Mexico's sugar tax leads to fall in consumption for second year running

Sarah Boseley Health editor
February 23, 2017
The Guardian

Health experts are watching the progress of the tax to see if it will lower the rates of obesity-related diseases and type 2 diabetes

Mexico’s sugar tax appears to be having a significant impact for the second year running in changing the habits of a nation famous for its love of Coca-Cola, and will encourage countries troubled by obesity and contemplating a tax of their own.

An analysis of sugary-drink purchases, carried out by academics in Mexico and the United States, has found that the 5.5% drop in the first year after the tax was introduced was followed by a 9.7% decline in the second year, averaging 7.6% over the two-year period.

Mexico has high rates of obesity – more than 70% of the population is overweight or obese – and sugar consumption. More than 70% of the added sugar in the diet comes from sugar-sweetened drinks. Coca-Cola is particularly popular and holds a place in the national culture, while former president Vicente Fox was the regional head of the company.

Health experts worldwide have been watching the progress of the Mexican tax closely because it could potentially lower the rates of obesity-related diseases and type 2 diabetes in a country with a population of more than 122 million.

The scientists cannot yet calculate the effect on health. But they write in the journal Health Affairs: “These reductions in consumption could have positive impacts on health outcomes and reductions in healthcare expenses in Mexico.”

The Mexican tax, if successful, may pave the way for taxes in other countries. “At the global level, findings on the sustained impact over two years of taxes on the beverages in Mexico may encourage other countries to use fiscal policies to reduce the consumption of unhealthy beverages … to reduce the burden of chronic diseases,” they say. 

The study has been carried out by the University of North Carolina at Chapel Hill’s Gillings School of Global Public Health and the Mexican Instituto Nacional de Salud Pública (National Institute of Public Health). They found that the tax, which is just 1 peso (4p) per litre of sugary drink, had its biggest impact on the poorest households, where the decline in purchases was 18.8ml per person per day in 2014 and 29.3ml in 2015.

Purchases of other untaxed drinks went up on average by 2% over the two years, although the second year showed a decline. There is evidence from other data, however, of an increase in the production of still bottled water two years after the tax began, which the authors say may suggest some consumers are turning to water instead.

“Overall the results from our study contradict industry reports of a decline in the effect of the tax after the first year of its implementation. We found a greater reduction in purchases of sugar-sweetened beverages in 2015 than in 2014. Moreover, both the absolute and relative reductions were highest among households at lower socioeconomic levels,” said the paper.

Barry Popkin, distinguished professor in the department of nutrition at Gillings and one of the authors, looked forward to collecting data on the health impact. “It will be important for us to continue to monitor this tax and see how this actually will affect overall diets, diabetes prevalence and other biological markers of the many noncommunicable diseases linked with excessive sugary beverage consumption,” he said.

Adam Briggs, of the Nuffield department of population health at Oxford University, said the results of the study were “really encouraging, particularly from a UK perspective where the sugar-sweetened beverages levy is due to be introduced in just 12 months’ time.

“These are very important data for policymakers considering implementing soft drink taxes and it will be fascinating to see how sales continue over time … measuring independent health outcomes of such isolated policies is really challenging but, as the authors say, these reductions in consumption would likely have important population-level health benefits in terms of diabetes and obesity-related diseases.”

The UK planned levy is different to the Mexican tax in its design and structure, he said. “However, the principle that price change leads to sustained behaviour change remains important.”

Gavin Partington, director general of the British Soft Drinks Association, said: “Given their fervent belief in the principle of taxing soft drinks we should at least be encouraged that the authors accept causality cannot be established in terms of the impact of the tax in Mexico and the claimed falls in consumption. Nevertheless, while it seems obvious that price can have an impact on sales levels, it is far from clear that the tax on soft drinks in Mexico has had any impact on levels on obesity.” 

A new report from Euromonitor International said that 19 countries had so far introduced what it called “sin taxes” on food and drinks and more would do so in the near future, with the aim of reducing sugar consumption by 20% in line with guidance from the World Health Organisation. 

Euromonitor suggested the Mexican tax may be too low to have the desired effect and that the higher tax of 33 US cents per litre introduced in Berkeley, California, has been a bigger success. Berkeley “is said to have reduced SSB [sugar-sweetened beverage] consumption by 21% and increased water consumption by 63%. In comparison, other cities in the US reported a 4% increase in SSB consumption, and only 19% increase in water consumption in that time,” said the report.

It pointed to countries that might want to introduce “sin taxes” in the near future. “According to the NHS in the UK, consumers should not exceed more than 70g of fat and have no more than 90g of total sugar a day. Euromonitor’s Passport Nutrition data shows that 37 of the 54 (69%) researched countries exceed the fat intake recommendation, and 38 (70%) exceed the sugar recommendation. The top three sugar consumers are Chile, the Netherlands and Belgium, while the top three fat consumers are Germany, Sweden and Austria,” it said.