Fausta's Blog

American and Latin American Politics, Society, and Culture

May 4, 2016 By Fausta

Mexico: The Bloomberg soda law is not working

In 2012, Bloomberg Philanthropies provided $10 million for a three year plan to decrease soda consumption in Mexico, following which, Mexico enacted a 10% tax.

After an initial drop in purchases of sugary drinks, sales of soda are climbing

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.

This is a classic case of elasticity of demand.

What may be more effective?

“If water was cheaper than soda, maybe I’d switch. But in the meantime I want flavor,” said Mr. Ramirez, after polishing off a 600-milliliter bottle of fruit-punch flavored Jarritos, a local soda brand.

The bottle sells for 6.50 pesos (about 37 cents) at a store near his shoe-shine stand, compared with at least 8 pesos for the same size of bottled water.

Rather than more taxes, maybe Bloomberg ought to look into that.

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Filed Under: Mexico, Michael Bloomberg, taxes Tagged With: Fausta's blog

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