Background and Current Market Trends
Mexico, the world’s highest per capita soft drink consumer, is projected to see a 3% annual growth in total industry sales until 2027, reaching over $55 billion and 75 billion liters in value and volume, respectively, according to Innova Market Insights.
Despite sugar-free sodas making up only 8% of the total industry, their double-digit growth rate outpaces regular soda’s 92% share. In the past year, regular sodios grew by 3.5%, while light versions declined by 5.3% as consumers migrated to the zero or sugar-free segment, which grew by 17.7%, according to Raquel Jiménez, Customer Success Leader at NielsenIQ (NIQ).
New IEPS Tax and Its Potential Impact
The new Impuesto Especial sobre Producción y Servicios (IEPS) tax, set to take effect in 2026, will affect both sugary and low- or no-calorie beverages. The tax increase of 3.08 pesos per liter for sugary drinks and 1.5 pesos per liter for non-caloric sweeteners may alter consumer purchasing habits.
While sugary drinks have seen a 7.3% price increase in the past year, low- or no-calorie versions have only experienced a 1.8% rise, making price differences crucial for consumers’ budgets.
Historical Impact of IEPS
In 2014, when the IEPS was first implemented, sugary beverage volume dropped by 1.9%, while prices increased by 13.3%. The general inflation was 4% during that time, explained Rodrigo Arroyo, Development of Business Director at Worldpanel by Numerator México.
Consumers opted to maintain their spending on soft drinks while cutting back in other household categories like detergents, cleaning products, and personal care items.
Although the IEPS had a short-term impact in 2014, the industry recovered and continued to grow. However, with the upcoming tax on low- or no-calorie beverages starting in 2026, it will take several years for their market share to surpass the current 8% and reach double-digit figures, according to experts.
Demographics and Consumer Behavior
Nearly 100% of Mexico’s population consumes soft drinks at least once a year, with cities over 50,000 inhabitants having an annual market value exceeding $100 million. In terms of value, 70% of soft drink consumption occurs at home, while 30% happens outside the home due to smaller package sizes.
The light (low-calorie) segment, including sugar-free versions, accounts for 5.7% of total soft drink expenditure, up from 4.3% the previous year, as per Worldpanel by Numerator México data.
Higher socioeconomic levels and individuals over 50, who are more concerned about sugar intake, tend to purchase low-calorie soft drinks. These consumers often have smaller families and fewer family members, including children.
Product Innovation and Health Concerns
Rodrigo Arroyo anticipates increased product innovation post-IEPS implementation, with more personalized and novel formulations. Between 2014 and 2024, the sugar content per 100 ml decreased by 28.5%, from 9.8 to 7.12 grams, due to product reformulations.
This aligns with Mexico’s NOM 086, which defines no-calorie beverages as those with 40 kilocalories or fewer per 200 ml.
Some consumers will likely abandon the sugary beverage category, while others may cut spending on other categories to continue purchasing their preferred low- or no-calorie drinks.
Key Questions and Answers
- What is the current growth rate of sugar-free sodas in Mexico? Sugar-free sodas are growing at a double-digit rate, while regular soda growth is 3.5%.
- How will the new IEPS tax affect sugar-free soda growth? Although sugar-free sodas will continue to grow, it may take several years for their market share to surpass 8% and reach double-digit figures.
- What demographics are more likely to purchase low-calorie soft drinks? Higher socioeconomic levels and individuals over 50, who prioritize sugar intake and often have smaller families.
- What changes in soft drink consumption and pricing have occurred since the 2014 IEPS implementation? Sugary drinks saw a 7.3% price increase in the past year, while low- or no-calorie versions increased by only 1.8%. Volume for sugary drinks decreased by 1.9%, while light versions declined by 5.3%.
- What is the projected annual growth for Mexico’s soft drink industry until 2027? The industry is expected to grow by 3% annually, reaching over $55 billion and 75 billion liters in value and volume, respectively.
