Does the Prevalence of Obesity Affect the Demand for Soft Drinks? Evidence from Cross-Country Panel Data

The impact of soft drinks on obesity has been widely investigated during the last decades. Conversely, the role of obesity as a factor influencing the demand for soft drinks remains largely unexplored. However, understanding potential changes in the demand for soft drinks, as a result of changes in the spread of obesity, may be useful to better design a comprehensive strategy to curb soft drink consumption. In this paper, we aim to answer the following research question: Does the prevalence of obesity affect the demand for soft drinks? For this purpose, we collected data in a sample of 97 countries worldwide for the period 2005-2019. To deal with problems of reverse causality, an instrumental variable approach and a two-stage least squares method were used to estimate the impact of the age-standardized obesity rate on the market demand for soft drinks. After controlling for several demographic and socio-economic confounding factors, we found that a one percent increase in the prevalence of obesity increases the consumption of soft drinks and carbonated soft drinks by about 2.37 and 1.11 L per person/year, respectively. Our findings corroborate the idea that the development of an obesogenic food environment is a self-sustaining process, in which obesity and unhealthy lifestyles reinforce each other, and further support the need for an integrated approach to curb soft drink consumption by combining sugar taxes with bans, regulations, and nutrition education programs.