Tag Archives: Beverages

Mexico’s soda tax is working, sales drop by 14%

A new study found that Mexico’s soda tax had a positive impact on purchasing habits just one year after implementation. The results show a decrease in sugar-sweetened beverage consumption accompanied by an increase in sales of untaxed drinks throughout the country.

Let’s face it, we all like soda. Undoubtedly the insane quantity of sugar they contain make them the equivalent of catnip for our brains (brainnip? — I’m coining that term). But they’re really bad for your health; they’ve been linked to everything from tooth decay, to diabetes and obesity.

Faced with a so-called “epidemic of obesity,” caused by American soda franchises opening up in Mexico and offering a lot of cheap but unhealthy products, the Mexican government decided to implement a tax of 1 peso per liter (or 10% out of total sales price) for sugar-sweetened beverages. While similar strategies have also been suggested for the U.S. (only implemented in Berkeley, California in March 2015 so far) the fact remains that there’s little research done into how such a tax affects purchasing behaviors over time.

These jellos ironically have less sugar than the soda it’s imitating.
Image via pixabay

One year after the implementation of the tax however, we’re already seeing a positive impact of the tax in the Mexico markets; the authors of the study report that an average of 6% decline in purchases of sugar-sweetened beverages along with an 4% increase in sales of beverages with no added sugar (which remained untaxed) was recorded. The drop in sales increased over time, reaching the peak of 12% drop in December of 2014. These values are relative to projected sales expectations sans-tax.

To reach these numbers, the team mined data on beverage sales in Mexico from January of 2012 (before the tax was implemented) through to December 2014. The data shows that in 2014, the average person bought around four fewer liters of the taxed beverages compared to what they did before the soda-tax went into effect; the most significant decline was recorded among low-income households.

The authors say it’s too early to determine for certain whether the tax is really working; the study is observational and cannot prove causality, and other factors such as health campaigns or economic changes also had an effect on sales.

In a corresponding editorial, Franco Sassi, a senior health economist at the Organisation for Economic Co-operation and Development in Paris, writes that

“Taxes can be part of a public health strategy—and Mexico’s is a great example for other countries—but they cannot be viewed as a magic bullet in the fight against obesity,” wrote Franco Sassi, a senior health economist at the Organisation for Economic Co-operation and Development in Paris in a corresponding editorial.

The soda-tax did have a positive impact in Mexico; but while taxation makes these beverages less attractive to buyers by increasing price, complementary policies like health education programs are required for a successful anti-obesity campaign.