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Mexico fights obesity with soda and snack tax Print

(Reuters) - Shares of Mexico's biggest bottling company fell as Congress approved a 1 peso-per-liter tax on sugary drinks and an 8 percent tax on junk food as part of a wider tax overhaul.

The plan, which was passed by lawmakers after markets closed, aims to curb rising obesity levels as well as lift Mexico's poor tax take.

Shares of Mexico-based Coca-Cola Femsa, Coke's largest bottler in Latin America, closed down 1.28 percent at 159.02 pesos.

Mexico, where obesity rates are now higher than in the United States, will be the first major soda market to tax high-calorie sodas, following a handful of other Latin American and European countries.

Mexicans are the world's biggest soda drinkers, guzzling about 707 8-ounce (0.24 liter) servings, on average, per year, according to U.S. newsletter Beverage Digest. The United States is the only other country in the same ballpark, clocking in at 701 servings.

Coke Femsa executives said on a call last week that they would pass on the tax by raising prices broadly between 12 and 15 percent.

"We think the industry will do the same thing because it's a heavy tax," Chief Financial Officer Hector Trevino told analysts on a call.

"Our operators are already looking at some of the strategies that we'll follow for next year and that includes doing a full reconfiguration of our whole portfolio, even doing some downsizing," Trevino added.
 
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