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News Article

Is Junk Food Consumption in Mexico Coming to an End?

By Andrea Villar | Tue, 08/25/2020 - 14:42

The first to set the example was Oaxaca. On Aug. 5 and after a year-long discussion, the state congress approved to prohibit the distribution, sale, gift and supply of sugary drinks and junk foods to minors. Days later, the state of Tabasco became the second state to do so. The next one could be Mexico City, which is already analyzing this initiative. But what consequences could this have for the processed food industry?

According to estimates by the National Association of Small Merchants (ANPEC), if similar initiatives are approved in more states, a drop of up to 50 percent in sales at 1.2 million stores is expected. This means a daily loss of MX$1,736.65 (US$79) per store since 25 percent of their income comes from soda sales, 15 percent from snacks and sweets and 10 percent from related impulse purchases.

In 2019, members of the National Association of Wholesale Grocers (ANAM) achieved sales of over MX$199 billion (US$9.04 million). Their main products were from the Nestle Group portfolio with 8.5 percent of its total income, PepsiCo Group with 5.4 percent and Jumex with 1.4 percent.

"(This measure) affects mainly small businessmen, miscellaneous stores, groceries and sugarcane producers. It affects the entire value chain that today represents 15 percent of the GDP that comes from processed foods, with the sole aim to blame someone for the deaths due to the pandemic,” said Carlos Salazar Lomelín, president of the Business Coordinating Council (CCE) in a statement. The fines for those who violate these new restrictions range from MX$8,000 to MX$130,000 (US$363 to US$5,908).

This new prohibition adds to the new labeling on processed products. Starting this month, the new front labeling for industrialized foods and beverages began popping in at supermarket shelves, in cans and plastic wraps with captions indicating excess of sodium, sugars and saturated fat. According to UNICEF, in Mexico, one in 20 children under the age of five is overweight or obese, which increases the risk of suffering from serious chronic diseases, which in turn would lead to premature death.

For an in-depth approach to the initiative and the changes to NOM-051, Mexico Business News (MBN) approached Hogan Lovells Life Sciences expert Ernesto Algaba. According to him, adequations to labeling were necessary but these must be well-thought, ensuring that they meet their goal without generating extra costs or problems for the industry.

Andrea Villar Andrea Villar Journalist and Industry Analyst