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Latin America

Mexicans lose thirst for soft drinks as so-called “cola tax” takes effect

Sales in sugary beverages dropped by 6% last year, according to a new study

Coca Cola, Multilatinas
A worker stacks crates of empty Coca-Cola bottles in México. Bloomberg

Mexico’s so-called “cola tax,” which went into effect in January 2014, is beginning to bear fruit.

According to a joint study by the Carolina Population Center at the University of North Carolina, and Mexico’s National Institute for Public Health, sales of sugary drinks around the country plummeted an average of 6% last year.

Mexican lawmakers approved the measure to combat the rise in obesity and diabetes

In 2013, Mexican lawmakers approved a controversial one-peso-per-liter (about seven US cents) excise tax on all nonalcoholic and nondairy sugary beverages as a measure to combat the soaring rise in obesity and other health problems related to Mexico’s increasing thirst for soft drinks.

Sales of drinks with added sugar represent 10% of the beverage market.

The measure ignited a fiery campaign by bottlers in the country, who took out ads and other publicity asking the public to voice its opposition to the so-called Special Tax on Production and Service (IEPS).

The joint study analyzed the purchasing habits of residents in 53 Mexican cities with a population of at least 50,000.

While research showed that purchases of sugary beverages had dropped in all income brackets, it was most noticeable in the lower socio-economic households, which registered a 9% decline.

At the same time, the study also showed that sales of bottled water and other beverages not covered by the special tax rose.

Mexican officials have long acknowledged that a majority of the population (about 46.5%) consumes soft drinks because they have little or no access to potable water in their communities.

Mexico has the second highest obesity rate in the world after the United States. But it ranks first in the list of countries that consume the most soft drinks: Mexicans on average guzzle about 163 liters of soda annually, according to the World Health Organization.

In 2013, President Enrique Peña Nieto championed the soft drink tax, along with an 8% excise tax on junk food, as a public health measure to fight Type 2 diabetes, which is the number one killer in Mexico.

By just drinking 355 milliliters of soft drinks a day the chances of becoming obese can rise by 60%. By drinking one liter a day, the chances of a person getting diabetes can rise by 25%.

Treasury officials said they have raked in $1.2 million from the tax

In 2013, Harvard University published the results of a study that showed that Mexico had the most deaths related to the consumption of sugary beverages than any other country in the world. Three hundred out of every one million people die from diseases – such as diabetes – caused by soft drinks.

Coca-Cola Femsa SAB, the franchised coke bottler in Mexico, saw its sales dropped by 2.5% last year. It was a better outcome than the 7% drop company officials had predicted when lawmakers approved the tax.

Mexican treasury officials said they have raked in $1.2 million from the tax and will soon announce where that money will be used.

Soft drinks are rarely absent from Mexican dinner tables. Supermarkets across the country offer beverages the come in different flavors and bottle sizes of up to three liters.

In some rural communities, it is much easier to find a can of Coca-Cola in the local market than it is to find milk or bottled water

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