The demand for non-alcoholic beverages across income groups and implications for sugar-sweetened beverage taxation in Germany

Abstract To reduce the intake of added sugars, several countries tax sugar-sweetened beverages (SSBs). In Germany, the potential effects of SSB taxation on demand and consumer welfare are unknown. We estimated the demand for non-alcoholic beverages in Germany across income strata and simulated a 20 per cent added value tax on SSBs and the same tax extended to fruit juice and flavored milk. The demand for SSBs, fruit juice, and flavored milk is elastic, particularly among low- and middle-income households. A tax on SSBs would overall reduce monthly purchases per household by around 2.1 liters but only by 0.9 liters for high-income households. The absolute monthly welfare loss was €0.8 to €1.5 per household and substantially larger among high-income households. However, the relative tax burden was twice as large for low- versus high-income households. While SSB taxation would be regressive, it could reduce health inequalities because low- and middle-income households reduce sugar consumption more.