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

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 bene…t of products with the highest sugar content. The increase in per person consumption is larger in households composed of overweight and obese individuals.

Consumer, Manufacturer and Retailer Responses to Health Price Policies: the example of EU Sugar Price Reform on the Soft Drink Market

Healthier food diet is likely to prevent numerous non communicable diseases. Then there is a growing interest in evaluating the impact of food price taxation on food consumption. However, strategic reactions of both manufacturers and retailers are missing in empirical analyses. Rather, passive pricing is assumed. Ignoring strategic pricing might lead to under-estimate or over-estimate the impact of food taxation. Based on the example of the soft drink industry, we analyse the bias which is introduced when assuming passive pricing. Using structural econometric model, we first estimate models of vertical relationships between the beverage industry and the retail industry. After selecting the ’best’ model of vertical relationships, we then simulate different scenrios of input cost changes or final products taxation. Our results indicate that assuming passive pricing by firms leads to under-estimate the impact on food consumption. In our example, the under-estimation amounts to 15% for regular products and 50% for diet ones when contracts between manufacturers and retailers are not taken into account. We thus conclude that for empirical analysis of food price policies for better health, considering strategic pricing is a key issue.vertical contracts, two part tariffs, competition, manufacturers, private labels, retailers, differentiated products, soft drinks, non nested tests, sugar CMO, passthrough, Food Consumption/Nutrition/Food Safety, Health Economics and Policy,

Tax incidence with strategic firms on the soft drink market

Healthier food diet is likely to prevent numerous non communicable diseases. Then there is a growing interest in evaluating the impact of food price taxation on food consumption. However, strategic reactions of both manufacturers and retailers are missing in empirical analysis. Rather, passive pricing is assumed. We develop a structural econometric model, to analyze vertical relationships between the food industry and the retail industry. We apply this model to the beverage industry and consider taxation of sugar. After selecting the ’best’ model of vertical relationships, we simulate different taxation scenarios. We consider excise tax as well as ad valorem tax. We find that firms behave differently when facing an ad valorem tax or an excise tax. Excise tax is overshifted to consumer prices while ad valorem tax is undershifted to consumer prices. We find that an excise tax based on sugar content is the most efficient at reducing soft drink consumption. Our results also indicate that ignoring strategic pricing by firms leads to misestimate the impact of taxation by 15% to 40% depending on the products and the tax implemented

A Gurson-type model accounting for void size effects

AbstractIn this paper we present an extension of the Gurson model of cavity growth which includes the void size effect. To this end, we perform the limit analysis of a hollow sphere made up of a Fleck and Hutchinson’s strain gradient plasticity material. Based on the trial velocity field of Gurson, we derive an approximate closed form expression of the macroscopic criterion. The latter incorporates the void size dependency through a non dimensional parameter defined as the ratio of the cavity radius and the intrinsic length of the plastic solid. The accuracy of this approximate criterion is demonstrated by its comparison with numerical data. In the last part of the paper we present a complete plasticity model involving the damage rate and a power-law strain hardening of the matrix. It is shown that the cavity size effect has a strong dependency on damage growth as well as on the stress strain response

The effects of taxation on the individual consumption of sugar-sweetened beverages

When assessing the impact of taxation on the consumption of sugar-sweetened beverages (SSBs), most studies consider the average consumer. Individual consumption is, however, very heterogeneous. In this paper, we propose a three-step methodology to evaluate the impact of SSB taxation on individual consumption. First, we use a disaggregation method to recover individual consumption from observed household consumption. Second, we estimate a matrix of price elasticities of demand. Third, we simulate the impact of a tax policy on individual consumption. We find high level of heterogeneity in consumption. Adults, both men and women, consume a greater quantity of SSBs than children. For any given age category, the average consumption of SSBs increases with body mass index. Among heavy consumers of SSBs, obese and overweight people are over-represented. In France, a e0.20/l tax on SSBs might decrease sugar intake (due to SSBs) by 0.8 kg per year on average and by more than 2 kg for 5% of the adult population; the decrease being greater for an obese adult than a normal weight adult. For children, the decrease in sugar intake is about 0.25 kg on average and greater than 0.6 kg per year for about 5% of children

The effects of taxation on the individual consumption of sugar-sweetened beverages

When assessing the impact of taxation on the consumption of sugar-sweetened beverages (SSBs), most studies consider the average consumer. Individual consumption is, however, very heterogeneous. In this paper, we propose a three-step methodology to evaluate the impact of SSB taxation on individual consumption. First, we use a disaggregation method to recover individual consumption from observed household consumption. Second, we estimate a matrix of price elasticities of demand. Third, we simulate the impact of a tax policy on individual consumption. We find high level of heterogeneity in consumption. Adults, both men and women, consume a greater quantity of SSBs than children. For any given age category, the average consumption of SSBs increases with body mass index. Among heavy consumers of SSBs, obese and overweight people are over-represented. In France, a e0.20/l tax on SSBs might decrease sugar intake (due to SSBs) by 0.8 kg per year on average and by more than 2 kg for 5% of the adult population; the decrease being greater for an obese adult than a normal weight adult. For children, the decrease in sugar intake is about 0.25 kg on average and greater than 0.6 kg per year for about 5% of children

An adaptive algorithm for cohesive zone model and arbitrary crack propagation

International audienceThis paper presents an approach to the numerical simulation of crack propagation with cohesive models for the case of structures subjected to mixed mode loadings. The evolution of the crack path is followed by using an adaptive method: with the help of a macroscopic branching criterion based on the calculation of an energetic integral, the evolving crack path is remeshed as the crack evolves in the simulation. Special attention is paid to the unknown fields transfer approach that is crucial for the success of the computational treatment. This approach has been implemented in the finite element code Z-Set (jointly developed by Onera and Ecole des Mines) and is tested on two examples, one featuring a straight crack path and the other involving a complex crack propagation under critical monotonous loading monotonous

Price Transmission in Food Chains: The Case of the Dairy Industry

International audienceThis chapter outlines the state of the art of empirical analyses of cost pass-through in food chains with reference to the use of structural econometric models using scanner data. Statistical analyses show that cost pass-through is imperfect, due in part to market power of firms in food markets where food supply chains are frequently composed of oligopolies and where the nature of contracts linking food retailers and food manufacturers could have an important influence on price transmission. Employing a structural model permits estimation of product-specific elasticities which, together with cost data, can allow estimates of markups and how they change in the face of cost changes. The scanner data are used to estimate structural models of the French fluid milk and yoghurt sectors. The results show considerable heterogeneity in price transmission, where evidence of both under- and over-shifting can be found