Levying a sugar tax on soft drinks may have the unintended consequence of driving up alcohol consumption, a study has warned.
Many other countries impose an industry levy on soft drinks with a high sugar content, including Hungary, Finland, France, Belgium, Portugal, Mexico, Chile, Thailand, Saudi Arabia and the UAE, researchers from London School of Hygiene and Tropical Medicine in the UK said.
Countries like India, the Philippines, Indonesia, Israel, and South Africa are set to follow suit, in a bid to curb the rising tide of obesity and diabetes, they said.
Several studies have shown that increasing the price of sugary drinks could make a small but significant dent in purchasing patterns, particularly among poorer households.
However, little is known about the potential impact of such a hike on alcohol sales.
Researchers applied a specialised tool for studying consumer demand to data on household expenditure on food and drink in 2012 and 2013 from a sample of 32,000 UK homes.
The data added up to some six million drinks purchases, grouped into high, medium, and low sugar content drinks, fruit juices, milk based drinks, and alcoholic drinks.
Low income households spent nearly half of their total drinks expenditure on all three 'strengths' of sugar sweetened drinks, compared with 44 per cent for medium income, and 39 per cent for high, income households.
Alcohol purchase was more sensitive to price change than soft drinks, researchers found.
However, 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.
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.
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 seem to be most effective, while applying one to diet/low sugar drinks seem to be the least effective, researchers said.
"Although this analysis can highlight significant relationships between beverages purchased, it cannot explain why these relationships arise," researchers said.
"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," they said.
Disclaimer: No Business Standard Journalist was involved in creation of this content
