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.
