What if there were a public policy that rewarded industry for selling healthier products and led consumers to buy fewer health-harming ones, while at the same time raising revenue to improve people’s lives – all without damage to the economy? 

Turns out there is one. Meet the Berkeley sugary drink tax.

A new study shows that after one year of taxing sugary drinks at a penny an ounce, Berkeley saw sales of those beverages drop nearly 10 percent as water sales went up and store revenue remained constant. According to research co-led by researchers at The University of North Carolina’s Gillings School of Global Public Health and the Public Health Institute of Oakland, CA:

• Sales of sugary drinks sales declined by 9.6% in Berkeley stores;
• Untaxed beverages sales increased by 3.5% in Berkeley stores and this was driven by bottled water (+15.6%);
• Average grocery bills did not increase, nor did store revenue fall more in Berkeley compared to control cities.

“This research shows that Berkeley’s sugary drinks tax is working exactly as advertised,” said Jim Krieger, MD, MPH, executive director of Healthy Food America. “People are choosing fewer harmful beverages and buying more of those that are healthier, and stores are still making money.

“While none of Big Soda’s dire predictions have come true, we can expect the health benefits such as reduced rates of diabetes and obesity, to materialize as these trends continue. Meanwhile, the revenue is going to support community programs to boost health and access to healthy foods for low-income residents.”

Researchers used three methods for evaluating conditions before the tax took effect Jan. 1, 2015 and during the first year of implementation: (1) sampling of beverage prices at 26 Berkeley stores; (2) point-of-sale scanner data on 15.5 million checkouts for beverage prices, sales, and store revenue for two supermarket chains covering three Berkeley and six control non-Berkeley large supermarkets in adjacent cities; and (3) a representative telephone survey of 957 adult Berkeley residents.

“I was really quite surprised, to be honest,” lead author Barry Popkin of UNC told Time. “Berkeley already consumes [fewer sugary drinks] than the rest of America.”  Even in higher-income communities, it appears, a soda tax can encourage a shift from sugary to less-harmful drinks, so the changes could greater still in lower-income communities and in places with higher consumption rates.

While researchers found evidence that the Berkeley tax is doing what was intended in terms of shifting sales and raising revenue, they found no evidence for the deleterious economic impacts the beverage industry inveighed against during the 2014 campaign for the tax. Now, even some of the once-skeptical merchants are philosophical about it.

“We still do sell sodas and all that but it’s not as much as before,” Murad Hussein, the owner of Ashby Supermarket told the San Francisco Chronicle. “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.”

“This study won’t stop Big Soda from claiming that taxes don’t work,” said Michael F. Jacobson, president of Center for Science in the Public Interest. “But if soda taxes didn’t make a significant dent in soda consumption, the industry wouldn’t be fighting taxes so hard.”

Noting that action to address rising rates of diabetes and pervasive obesity is long overdue, study author Lynn Silver said, “Somebody has to start somewhere, and it’s often been cities that have taken the lead.”