Background on Arca Continental and its Relevance
Arca Continental, a leading bottler of Coca-Cola products in Mexico, plays a significant role in the beverage industry. As one of the primary Coca-Cola bottlers, Arca Continental’s decisions directly impact consumers and the market. The company’s recent announcement regarding potential price adjustments due to a new beverage tax in Mexico highlights its importance and influence.
New Beverage Tax and Price Projections
Arca Continental anticipates an 8-10% increase in the prices of its beverages by 2026, excluding inflation, should the new impuesto a los refrescos (IEPS) be implemented in Mexico. The company’s CEO, Arturo Gutiérrez Hernández, explained that they would need to pass on the impact of this new tax through price adjustments to maintain profitability and market competitiveness.
Gutiérrez Hernández acknowledged the expected negative impact on sales volumes but noted that it’s challenging to estimate the magnitude, as consumer reactions to price increases remain uncertain. He referenced a similar situation when the IEPS was introduced in 2014, resulting in approximately 12% price hikes and a 3% drop in sales volume, which gradually recovered by year-end.
Mitigating the Impact and Commitment to Healthier Options
Despite the anticipated challenges, Arca Continental aims to mitigate some of the impacts through its strengthened capabilities in revenue management (RGM) and its solid partnership with The Coca-Cola Company. Gutiérrez Hernández emphasized their commitment to being part of the solution, highlighting their constructive dialogue with the Mexican government and stakeholders.
As part of their commitments, Arca Continental plans to more proactively promote low-calorie beverage options, including a smaller, more affordable version of Coca-Cola Zero. This category will be central to their advertising and promotional campaigns during the 2026 FIFA World Cup.
Mexico’s High Consumption of Sugary Beverages and Health Concerns
Mexico is the world’s leading consumer of carbonated drinks, with an average annual consumption of 166 liters per person. This high intake has contributed to seven out of ten children and adolescents consuming sugary beverages daily, leading to four out of ten experiencing overweight or obesity issues.
Public health concerns have linked excessive sugary beverage consumption to one in three new diabetes mellitus cases and one in seven new cardiovascular disease cases in Mexico. These alarming statistics underscore the importance of Arca Continental’s efforts to offer healthier beverage options.
Key Questions and Answers
- What is the new tax Arca Continental is referring to? The new tax is the impuesto especial sobre producción y servicios (IEPS), which will increase the price of sugary beverages in Mexico starting in 2026.
- How much price increase does Arca Continental expect? The company anticipates an 8-10% price hike on its beverages, excluding inflation, should the new IEPS be implemented.
- What measures is Arca Continental taking to address health concerns? Arca Continental plans to more actively promote low-calorie beverage options, including a smaller, more affordable version of Coca-Cola Zero.
- How will the new tax affect sales volumes? While Arca Continental expects a negative impact on sales volumes, the exact magnitude remains uncertain due to unpredictable consumer reactions to price increases.
- What is Mexico’s current situation regarding sugary beverage consumption and health? Mexico has one of the highest per capita carbonated drink consumption rates globally. This high intake, especially among children and adolescents, has been linked to rising obesity and diabetes rates in the country.
