Sugar Tax Leads to 6% Fall in Mexican Soft Drinks Sales

19 Jun 2015

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19 Jun 2015 --- Sales of sugar-sweetened soft drinks have declined by 6% in Mexico, following a tax introduced in 2013, early results show.

The UNC Food Research Program at the Carolina Population Center at the University of North Carolina and the Instituto Nacional de Salud Pública have estimated changes in household purchases of beverages over the complete year of 2014, since the one peso per liter excise tax on sugar-sweetened beverages took effect (January 1, 2014).The tax of approximately 10 percent applies to nondairy and non-alcoholic beverages with added sugar.

For many nations which are increasingly concerned about an obesity crisis, caused in part by the over-consumption of sugary soft drinks, a tax on such items seems a viable solution. Campaigners for such taxes will be encouraged by the latest results, which show Mexico to be achieving the desired effect, and hopefully, starting to reduce obesity rates. Similar moves in France and Denmark were abandoned in recent years but this news may prove that, done in the right way, taxes do work to reduce sugar consumption.

The British Soft Drinks Association does not agree. Gavin Partington, BSDA Director General, said of a previous effort to reduce obesity by taxing sugary soft drinks: “This is a poorly thought out political proposal which will hit the poorest hardest while doing nothing to curb obesity, the causes of which are far more complex than this simplistic approach implies.

“In fact evidence from France shows that while sales of soft drinks initially fell after a tax was introduced in 2012, they have increased since, with sales up 6% in the first 4 months of this year.”

Supporters of taxing soft drinks feel that any effort to reduce obesity and change lifestyles is positive. Charlotte Stirling-Reed, a Registered Nutritionist, said: “At the moment we need changes, especially in the current obesogenic environment in which we are living. Asking individuals to make changes themselves is complicated and is unlikely to result in the big change in obesity rates we need. In order to have an impact, we need to changes things at a number of levels, including via education, government legislation, industry practices and to the environment in which we make our food choices. It may be small, but any change is beneficial.”

The Mexican data comes from a commercial panel of consumers that contains information on purchases of beverages from households living in 53 cities with at least 50,000 residents. The model adjusts for the pre-existing downward trend of taxed beverages since 2012 and for macroeconomic variables that can affect purchases. Preliminary results show a 6 percent average decline in purchases of taxed beverages over 2014 compared to pre-tax trends. This difference accelerated over 2014 and the reduction compared to pre-tax trends reached 12% by December 2014. All socioeconomic groups reduced purchases of taxed beverages. Reductions were higher among lower socio-economic households, averaging 9% decline over 2014 compared to pre-tax trends and up to a 17% decline by Dec 2014. Results also show roughly a 4 percent increase in purchases of untaxed beverages over 2014, mainly driven by an increase in purchased bottled plain water (tap water intake is not collected).

These preliminary results show average effects in the population studied. Future research would provide estimations on subgroups (i.e. large consumers of taxed beverages) to assess differential effects.

These results are preliminary and are currently under peer-reviewed publication. The study is funded by Bloomberg Philanthropies and the Robert Wood Johnson Foundation.