Soda Tax in Mexico Causes Serious Sales Dip in Sugary Drinks

One year after Mexico implemented a 10 percent tax on sodas and sugary drinks, the rate of purchases of such products was 12 percent lower than expected. Carlos Jasso / REUTERS

Taxes on soda and other sugary drinks have not generally fared well. Several countries and American cities like Philadelphia and San Francisco have tried and failed, due in large part to lobbying, political contributions and protests by the soda industry. While health experts generally agree that Americans and people in many other countries consume too much sugar, much of it in the form of beverages like soft drinks, there has been little evidence to date proving that taxes on such products are effective in getting people to stop downing sugary drinks.

Obesity, heart disease and diabetes, all linked with a high intake of sugar, are growing problems worldwide.The situation has been particularly bad in the United States, but even worse in Mexico, where 70 percent of adults are overweight or obese, and where diabetes and heart disease are the leading causes of death.

On January 1, 2014, Mexico enacted a 10 percent tax on sugary beverages, one of the first and largest of its kind. A study published January 6 in the BMJ shows that in the year following the tax, the consumption of taxed sodas and sugary drinks was 6 percent lower than expected on average over the course of the year. This percentage increased as the year went on and by December consumers were buying these beverages at a rate 12 percent lower than expected.

The decline in consumption was greatest amongst those who earned the least, and appears to be going up over time as people's habits change, says study co-author Arantxa Colchero, an economist at Mexico's National Institute for Public Health.

Corinna Hawkes, a researcher with the Center for Food Policy at City University London who wasn't involved in the study, was initially skeptical that this tax would reduce consumption in the short-term. But the paper, which is "really the first high-quality study that has looked the the impact of sales tax" on soda, has changed her mind. This paper "shows that taxes moves things in the right direction," Hawkes says.

The study shows that people do change their behavior in the face of such a tax, as has been witnessed with other products like tobacco, which are consumed less and less as taxes go up and up. But these sorts of taxes also help by bringing the issue into the political arena, which leads to high-profile discussions and public education about the dangers of consuming too much sugar, Hawkes says.

Generally speaking, attitudes about sugary beverages have shifted in recent years. They're no longer viewed in the same favorable light as they were decades ago, and people are drinking less in many countries. Over the last two decades, sales of full-calorie soda in the United States have declined by 25 percent, for example.

Frank Chaloupka, an economist at the University of Illinois at Chicago who wasn't involved in the study, says that the tax ought to be applied elsewhere, and would improve health by encouraging a lower consumption of sugar. "I think sugary beverage taxes should be an important part of a comprehensive approach to promoting healthier diets and reducing obesity," he says. "The experiences in Mexico are demonstrating their effectiveness in altering consumer behavior, which will almost certainly eventually show up" as a decline in obesity, he adds.