The purpose of enacting a country-wide 10% tax in Mexico four years ago – applied to all sugar-sweetened beverages, including soda, fruit drinks, and sweetened iced tea – was to address the prevalence of obesity in the country.
Nearly a third (32.4%) of the population in Mexico over the age of 15 is considered obese, according to the Organization for Economic Co-operation and Development (OECD), and Mexico ranks first for childhood obesity with about 4.5 million children dangerously above a healthy weight range for their height and age.
"The tax applied to soft drinks in Mexico has been ineffective in reducing obesity, but effective to increase product prices and tax collection," Guillermo Angeles, communications director at ANPRAC, told FoodNavigator-LATAM.
ANPRAC’s stance
ANPRAC, the national association for soft drink and carbonated water producers in Mexico, accounts for 1.1% of the country’s GDP and has invested $730 million pesos (US$37.3m) to programs that promote a multidisciplinary approach to addressing public health issues stemming from poor eating habits.
"The Mexican soft drink industry considers that obesity is a disease that has its origin in multiple factors, which cannot be linked exclusively to a single product. It is a complex problem of public interest that needs to be addressed in a comprehensive manner by private initiative, government, authorities and interested organizations," Angeles said.
"In this sense, the industry believes that nutritional education and the promotion of physical activity are key elements, which is why social responsibility programs are focused on these issues."
ANPRAC added that while the tax may have generated additional revenue of roughly 76.7 million pesos ($3.9m) since 2014, it has been largely ineffective in reducing consumption of sugar-sweetened beverages and has unfairly targeted low-income households who either consume or work in small business that sell the taxed beverages.
Director of ANPRAC, Jorge Terrazas, said despite a double-digit decline in soft drink sales in 2014, the tax has been “useless” in reducing obesity in Mexico.
According to Terrazas, Mexicans have grown used to living with the tax and replaced the taxed beverages with other sugar-sweetened products thus not changing their caloric intakes.
"Four years after its implementation and based on official sources such as the Monthly Survey of the Manufacturing Industry (EMIM) of the National Institute of Statistics and Geography (INEGI), we can say that consumers reacted to the change in prices in the short term, but their usual consumption has resumed over time. The impact in long-term consumption was minimal," Angeles added.
As a result, the average Mexican adult still consumes around 3,000 calories per day, and this number has barely budged, declining between six and 10 calories per person since the soda tax went into effect, according to ANPRAC.
Soft drink industry responds
Better-for-you reformulations using novel zero-calorie sweeteners in soft drinks has taken place across Mexico's soft drinks industry and has sped up since the tax went into effect.
ANPRAC reported the category share of low- and no-calorie beverages grew from 37% in 2011 to 50% in 2017.
Since 2011, soft drink calorie profile have reduced on average by 7% across the majority of beverage brands sold in Mexico with some of APRAC’s members reducing their calorie counts by 50%, ANPRAC pointed out.
“The commitment of the industry is to continue innovating and expanding the product portfolio to continue offering each consumer an option according to their lifestyle,” ANPRAC said.