One City's 'Sugar Tax' Looks Like It's Causing Consumption To Fizzle Out

Berkeley, a city in Northern California, saw consumption of sugary drinks drop by 21 percent in some of its low-income areas after a tax of one penny per ounce was levied on the beverages.

Fortune, citing a report from the American Journal of Public Health, reported that Berkeley was the first American city to successfully roll out a tax on sugary beverages. Meanwhile, cities that failed to implement a proposed tax, such as San Francisco and Oakland, have seen a 4 percent rise in soda consumption.

The tax forced consumers to move away from the core products made by The Coca-Cola Co KO, PepsiCo, Inc. PEP in favor of water. In fact, the study found that residents of Berkeley are drinking 63 percent more bottled or tap water than they were before the tax was introduced.

More encouraging, from a health perspective at least, is the fact that just 2 percent or residents traveled outside of city lines to buy their favorite sugary beverage tax-free.

"Not only was the drop in sugary drink consumption in Berkeley greater than we expected, the apparent shift to less harmful products like water is a very good sign," Fortune quoted Kristine Madsen, an associate professor of public health at UC Berkeley and co-author of the study as saying.