Soft drinks are so deeply embedded in the Mexican culture and diet that they have become part of the dining tradition, from the taco stand to the white-linen restaurant. Whether lunch consists of corn tortillas and beans, or meat in sauces infused with cacao and fragrant spices of Aztec origin, it usually goes with something fizzy. Soft drinks, and especially cola beverages, have become an integral part of Mexican life, even intersecting with politics and religion in certain regions.
Coca-Cola had been in Mexico for decades before it started booming in popularity. Coca-Cola rose to popularity in Mexico starting in the 1960s with the help of Vicente Fox, the former president of Mexico, who started his career as a delivery driver for the company. In the early 1970s, an international ad campaign for the drink swept across Mexico. Around the same time, Coca-Cola sponsored the Mexico City Olympics and the World Cup.
Currently, Coca-Cola has almost a cult like following in the country. There are some places where it’s used in religious ceremonies, like at the „Coca-Cola Church“ in the state of Chiapas. It’s really the St. John’s Church, but that’s not what most people call it. A few decades ago, the religious leaders replaced a traditional alcohol with Coke. They use it for a variety of things like decoration and healing, and they drink it in ceremonies.
There is no doubt that Coca-Cola is among the favorite soft drinks in Latin America. However, its success goes beyond the subcontinent’s borders. The North American market highly values the variety produced in Mexico. Fifteen years ago, the glass-bottled and Spanish-labeled Mexican Coca-Cola entered the southwestern United States’ market, with Mexican consumers as its top buyers. The Mexican Coke has become so popular that consumers today pay twice as much for a bottle in cities such as Los Angeles and New York.
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PepsiCo has been present in Mexico for the last 112 years. Grupo Gepp SAPI de CV is PepsiCo’s exclusive Mexico bottler. It produces and distributes company’s international brands Pepsi, 7 Up, Lipton, Gatorade, as well as partner products including Jumex Fresh and Jarritos.
The Company offers both carbonated and non-carbonated drinks, as well as purified water. Grupo Gepp operates in the Central and West Central Mexico and much of the Southeast Mexican Country.
In 2019, PepsiCo announced plans to expand its presence in Mexico with a $4 billion investment. This investment involved construction of a production plant in Guanajuato, its first new Mexican facility in two decades.
“Mexico is our largest operation in Latin America and our second largest worldwide,” Ramon Laguarta, CEO of PepsiCo, had commented on the occasion of announcement of these investments. “It is an honor for us to have a positive impact at all levels of the country’s economy, from the countryside to the corner stores in each location.”
The Mexican government approved a sugar tax of 1 peso per liter (roughly 5 US cents) in 2014. The tax on soft drinks is part of a campaign to reduce obesity and diabetes, both of which are serious health issues in Mexico, which has the world’s highest rate of obesity.
After the tax was implemented in January 2014, beverage sales volumes declined for two quarters for coke and one quarter in Pepsi’s case. Years 2015 and 2016, too, witnessed a decline in volumes, but in later years volume started to pick up again. The tax was raised to 1.17 pesos per liter in 2018. Various studies have concluded that the tax has diminished soft drinks consumption in the country by 7.5 %.
Soft drink producers have indeed committed to reducing the calorie content of the drinks they make and sell in Mexico by another 20 % by the year 2024. According to a statement from ANPRAC, “Soft drinks made at the 120 bottling plants we represent will have one-fifth fewer calories by 2024.”
The association noted that its members, among whom are Coca-Cola Femsa, Coke-bottler Arca Continental and Grupo Penafiel, have already reduced calories in their beverages by 55 % over the past 10 years, meaning that some products on shelves in 2024 will have 75 % fewer calories than they originally had.
Future prospects of soft drinks in Mexico
All in all, soft drinks in Mexico are expected to record steady volume growth over the next few years with important new products attracting consumers in an environment where healthier ingredients are becoming a priority. Leading soft drinks companies are set to use more natural sweeteners, which reduce the calorie content while maintaining the flavor.
Want to discover the latest beverage market trends and discuss them with other industry professionals? Then visit us at the next drinktec, which will be held from September 12 to 16, 2022 in Munich.
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Photo: Geraud pfeiffer
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