Does Mexico's fate rest on 'cola tax'?

Posted by Tim Johnson on October 24, 2013 

Mexican television ad urges viewers to consume fewer soft drinks.


A proposal to slap an additional tax on sugary drinks in Mexico has unleashed a furious media war. Ads fill the newspapers and the airwaves. Some are so alarming – even shrill – that you’d be forgiven for thinking the fate of Mexico rested on the matter.

President Enrique Pena Nieto unleashed the debate last month with a proposal to slap a one peso per liter tax on sugary drinks.

The economic and public health stakes are high. Coca Cola alone stands to lose $1 billion a year in Mexico from reduced sales of its beverages, its executives say. That’s because consumption is huge. The average Mexican household spends $173 a year on soft drinks, this survey finds, among the highest levels in the world.

The TV spots on the issue strike hard. Check out the gruesome images at the end of the 30-second advertisement above. This morning’s El Universal newspaper has three full-page ads on the issue and another half-page ad. If nothing else, the sugary drink tax has been a boon to Mexico’s Madison Avenue and to the media.

The sugar cane industry and soft drink bottlers hit on the angle of jobs. The bottlers say 10,000 people will lose their jobs in the short term, and another 20,000 people will go unemployed in the medium term (link in Spanish).

A group calling itself Alliance for the Protection of Jobs has all of page five in this morning’s El Universal: “Our small shops depend on income generated by the sale of drinks, among other products. In fact, soft drinks, juices, sports beverages and teas represent between 30 and 40% of the sales of more than 900,000 small shops in the country.”

Some five million Mexicans “will be put at risk” by the tax, the ad says.

The next full-page ad on page 13 is from the Alliance for Nutritional Health, whatever that is. It shows a big drawing of a mosquito carrying a briefcase depicting one of the lobbyists swarming Congress to fight the tax.

“The obesity epidemic is transmitted by lobbyists for the soft drink bottlers,” it says. “Senator: Will you be bitten?” It adds that 500,000 Mexicans died from diabetes in the past six years. “When will we act?”

The last full page ad is on page 14. It has very little type and doesn’t make clear who bought the ad. It shows a smiling family: “Senators: Favoring health care will always be the right decision. Mexicans trust that you will be on our side.”

I can’t help but wonder if any of New York City Mayor and billionaire Michael Bloomberg’s money helped pay for that ad. Hard to tell.

The half page ad is less emotional. “With this new tax,” it says, “it is estimated that consumption of soft and sugary drinks will fall 20 percent in our country. This measure will affect to the same degree our productivity (and) will halt investment and bring about payroll reductions.”

In a country with rampant organized crime and widespread governmental corruption, such debate seems, perhaps, to be a luxury. But the “media war” over the tax also lays bare the power of those who might see their interests affected.

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