In the context of a very high prevalence of obesity and diabetes in Mexico, coupled with a high consumption of sugar-sweetened beverages in the country, the Mexican government in January 2014 implemented a one-peso-per-liter excise tax on all nonalcoholic beverages that contain added sugar, including powder, concentrates and ready-to-drink beverages.
Researchers from The University of North Carolina at Chapel Hill’s Gillings School of Global Public Health and Carolina Population Center collaborated with colleagues from Mexico’s National Institute of Public Health (the Instituto Nacional de Salud Pública, or INSP) to estimate changes in beverage prices after the sugar-sweetened beverage (SSB) tax was implemented.
Their study, “Changes in prices after an excise tax to sweetened sugar beverages was implemented in Mexico: Evidence from urban areas,” was funded by Bloomberg Philanthropies and published online December 14 in the journal PLOS ONE.
“While the purpose of Mexico’s tax is to discourage consumption of unhealthy beverages, it is important first to determine whether the tax implementation was successful before making conclusions about whether the tax affects consumption and health,” said Dr. Shu Wen Ng, associate professor of nutrition at the UNC Gillings School and study co-author. “Our measure for whether the tax implementation ‘worked’ is to determine whether and to what extent prices of sugar-sweetened beverages rose by the tax amount.”
The authors used publicly available monthly price data from January 2011 to December 2014, which had been collected in 46 cities by the National Institute of Statistics and Geography (INEGI) to estimate the Consumer Price Index for the country.
Study results show that the average price for sugar-sweetened beverages overall increased by one peso per liter, the amount of the tax. However, differences were seen in the application of the tax to carbonated versus noncarbonated beverages. The price of carbonated beverages (soft drinks) increased more than the amount of the tax (more than one peso per liter), while the full tax was not implemented consistently for noncarbonated beverages. The analysis adjusts for previous trends in prices beginning in 2011 and for time-variant factors that could be associated with changes in prices.
“Manufacturers of carbonated beverages also manufacture noncarbonated beverages of various package sizes, as well as non-taxed beverages,” Dr. Ng said. “As the tax is levied on manufacturers, it is important to consider the fact that manufacturers can cost-shift in a variety of ways. They also may determine that certain consumers might be less willing to pay more for some beverage products. Therefore, in our study, we also look at how prices may have changed by beverage types, package sizes and geography.”
The study showed that changes in prices were larger for the smaller package sizes and that price increases varied by region, with lower price increases observed in the poorest area of the country, the southern region. Meanwhile, in general, the prices of untaxed beverages (e.g., bottled plain water, plain milks) did not change after the SSB tax was implemented.
As follow-up to this paper, the authors also have investigated how these price changes may affect beverage purchases among Mexican households in urban areas. They expect to publish the second paper soon.
Co-authors from Mexico’s INSP are Dr. Arantxa Colchero, researcher at INSP’s Center for Research in Evaluation and Surveys, who is first and corresponding author of the study, and Dr. Juan Rivera, director of INSP’s Center for Nutrition and Health Research.