Two years later, soda tax hasn’t hurt Berkeley businesses

Murad Hussein, the owner of Ashby Supermarket, looks through sodas in the fridge to take inventory on Friday in Berkeley. Murad Hussein, the owner of Ashby Supermarket, looks through sodas in the fridge to take inventory on Friday in Berkeley. Photo: Natasha Dangond, The Chronicle Buy photo Photo: Natasha Dangond, The Chronicle Image 1 of / 14 Caption Close Two years later, soda tax hasn’t hurt Berkeley businesses 1 / 14 Back to Gallery

Murad Hussein, the owner of Ashby Super Market, vehemently opposed Berkeley’s soda tax when it was passed by voters in 2014. He was afraid that higher prices would mean fewer customers.

Things have worked out differently since he and other grocers began collecting the tax two years ago: His store on Martin Luther King Jr. Way and Ashby Avenue is selling fewer sodas, but he has seen an increase in two things: bottled water sales and customer complaints about soda prices.

“We get a lot of trouble with customers coming in, grabbing a drink that says it’s a dollar and then they start complaining when we charge $1.20 because they don’t know its a law,” he said. “And they start arguing. They say, ‘This is ridiculous. This is the last time we’re coming here,’ and they storm out.”

“That happens every day now,” he said.

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From the perspective of public health experts, Berkeley’s tax on sugar-sweetened beverages — the first of its kind in the country — has worked. The city has seen a significant drop in soda sales since the tax was implemented in March 2015.

Industry groups, who called the levy a “grocery tax,” said it would hit sales for smaller grocers like Murad. But a recent study by the University of North Carolina’s Gillings School of Global Public Health and Oakland’s Public Health Institute suggests that’s not true. (The Chronicle reported preliminary findings from the study in October.)

Researchers analyzed 15.5 million checkout purchases from two major supermarket chains and 26 grocers in Berkeley, and compared them with sales in those chains in neighboring communities. What they found was that while sales of soda fell 9.6 percent in the year after the tax was imposed, there was no reduction in overall store revenue.

That was because as soda purchases fell, unsweetened beverage sales rose 3.5 percent, mostly because of an increase in bottled water sales, which rose 15.6 percent.

Though untaxed, the sale of diet soda and other artificially sweetened beverages also fell by 9.2 percent.

“I think its because of a growing awareness that sweetened beverages are the most problematic from a health standpoint and have no nutritional value,” said study co-author and Oakland Public Health Institute senior adviser Lynn Silver. “It suggests the tax accomplished what it wants to do without hurting local business or consumers. The Berkeley tax is a home run.”

Paper co-author Ng Shu Wen, an associate professor at the University of North Carolina, said it’s significant that some communities beyond Berkeley are embracing the tax.

“Given Berkeley is a relatively well-educated population, with a baseline consumption that is much lower than the national average, one would argue the impact in other locations might be higher than Berkeley’s,” Ng said.

The study was funded by funded by Bloomberg Philanthropies, which in 2016 gave $21 million to campaigns supporting soda taxes.

San Francisco, Oakland, Albany and Boulder, Colo., have followed Berkeley in passing versions of the tax. Santa Fe votes on a proposed soda tax on May 2, and people in Multnomah County in Oregon have begun collecting signatures to put a soda tax on the ballot in November.

“We still do sell sodas and all that, but it’s not as much as before,” said Ashbuy Super Market’s Hussein. “People are drinking more water now or sugar-free sodas and juice. ... It’s not as bad as we thought it was going to be.”

Nearby on Adeline Street, Sucha Singh Banger, owner of the Black & White Liquor Store, also said he’s seeing a customer backlash at the register.

“We’re not affected,” said Banger. “Whoever wants to drink soda are still going to drink soda. They’ll just (complain) about it while they’re doing it.”

Banger tells customers to call the city.

“It’s a hassle for the businesspeople, but the customers will be mad about it for a second and they’ll forget it after that,” he said.

The city said the soda tax raised $1.5 million last year, of which the bulk has gone to funding nutrition and cooking programs in the Berkeley Unified School District and health programs in community groups including Ecology Center, Healthy Black Families, Berkeley Youth Alternatives and the YMCA.

Councilwoman Linda Maio, one of the more vocal supporters of the tax, said the study refutes claims made by the soda industry that the tax would kill small businesses in Berkeley.

The American Beverage Association, however, said the study did not find any meaningful reduction in obesity rates as a result of the tax.

“Additionally, Berkeley’s relatively small size, high median income and low baseline consumption rates make it a challenging place to determine the true impact of a beverage tax — unlike Philadelphia, where the tax has led to significant job losses and economic hardship for working families,” the association said.

One person who isn’t going to let the tax stop him from getting his hands on soda is John Handel, a UC Berkeley student pursuing a doctorate in history.

As the 24-year-old chugged a small bottle of Coke at the Roxie Diner on Shattuck Avenue — one of about 14 he says he drinks a week — said the penny-per-ounce tax hasn’t noticeably hit his wallet. And it won’t dull his cravings.

“I get how it’s a good tax, soda isn’t a healthy product, and the money can be used for other helpful things,” Handel said. “But on the other hand, I want to say, ‘Let me drink myself to a sugary death if I want.’”

Nicholas Cheng is a San Francisco Chronicle staff writer. Email: ncheng@sfchronicle.com. Twitter: @nichocheng.