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Companies face junk-food taxes in Mexico

  • Major international food and beverage companies are concerned about Mexico's plans to impose taxes on junk food and sugary drinks.
  • Last week, Mexico's lower house of Congress authorized a 5% levy on high-calorie packaged food such as peanut butter. The chamber has also passed legislation to tax sugary drinks at 1 peso (8 U.S. cents) per liter.
  • The taxes could pose a big challenge to the food companies, especially if Mexico is successful in its aim of changing diets in the country - where 7/10 adults and 1/3 children are overweight or obese - and is copied by other nations.
  • Companies that are set to be affected include Coca-Cola (KO), Kellogg (K), PepsiCo (PEP), Mondelez (MDLZ) and Nestle (NSRGY.PK).
  • ETFs: XLP, VDC, FXG, IYK, PSL, RHS, PSCC, UGE, SZK
Comments (10)
  • BlueOkie
    , contributor
    Comments (6491) | Send Message
     
    I was raised on peanut butter and Jelly. It will hurt the poor. Doubt if it will make anyone eat healthier as those foods are more expensive. Sure isn't going to help my PEP stock
    20 Oct 2013, 08:58 AM Reply Like
  • kolizacr@yahoo.com
    , contributor
    Comments (217) | Send Message
     
    And what exactly do average mexicans eat and drink?
    Are tacos healthy? Are burritos good for you?
    As for drinks, they take the most sour of the fruits and add lots of sugrar and water to it - that is the custom all over Latin America.
    When you are rich, you can afford all the healthy, organic fad. But for the rest, we eat to enjoy ourselves or simply survive.
    20 Oct 2013, 11:14 AM Reply Like
  • sarichter
    , contributor
    Comments (438) | Send Message
     
    Since when are vegetables and fruit for the rich? Give me a break... this argument has absolutely no validity. Sure, the prepackaged food that is 'healthy' and 'organic' can be expensive. However, fruits and vegetables are not expensive. Try cooking every night instead of buying Taco Bell.

     

    Cooking at home is cheaper every time.
    20 Oct 2013, 01:46 PM Reply Like
  • tijoe24
    , contributor
    Comment (1) | Send Message
     
    Good on you Mexico for admitting you have a problem.
    20 Oct 2013, 11:32 AM Reply Like
  • Hendershott
    , contributor
    Comments (1609) | Send Message
     
    Yes, tacos and burritos are good for you. Soda and candy are not.
    20 Oct 2013, 12:36 PM Reply Like
  • BAHAMAS1
    , contributor
    Comments (2526) | Send Message
     
    They're talking the basis for another Mexican Revolution.

     

    Mexicans are not like Americans.
    They won't take this laying down.
    Mexicans will show their passion.
    20 Oct 2013, 01:01 PM Reply Like
  • richjoy403
    , contributor
    Comments (10461) | Send Message
     
    The obesity problem is not confined to Mexico.

     

    Behavior modification through taxation has been tried before...for example, the U.S. Congress has used taxes (including on cigarettes and alcohol); they've also allowed tax credits for purchase of hybrid electric cars, mortgage deduction to support home ownership, charitable deductions, etc. Success is mixed, and it may take a long time to show progress-- is the current 4% annual decline in cigarette consumption the result of taxation, cultural change, or other causes?

     

    This probably won't work in Mexico (for several reasons, including the tax may not be great enough)...but if it did work, it would be also applied to the U.S. and other countries.

     

    Also if it shows signs of workimg, look for all kinds of special interest groups to support more attempts at behavior modification via tax policy.
    20 Oct 2013, 04:39 PM Reply Like
  • SoldHigh
    , contributor
    Comments (1013) | Send Message
     
    Did Mother Bloomberg have a talk with Mexico govt?
    20 Oct 2013, 10:03 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    that sounds great, go short PEP.

     

    This may affect the poor in the short-term but health costs and general well-being is positive in the long-term.

     

    I spoke to a 50 year old in Shanghai and despite being a smoker, looks much younger, but he revealed to me that he has gout and arthritis! Rich country illness.

     

    If I stuck to the USA diet I would have diabetes, high blood pressure, stroke, etc. ...

     

    People hate my garlic over dosing!!
    20 Oct 2013, 11:23 PM Reply Like
  • Phr3d
    , contributor
    Comments (291) | Send Message
     
    This is such a great idea, I fully expect the U.S. guv'm't to adopt it before the year is out. As mentioned above, taxation to 'modify behavior' has been tried before, and has served to support the universally popular obamacare, among other things.

     

    Sodie-pop is used by Everyone, and the cost of delivered product vs cost of production (on the order of 75% profit pre-ad-expense, can you say tobacco?) is already extreme but America can't buy enough This will be an Endless Gold Mine mimicking -if not exceeding- tobacco, for our fiscally conservative republocrats that struggle so to make ends meet in this crappy economy.

     

    By March 2014, expect states to follow suit to address the obesity problems that crush their Medicaid budgets in their cities, adding another 1¢ to every 5¢ the fed imposes, and the consumers -rich AND poor- will eat that cost happily. Cost of living rises by the amount of the tax, but the guv'm't can ignore that impact upon their citizenry - all citizens hafta' do is QUIT, and be healthier, goshdurnit!

     

    By golly, if Other Socialist States can do it, why in the world shouldn't we? Look how Mexico's economy is thriving by taxing the flaming bejeezus out of everything imaginable. Since we cannot pass income-based taxation, let's declare any food not already protected and supported by taxation and Guv'm't Departments as unhealthy.. the House of RepreSenators should be able to midnight-pass this without announcement Or troublesome discussion right before the holiday break -effective immediately- so as to gather much needed social-security-expense offsetting funds over the holidays.

     

    Just think of all the unhealthy lifestyles that will improve..

     

    I am SO Phargn out o' this CONUS come retirement..
    <end rant>
    21 Oct 2013, 01:39 AM Reply Like
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