Pop sales decline following new tax on sugared drinks

Taxes up, sales down

Friday, July 25, 2014

It appears that Mexico’s new tax on soft drinks might be having an effect on consumption, judging by the drop in sales at Coca-Cola Femsa and other bottlers.

Sales volumes were down 1.5% for the Coca-Cola bottler, a decline which it attributed to the peso-per-litre tax introduced this year by the federal government. The tax applies to sugary drinks and junk food and is part of a campaign to curb obesity and diabetes, both of which are serious health problems.

Coca-Cola Femsa anticipates a drop in sales between five and seven per cent this year as a result of the tax.

Rivals Arca Continental — Latin America’s second largest Coke bottler after Femsa — and Pepsi have also reported declines in sales. However, all three companies cited weather conditions and a softening of the economy as other contributors to the drop in sales.

Source: Reuters (eng)

Mexico Soda Tax Makes Immediate Cut in Consumption

banderasnews.com

Nicole Magge - BeverageManager.net
May 28, 2014

Mexico's tax on sugar sweetened drinks made an immediate impact on soft drink consumption in the country. In the first 3 months of 2014 manufacturers experienced a 4% decline in sales across the board.

The Mexican government introduced a groundbreaking tax on sugar-sweetened beverages in late 2013. The tax became law in January 2014, meaning that the period January-March this year is the first in which the results of the tax can be seen.

And the results are clear.

Mexicans drink 163 liters of sweetened drinks a year - the highest consumption in the world and 40 percent more than Americans - the equivalent to 40.75 liters by every person, every three months.

But in the first three months of 2014 that total fell by 1.65 liters, a 4 percent decline.

Across the board individual drinks companies reported falls in sales of between 3.6 percent and 4.4 percent. The finance director of Coca-Cola Femsa – the biggest Coca-Cola bottler outside the United States – told analysts in a conference call it too, had experienced a 4.4 percent fall in business.

The new soft drinks tax had been set at 1 Mexican peso per liter and health advocates believed that it would reduce annual consumption by 12 percent. With only three months sales in, it remains to be seen whether that target will be reached.

It may also be that after consumers’ initial surprise at the price increase and the attendant media attention has worn off, consumption might stabilize at a 4 percent decline – or go back up to where it was before.

Mexico’s tax was introduced in response to the country’s crisis of obesity and diabetes – 32.8 percent of the population is obese, making it the fattest country in the world.

This biggest-ever real-life test of whether "sugar taxes" can work will continue be the object of worldwide fascination.

All Eyes on Mexico’s Soda Tax

nacsonline.com

January 13, 2014 

 

 

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​WASHINGTON – Mexico’s new tax on soda and other high calorie foods could start the clock on calls for similar action in the United States, reports Politico.

William Dietz, former director of the Division of Nutrition and Physical Activity at the Centers for Disease Control and Prevention, believes that it's only a matter of time before similar policies make their way to the United States.

"I'm convinced that this is going to happen, it's just a matter of when," Dietz said in an interview with Politico.
The news source also notes that more than 30 states and cities have attempted to enact soda taxes through ballot initiatives or legislation over the past several years — and every one of them has failed.

Mexico, which surpassed the U.S. as the world’s fattest country, gained assistance from former New York City Mayor Michael Bloomberg in the form of a $10 million grant. Health advocates say that if Mexico’s plan puts “even a small dent in high-calorie consumption,” there will likely be a push within the United States to go down a similar path.

“The Mexico tax is going to have an impact in this country,” Barry Popkin, nutrition and author of “The World Is Fat,” told Politico, adding, “It will cut energy intake, it will cut sugar…The reduction in production and sales will be meaningful.”

While Mexico starts its experiment and a handful of other localities in the U.S. look to do the same, Dietz noted it's important to look at what impact a sugary drink tax has on consumer-level prices, as there's always the possibility beverage companies could cut into their profit margin and absorb the tax to keep prices low.

Popkin adds that researchers will be able to measure the impact of Mexico’s new policy because it looks like the cost of the excise tax, which increases the price of a 2-liter soda by about 10%, a cost that passes directly to consumers.

The American Beverage Association notes that Mexico’s tax is not a targeted strategy for tackling obesity.
“This whole thing in Mexico is really not about obesity; it’s about revenue,” Chris Gindlesperger, a spokesman for the American Beverage Association, told Politico. “Overall, Americans don’t support taxes, bans or other restrictions on what to eat and drink.”