Sugar Tax in Mexico increases sales of sugary drinks

The Wall Street Jounal reports on the…uhmm…success? …that a soda tax has had in Mexico:

Sales of soda are climbing two years after Mexico imposed a roughly 10% tax on sugary drinks—a bright spot for an industry that has feared it could be cast as the next tobacco.

Mexico’s tax was an attempt to cap alarming obesity and diabetes rates in a country where per capita soda consumption is the highest in the world. It came at a time when then Mayor Michael Bloomberg was trying to limit sales of the beverages in New York City, and more countries are weighing a similar tax.

Purchases, however, are rising in Mexico after an initial drop, making the country a key-growth market again for soda giants Coca-Cola Co. and PepsiCo Inc.

Underscoring the resiliency of sugary drinks, the tax of one peso per liter has raised more than $2 billion since January 2014, about a third more than the government expected.

Tax revenue is a very good proxy for sales data. Taxes have increased, therefore sales have increased. Not the desired result I should have thought from the geniuses who proposed a sales tax on sugary drinks.

While that public-health campaign is long gone, soda makers continue to advertise their products heavily and say it is unfair to single out something representing less than 10% of daily caloric intake.

Coca-Cola Femsa SAB, the country’s largest Coke bottler, said last Wednesday that its Mexican soda volumes rose 5.5% in the first quarter from a year earlier. Arca Continental SAB, the No. 2 Coke bottler, reported soda volumes surged 11%.

The turnaround began last year, when Mexican soda-industry volume rose 0.5% after falling 1.9% in 2014, said data service Canadean.

Consumers also aren’t flocking to untaxed zero-calorie sodas. The market shares of full-calorie Coca-Cola and Pepsi-Cola inched higher last year to 48% and 11%, respectively, according to Euromonitor, another data service.

Utter failure.

 

-WSJ

 

 


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  • Alan Beresford B’Stard

    Oh dear another myth busted!! Will this be the end of references to the Mexico sugar tax, so favoured by health troughers here?

  • johcar

    You can lead a Mexican to water… no… wait….

  • JEL51

    We must go gently with this information. We are not allowed criticize the Health Experts/Scientist when they demand extra taxes be applied on sugary drinks here in NZ . Apparently they are getting hurty feelings when we the poor taxpayer have the audacity to question their authority.

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