New Soft Drink Tax May Take Away Your Mexican Coke Matt Phillips and Roberto A. Ferdman - Quartz
go to original November 5, 2013

A heavy tax burden could lead bottlers to take the cane sugar out of Mexican Coke. (Reuters/Romeo Ranoco)

Associated Press Update: Arca Continental, the Mexican bottler, stressed in a statement that it has no plans to change the sweetener for the Coke bottles it exports. Those will continue to use 100 percent cane sugar, it said. The company's CEO said last week that the bottler could consider using more fructose, but that was only for drinks distributed in Mexico.

Mexico’s new soft drink tax could push the nation’s Coca-Cola makers away from the cane sugar that’s made “Mexicoke” a cult hit in the U.S.

Executives from the second-largest bottler of Coca-Cola in Latin America suggested that a shift away from cane sugar might be in the cards as a result of the steep sales tax on soda Mexico’s congress approved on Thursday (Oct. 31). American Coke enthusiasts claim the Mexican version tastes better than what they get in the US, which some say is because Mexican Coca-Cola is made with cane sugar rather than high-fructose corn syrup.

On an earnings call with analysts last week, the head of Arca Continental SAB said that the Mexico-based Coca-Cola bottler could “move to more fructose,” which is cheaper than cane sugar. Arca Continental’s Francisco Garza added “that’s a very important part of the savings that we are foreseeing now.” The independent bottlers who distribute Coke in local markets use the same recipe but have some latitude from Coca-Cola to tinker with the sweetening ingredients. (Arca Continental hasn’t yet responded to a request for further comment.)

Mexico’s new soda levy will tack on an extra peso ($.08) per liter to all soft drink sales in the country. The move is part of a growing campaign to address what has become an obesity epidemic - over 70% of Mexico’s population is now overweight. And the hope is that it will help curb the country’s unmatched affinity for soda. On a per capita basis, Mexicans drink more Coca-Cola products than residents of any other country in the world.

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