Introduction
As anticipated, the prices of cigarettes and soft drinks experienced a historic increase in the first two weeks of January due to the rise in the Impuesto Especial sobre Producción y Servicios (IEPS) approved by legislators for this year.
Cigarette Price Surge
The cigarette prices increased by 12.22% in the first half of January, marking the largest increase ever recorded since data collection began in 1995. This adjustment stems from legislators’ approval of raising the IEPS rate on cigarettes, pipes, and other manufactured tobacco from 160% to 200%. Additionally, the additional quota charge for each cigarette sold or imported has been updated from 0.6445 pesos in 2025 to 0.8516 pesos for 2026.
For instance, the price of a pack of 20 Marlboro cigarettes, Mexico’s best-selling brand, rose from 87 to 106 pesos – a more than 20% increase since January 1st.
The IEPS adjustment aims to decrease tobacco consumption, thereby reducing tobacco-related diseases and lowering the expenses associated with treating them as demand for the product declines. According to the Centro de Investigación Económica y Presupuestaria (CIEP) simulator, the sale of cigarettes is projected to drop by 7.3% with these changes, from 2,384.6 million packs in 2025 to 2,209.4 million packs in 2026. Consequently, the price per pack would increase from 73.1 to 85.8 pesos, a 17.4% rise. Currently, 73.1% of the pack’s value is attributed to taxes, including IEPS and the Value Added Tax (VAT).
Soft Drink Price Hike
The prices of soft drinks also increased by 3.97% on a weekly basis, the most significant rise for a comparable period since 2014 – over twelve years ago. This surge is attributed to IEPS adjustments.
Regarding flavored beverages, such as soft drinks and industrial juices, legislators approved raising the so-called “healthy tax” from 1.6451 pesos per liter in 2025 to 3.0818 pesos for 2026. Furthermore, beverages with natural or artificial sweeteners – including light, zero, or diet versions – will now be subject to an IEPS of 1.50 pesos per liter for the first time.
In response to these changes, brands like Coca-Cola have applied substantial price increases (up to 20%) to their products since late December. Retailers remain uncertain about potential further adjustments in January or upcoming months.
“Some of the pressures come from the 2026 Economic Package, due to the IEPS increase on sugary beverages,” Banco Base noted. “This is evident in the food commodities’ inflation, which exceeded 6% annually during the first half of January.”
Key Questions and Answers
- What is the IEPS? The Impuesto Especial sobre Producción y Servicios (IEPS) is a tax levied on the production and importation of various goods, including tobacco products and soft drinks.
- Why were cigarette and soft drink prices increased? The price hikes resulted from legislators’ approval of raising the IEPS rate on cigarettes and soft drinks to reduce consumption and associated healthcare costs.
- How much have cigarette prices increased? Cigarette prices rose by 12.22% in the first half of January, with a pack of Marlboro cigarettes increasing from 87 to 106 pesos.
- What is the projected impact on cigarette sales? The CIEP simulator predicts a 7.3% decrease in cigarette sales, from 2,384.6 million packs in 2025 to 2,209.4 million packs in 2026.
- How have soft drink prices changed? Soft drink prices increased by 3.97% weekly, with flavored beverages facing a “healthy tax” rise from 1.6451 pesos per liter in 2025 to 3.0818 pesos for 2026.
- What are the implications of these price adjustments? These changes aim to decrease tobacco consumption and associated healthcare expenses while generating additional government revenue.
