Despite an increase in organic revenue, rising sales and overall company growth, PepsiCo—which announced a higher quarterly profit Thursday—revealed sales in Mexico were down 3 percent, largely in part to new taxes on junk food.
Mexico’s congress passed a measure last year which instituted a tax on high-calorie foods as well as a levy on sugar sweetened beverages to combat obesity and address health concerns.
According to the Associated Press, the tax in Mexico adds 5 percent to the price of food with more than 275 calories per 100 grams and one peso to the cost of a liter of sweet beverages.
The news agency reported Coca-Cola also experienced a drop in its Mexican beverage sales because of the tax.
The downward trending performance in Mexico is an indicator to why some manufacturers are spending millions to combat similar legislation stateside proposed in San Francisco and nearby Berkeley.
Come November, residents of the two municipalities will vote on whether or not to institute a per-ounce tax on sugar-sweetened drinks.
The American Beverage Association has been vocal regarding any taxes or bans calling them unpopular with voters and hurtful to businesses.