Coca-Cola FEMSA Raises Mexican Soda Prices Up to 5 Pesos After IEPS Hike

Business: Mexico City

Coca-Cola FEMSA is lifting soda prices in Mexico by as much as 5 pesos (about US$0.26) per unit, passing on a higher IEPS excise tax on sugary drinks to consumers.

A Price Increase of Up to 5 Pesos

Coca-Cola FEMSA is raising prices on its soft drinks in Mexico by up to 5 pesos (about US$0.26) per unit, according to the company’s pricing plans.

The size of the increase varies by product and format, but it applies to some of the most widely sold beverages in the country.

Passing On the IEPS

The main driver is a higher IEPS, the Impuesto Especial sobre Producción y Servicios, Mexico’s excise tax that applies to sugary drinks among other goods.

When the levy on sweetened beverages rises, bottlers typically pass at least part of the cost to consumers through higher shelf prices.

Who Coca-Cola FEMSA Is

Coca-Cola FEMSA is the largest franchise bottler of Coca-Cola products by volume and a dominant force in Mexico’s beverage market.

Its pricing decisions therefore ripple across a large share of the country’s soft-drink sales.

The Impact on Consumers

For shoppers, the change means paying more for a staple purchase, at a time when household budgets remain sensitive to price moves.

How much demand softens will depend on the final increase per product and on competition across brands and formats.

Tax as Health Policy

Mexico’s tax on sugary drinks is designed to do two things at once: raise public revenue and discourage consumption of sweetened beverages linked to obesity and diabetes.

Higher prices are part of the mechanism through which the policy is intended to work, even as they add to consumer costs.

Sources: Coca-Cola FEMSA, Secretaría de Hacienda (SHCP), Reuters.

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