Mexico’s lower house of Congress is looking to add higher taxes on junk food through a bill that was passed last week.
The bill, which would add a 5% excise tax to junk food, comes at the same time as another tax that would increase the price of sugary soft drinks by 8 cents a liter. The junk-food taxes are part of an effort to lower obesity in Mexico, which is the most overweight country in the Organisation for Economic Co-operation and Development. These junk-food taxes will present a challenge to big brands such as: Coca-Cola (KO), Kellogg (K), Nestle (NSRGY), PepsiCo (PEP) and Mondelez International (MDLZ). Mexico is is the world’s ninth largest market for processed foods. Latin America is Coca-Cola’s second most profitable market and Mexico is the largest per capita consumer of the company. Mexico cntributed to 6% of PepsiCo’s revenue last year and was the company’s third-largest market by revenue. Mondelez, which makes snacks like Oreos and Cadbury chocolates, sees 15.8% of it sales go to Latin America, reports The Wall Street Journal.
32.8% of Mexican adults are overweight as compared to 31.8% of adults in the United States. Obesity-related diabetes is now the leading cause of death in Mexico.