Philly’s soda tax

Soda tax ‘killing’ corner stores that rely on summer sales

Water has been a major boon but not enough to make up for the decline in sugary beverages.

Andrew Patel, manager at Foodpoint Deli & Minimart, said the store orders about one-third as much sugary beverages it did last year.

Andrew Patel, manager at Foodpoint Deli & Minimart, said the store orders about one-third as much sugary beverages it did last year.

Mark Dent/Billy Penn

If anybody could see the divisive Philadelphia soda tax from both angles, it’s Beverly Diggins. She’s the general manager of Ms. Jessie’s Stop N Shop. She also has a master’s in education and has taught at Peirce College.

Around her North Philadelphia home she sees the broken infrastructure of public schools and wants better. And around South Philadelphia, home to Ms. Jessie’s, she sees dwindling revenue and wants better.

“I think we’ve gotten used to it mentally,” she said of the tax. “When are our pockets going to get used to it? That’s the issue.”

In January, Billy Penn reported on the effect of the soda tax from corner store owners who described it as nothing short of disastrous. We caught up with some of the same ones from this winter and others in different neighborhoods to see where they stood at the end of the long, hot summer when sales of sugary drinks typically soar. The result has been similar: Corner stores have seen a bump in sales compared to the first few months of the year but owners find themselves concerned as they stare down revenues smaller than in previous years.

Estimates ranged from 15 percent to 70 percent declines on sugary beverages, which can be a major hit for stores where drink sales comprise somewhere between 30 and 50 percent of total revenues. Ricky Patel, owner at 1 Stop Mini Market at 8th and Bainbridge streets, expects many small stores to close altogether two years from now if sales don’t pick back up.

“All the mom and pops,” he said, “they’ll be out of business.”

Patel has a bigger business than the Philly standard, his corner shop offering sandwiches and beer in addition to the go-to’s of cigarettes and soft drinks. His revenue, he said, has actually been steady, despite what he claims has been a 70 percent decline on sodas, the same number he gave in January. However, he doesn’t consider steady a cause for celebration. He transformed the store to offer beer to increase his revenue, not to recoup losses.

Ms. Jessie's Stop Shop.

Ms. Jessie's Stop N Shop

Mark Dent/Billy Penn

Ms. Jessie’s Stop N Shop, located 12th and Christian streets, more closely fits the mold of mom and pop store, albeit as perhaps the cleanest, coziest corner shop in Philly. It has hardwood floors and a table topped with baskets of cookies, candy and other goodies greeting guests as they walk in.

Ms. Jessie’s doesn’t have beer or numerous sandwich selections. Its main customers are children who attend three nearby schools, contractors and construction workers and whoever wanders in from the neighborhood.

Since the soda tax, water has been a major boon for the store. Diggins said this summer they’ve been ordering about 100 bottles every other day, more than in the past. They’re selling 16 oz. bottles for 50 cents a pop. The same size of soda goes for $1.75. As we talked, a teenager walked in and quickly grabbed two bottles of water.

“I see more and more that,” Diggins said.

Believe it or not, packets of Kool-Aid have been popular, too. Yes, people are really hacking the soda tax.

Still, it hasn’t been enough. Diggins estimated revenue on sugary drinks to be down 15 percent compared to the pre-soda tax days and not made up by the increase in water sales.

Another customer walked in. Phil Fairell was buying Arizona Iced Tea. But it’s a 12 oz. can.

“Usually,” he said, “I’d be searching for the bottle.”

Ms. Jessie’s still offers a big selection of sugary beverages. Diggins explained that there’s nothing worse for business than not having what a consumer wants, even when they’re less likely to spring for a large container of soda. Other stores have been reducing supply, in part because of less demand but also because distributors are cutting them off. Pepsi stopped offering 2-liters in the city and, in deep South Philly, corner store manager Andrew Patel said several products have become increasingly difficult to get, such as Starbucks Frappucinos. His sugary drink sales have fallen by about a third.

“We think the independently-owned small corner stores are probably the hardest hit of this tax,” said Dave McCorkle, president emeritus of the Pennsylvania Food Merchants Association (PFMA).

The PFMA, which opposes the soda tax, has looked at 35 major grocery stores and concluded sugary drink sales are down about 50 percent so far this year. In Berkeley, California, the first city to pass a soda tax, a study conducted by the pro-tax Public Health Institute showed a variety of grocery and convenience stores had seen beverage sales drop only 10 percent.

The Mayor’s Office has claimed sugary beverage consumption should fall citywide no more than 27 percent, but unexpectedly lower revenues from the first six months of the tax indicate the consumption has likely dropped closer to 33 percent, based on previous year averages.

However the soda tax impacts business here in the long run, the city’s 1,500 corner stores will be tougher to track on a wide scale. With thin margins, a surfeit of products and sometimes questionable ownership, they could close for any reason.

Andrew Patel said he had heard of stores already closing in part because of the soda tax and listed off a couple areas in South Philly where they were located. Sure enough, one store at 16th Street near Washington Avenue he mentioned was shuttered. Neighbors said it closed sometime in the last couple of months. The owner could not be reached for comment.

At a time when warm weather, holidays and summer parties usually boost business, corner stores can’t get away from the gloom.

“It’s definitely killing the industry,” Andrew Patel said. “We see less and less sales.”

Want some more? Explore other Philly’s soda tax stories.

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