Is This the End of Mexican Coke?

Moneybox
A blog about business and economics.
Nov. 4 2013 4:17 PM

Is This the End of Mexican Coke?

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A Mexican miner carries a snack and Cokes on the job.

Photo by YURI CORTEZ/AFP/Getty Images

Last week, the Mexican government took aim at the country’s growing national obesity epidemic by passing a law that hiked taxes on the country’s junk food industry. As part of the Bloomberg-like plan, the country levied a one peso-per-liter tax on sugary drinks. Mexicans are the world’s biggest soda drinkers, consuming on average almost two 8-ounce servings of the stuff per day.

The country’s soda trade group, the National Soft Drink Producers Association, has issued dire warnings that the tax would eliminate 20,000 jobs and shares in the country’s biggest bottlers have taken a hit. Coca-cola controls 75% of the Mexican drinks market, making it the biggest player with the most to lose, Reuters reports. Facing potential losses, the Mexican soda industry says it not only will have to change the way it does business, it is even considering tinkering with the product, Quartz reports.

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).
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.

The change in Coke’s special sauce in Mexico may not seem like a big deal to your run-of-the-mill American Coke drinker, but to aficionados, the move away from sugar cane would be a huge loss. Mexican Coke, unlike its American counterpart, uses actual sugar in its local brew, instead of high fructose corn syrup. Bottles of the Mexican version first came across the border to the U.S. in 2005 to cater to Mexican immigrants. Since then it’s commanded a loyal, sometimes cult-like, American following that’s gone mainstream, even lining the aisles of Costco.

Elliot Hannon is a writer in Washington, D.C. Follow him on Twitter.

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