Mexico's junk food taxes hitting Pepsi, Coke

Click here to read the AP article by CANDICE CHOI.

In a couple of my micro sections we recently read a chapter from The Economics of Public Issues on obesity. Some people think that taxing sugary drinks and snacks will help reduce the problem. Here are excerpts from the article linked above:

"PepsiCo reported a higher quarterly profit Thursday as global sales rose, but one weak spot was Mexico. The company said snacks sales volume declined by 3 percent, hurt by a new tax on junk foods.

Recent declines suffered by Pepsi and Coke in Mexico underscore why the beverage industry is fighting tax proposals on sugary drinks in in San Francisco and nearby Berkeley.

PepsiCo — which makes Frito-Lay chips, Gatorade and Tropicana — reported similar declines in its snacks business for the first half of the year, starting when the tax went into effect.

Coca-Cola, which reports its third quarter results Oct. 21, has also reported beverage volume declines in Mexico for the first half of the year, citing a similar tax on drinks. Mexico has the world's highest per capita consumption of Coca-Cola drinks."

"The taxes in Mexico add one peso, about 7 cents, to the cost of a liter of sugary drinks, and 5 percent of the price to foods with 275 calories or more per 100 grams."

See a post from last year Will A Tax On Junk Food Help Mexico Fight Obesity? Both Mexico and the U. S. have very high obesity rates.