Some cities are proposing heavy sales taxes on sugary soda beverages, and Philadelphia's soda sales are seeing a huge cut in profits after implementation.
The tax was implemented in Philadelphia and in other select cities January of 2017, despite outrage from an already declining soda industry. Some said that the tax went against the constitution in that it "violates the Pennsylvania constitutional requirement of uniformity of taxation and because local government doesn't have the power to impose a sales tax when the Pennsylvania legislature has already imposed a sales tax."
In addition, 58 percent of Philadelphia voters were reportedly against implementation of the tax in the first place. However, Philadelphia moved forward with it, and the results for the soda company have probably been just as devastating as they had initially imagined.
Bloomberg Markets reports that although the tax is only 6 weeks old, the sales of soda beverages have dropped as much as 50 percent. One of Philadelphia's local distributors of Canada Dry Ginger Ale, Sunkist, A&W Root Beer, Arizona Iced Tea and Vita Coco reported a drop of 45 percent when compared to sales from the first five weeks of 2016.
Jeff Brown, CEO of Philadelphia-based Brown's Super Stores, expressed that “In 30 years of business, there’s never been a circumstance in which we’ve ever had a sales decline of any significant amount. I would describe the impact as nothing less than devastating.”
The tax amounts to 1.5 cents per ounce on sweetened beverages, which almost doubles the cost of 12 packs of soda and two-liter bottles. While the soda industry continues to take these kinds of hits, other cities are following suit on the tax, which is said to be going toward public schools. Some of those cities include: San Francisco and Oakland, California, Boulder, Colorado, and Cook County, Illinois (where Chicago is located).
If soda sales tanked that much in only six weeks in Philadelphia, there's no telling the damage these companies could take if more and more cities continue to impose this tax. What will it mean for the future of soda? Perhaps the industry will have to come up with something healthy and new.