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Does the EU Sugar Policy Reform Increase Added Sugar Consumption? An Empirical Evidence on the Soft Drink Market

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  • Bonnet, Céline
  • Réquillart, Vincent

Abstract

National Health authorities recommend a decrease in the consumption of ‘added’ sugar. At the same moment, a reform of the Common Organisation of the Sugar Market will lead to a decrease by more than 30% of the sugar price in the EU. Using French data on the soft drinks purchases, this paper investigates the impact of this reform on the consumption of sugar sweetened beverages and on added sugar consumption. The soft drink market is composed of highly differentiated products with different sugar content. Hence the reform of the EU sugar policy leads to a decrease in regular soft drink prices by more than 3% in average and varies from 1.7% to 6.5% according to the brand. To assess substitution within the food category of sugar sweetened beverages, we use a structural econometric model, the random-coefficients logit model. Our model also takes into account observed and unobserved heterogeneity in the consumers’ behavior and then allows to estimate the impact of the sugar price decrease on the soft drink consumption according to the type of consumers. Results suggest that price changes would lead to an increase in market shares of regular products by 7.5% and a decrease in market share of diet products by 3.5%. On the whole, it would rise the consumption of regular soft drinks by more that 1 liter per year and per person and the consumption of added sugar by 124 grams per year and per person. Moreover, the reform leads to substitution between brands at the benefit of products with the highest sugar content. The increase in per person consumption is larger in households composed of overweight and obese individuals.

Suggested Citation

  • Bonnet, Céline & Réquillart, Vincent, 2010. "Does the EU Sugar Policy Reform Increase Added Sugar Consumption? An Empirical Evidence on the Soft Drink Market," TSE Working Papers 10-197, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:23467
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    References listed on IDEAS

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    Cited by:

    1. Silva, Andres & Etilé, Fabrice & Boizot-Szantai, Christine & Dharmasena, Senarath, 2013. "The Impact of Beverage Taxes on Quantity and Quality of Consumption in France," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150428, Agricultural and Applied Economics Association.
    2. Bradley J. Rickard & Abigail M. Okrent & Julian M. Alston, 2013. "How Have Agricultural Policies Influenced Caloric Consumption In The United States?," Health Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 316-339, March.
    3. repec:eee:jfpoli:v:71:y:2017:i:c:p:86-100 is not listed on IDEAS
    4. Bonnet, Céline & Réquillart, Vincent, 2013. "Tax incidence with strategic firms in the soft drink market," Journal of Public Economics, Elsevier, vol. 106(C), pages 77-88.
    5. Bonnet, Céline & Réquillart, Vincent, 2011. "Strategic Pricing and Health Price Policies," IDEI Working Papers 671, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2012.
    6. Haucap, Justus & Heimeshoff, Ulrich & Klein, Gordon J. & Rickert, Dennis & Wey, Christian, 2013. "Bargaining power in manufacturer-retailer relationships," DICE Discussion Papers 107, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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