Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2018 Jan 25:15:E12.
doi: 10.5888/pcd15.160611.

Identifying Financially Sustainable Pricing Interventions to Promote Healthier Beverage Purchases in Small Neighborhood Stores

Claudia Nau  1 , Shiriki Kumanyika  2   3 , Joel Gittelsohn  3   4 , Atif Adam  3   4 , Michelle S Wong  3   5 , Yeeli Mui  6 , Bruce Y Lee  3   7
Affiliations

Identifying Financially Sustainable Pricing Interventions to Promote Healthier Beverage Purchases in Small Neighborhood Stores

Claudia Nau et al. Prev Chronic Dis. .

Abstract

Introduction: Residents of low-income communities often purchase sugar-sweetened beverages (SSBs) at small, neighborhood "corner" stores. Lowering water prices and increasing SSB prices are potentially complementary public health strategies to promote more healthful beverage purchasing patterns in these stores. Sustainability, however, depends on financial feasibility. Because in-store pricing experiments are complex and require retailers to take business risks, we used a simulation approach to identify profitable pricing combinations for corner stores.

Methods: The analytic approach was based on inventory models, which are suitable for modeling business operations. We used discrete-event simulation to build inventory models that use data representing beverage inventory, wholesale costs, changes in retail prices, and consumer demand for 2 corner stores in Baltimore, Maryland. Model outputs yielded ranges for water and SSB prices that increased water demand without loss of profit from combined water and SSB sales.

Results: A 20% SSB price increase allowed lowering water prices by up to 20% while maintaining profit and increased water demand by 9% and 14%, for stores selling SSBs in 12-oz cans and 16- to 20-oz bottles, respectively. Without changing water prices, profits could increase by 4% and 6%, respectively. Sensitivity analysis showed that stores with a higher volume of SSB sales could reduce water prices the most without loss of profit.

Conclusion: Various combinations of SSB and water prices could encourage water consumption while maintaining or increasing store owners' profits. This model is a first step in designing and implementing profitable pricing strategies in collaboration with store owners.

PubMed Disclaimer

Figures

Figure 1
Figure 1
Water demand and profit for coordinated price changes for selling bottles of sugar-sweetened beverages (SSBs) for corner store A, Baltimore, Maryland, 2014. Panel A shows absolute demand of water over prices of water and bottles of SSBs. Panel B shows only profitable price combinations for percentage change of water demand in relation to profit change.
Figure 2
Figure 2
Water demand and profit for coordinated price changes for selling cans of sugar-sweetened beverages (SSBs) for corner store B, Baltimore, Maryland, 2014. Panel A shows absolute demand of water over prices of water and cans of SSBs. Panel B shows only profitable price combinations for percentage change of water demand in relation to profit change.
See this image and copyright information in PMC

References

    1. Gravlee CC, Boston PQ, Mitchell MM, Schultz AF, Betterley C. Food store owners’ and managers’ perspectives on the food environment: an exploratory mixed-methods study. BMC Public Health 2014;14(1):1031. 10.1186/1471-2458-14-1031 - DOI - PMC - PubMed
    1. Bleich SN. Generating better evidence to engage local food outlets in obesity prevention research. Prev Med 2013;57(4):265–7. 10.1016/j.ypmed.2013.07.015 - DOI - PubMed
    1. Centers for Disease Control and Prevention. Rethink your drink — cutting calories. http://www.cdc.gov/healthyweight/healthy_eating/drinks.html. 2016. Accessed January 29, 2016.
    1. Tate DF, Turner-McGrievy G, Lyons E, Stevens J, Erickson K, Polzien K, et al. Replacing caloric beverages with water or diet beverages for weight loss in adults: main results of the Choose Healthy Options Consciously Everyday (CHOICE) randomized clinical trial. Am J Clin Nutr 2012;95(3):555–63. Erratum in: Am J Clin Nutr 2013;98(6):1599. 10.3945/ajcn.111.026278 - DOI - PMC - PubMed
    1. James J, Thomas P, Cavan D, Kerr D. Preventing childhood obesity by reducing consumption of carbonated drinks: cluster randomised controlled trial. BMJ 2004;328(7450):1237. Erratum in: BMJ 2004;328(7450):1236. 10.1136/bmj.38077.458438.EE - DOI - PMC - PubMed

Publication types