Boston, MA -- (SBWIRE) -- 01/01/2014 -- We are forecasting an acceleration in GDP growth in Mexico in 2014 to 3.5%, driven by an improvement in private consumption and investment in light of the government's ongoing reform drive and stronger US demand. Although the new tax on sugary drinks and the tax hike on junk food will have a negative impact on the food and drink sector in Mexico, we maintain a favourable outlook for the domestic consumer, and declining unemployment and rising disposable income will ensure a robust expansion in the sector over the long term.

Headline Industry Data (local currency)

- 2013 per capita food consumption = +4.4%; forecast 2013 to 2017 = +19.0%
- 2013 alcoholic drink sales = +7.9%; forecast 2013 to 2017 = +33.2%
- 2013 soft drink sales = +5.1%; forecast 2013 to 2017 = +22.7%
- 2013 mass grocery retail sales = +6.9%; forecast 2013 to 2017 = +29.8%

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Key Company Trends

Landmark Tax On High-Calorie Foods: In a landmark decision in autumn 2013, the Mexican government voted to implement an 8% tax on high-calorie foods in a move to combat the country's rising obesity epidemic. Products with at least 275 kilocalories per 100 grams, which include snacks, confectionery and ice cream, will be subject to the tax.

Tax Hike Threatens Soft Drinks Potential: The Mexican government's tax introduced in late 2013 on sugary drinks - an attempt to curb spiralling obesity and diabetes rates - will present significant challenges in one of the world's largest and most profitable soft drinks markets. The tax, part of President Enrique Pena Nieto's tax overhaul, targets all sugar-sweetened drink products (not just sodas) in a country where seven out of 10 adults are overweight or obese and where an estimated 15% of the population has adult-onset diabetes.

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