Corn processors aware of possible Mexican soft drink tax

by Jeff Gelski
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DECATUR, ILL., and WESTCHESTER, ILL. — As Mexico deals with an adult obesity prevalence of nearly 33%, legislators in that country are considering a 1 peso per-liter tax on soft drinks proposed by President Enrique Pena Nieto. The potential tax might impact soft drink consumption, which in turn would affect U.S. corn processors that sell sweeteners for use in Mexican soft drinks.

Juan Luciano, executive vice-president and chief operating officer for Decatur-based Archer Daniels Midland Co., was asked about the Mexican situation during an Oct. 29 earnings conference call.

“It’s difficult — first of all, the tax is not a law yet — but it’s difficult to estimate the impact that will have,” Mr. Luciano said. “We don’t know exactly how it’s going to impact one serving items, if that’s going to apply or not, and also, you have to remember that the soda marketing people are very good price managers, and I’m sure they’re going to position price correctly to minimize the impact. There are some estimates over there saying maybe a 5% drop in consumption is a speculation at this point in time.”

For a tailwind, Mr. Luciano mentioned lower corn prices that make ADM products more competitive.

Ilene Gordon, chairman, chief executive officer and president of Westchester-based Ingredion, Inc., addressed the potential Mexican tax in an Oct. 30 earnings conference call.

“Of course it will have an impact in the beverage side of Mexico, but the heightened awareness of some of the issues that that tax is addressing on obesity actually creates a positive environment for some of our starches and specialty starches that are targeted at healthy food products in Mexico,” she said.
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