuts, are already charging more for coffee.
Always on, always full and always ready, new technology provides instant hot and cold beverages
SARASOTA, Fla., Feb. 23, 2011 /PRNewswire/ -- In just a year's time, the average American household typically spends thousands of dollars on pre-packaged beverages and homebrewed coffees and teas, in addition to drinks bought at neighborhood cafes and convenience stores. Whether a habit or necessity, these purchases and their associated costs add up, as does the amount of post-consumption trash. Thanks to the new Esio Water and Beverage System, it's now possible to stop such out-of-control spending and "drink green," by preventing and reducing waste with the earth-friendly Esio solution.
The only always on, always full and always ready hot-and-cold beverage system on the market, the Esio transforms tap water into purified water and beverages when connected to a reverse osmosis filtration system, such as the Esio 5 Stage R/O System, or may be used with purified bottled water. With the touch of a finger, the Esio's patented drop-and-drink technology conveniently dispenses an array of hot and cold beverages - everything from coffee and teas to juices, vitamin waters, sports drinks and more.
"Let's face it, Americans drink a ton of bottled and canned beverages, many of which aren't good for your health, your wallet or your environment," says Chuck Vollmer, Owner/Operator of Esio Water and Beverage System. "The Esio eliminates the need to purchase and continually dispose of small bottles and cans, and gives consumers a number of Esio drink choices, thanks to concentrated Esio-paks that deliver more beverage for the buck."
Perfect for the home or office, the Esio comes in two models, black or white, and woodgrain or stainless steel upgrade kits are available for a modest additional charge. Esio offers multiple rental or purchase plans. Each small Esio-pak makes nearly a gallon of delicious drinks. This replaces 10 12-oz. drinks in cans or plastic bottles, making the Esio 92 percent landfill-efficient and an affordable, eco-friendly beverage alternative. Ordering is easy online or through Esio sales representatives.
