Article: Mexico states poised to adopt more laws banning sales of junk food and soda to minors

A wave of public health reforms is sweeping through Mexico, as two of the country's states - Oaxaca and Tabasco - have now passed measures to prohibit the sale of sugary drinks and high-carbohydrate snacks to children.

And it will not stop there, says Ernesto Algaba Reyes who leads the Life Sciences practice at the Hogan and Lovells law firm in Mexico City.

In at least five other jurisdictions in Mexico - the states of Chihuahua, Sinaloa, Hidalgo, Zacatecas and Mexico City - lawmakers have presented proposals within the last two weeks to ban or restrict the sale of high-sugar soft drinks and high-carbohydrate snacks to children under 18.

In addition, similar bans are being discussed in another nine of Mexico's 31 states, including in the state of Mexico - the country's most populous and most densely populated state.

According to Reyes, a proposed federal measure seeking to prohibit advertising of foods with high-calorie content foods to children is also under discussion and has a good chance of moving forward soon.

"That is still a very early draft, but it is very likely that will be something of significant interest in the coming weeks, or perhaps months," Reyes told IHS Markit on Thursday (Aug. 20). "That is still a very early draft that published at the National Commission of Regulatory Improvement and some companies have already filed comments [on it]."

Pandemic becomes catalyst for anti-junk food state laws

The proposed measure, Reyes noted, is consistent with Mexico's sweeping reforms of food and beverage labels set to go into effect Oct. 1, despite opposition from industry and criticism from some of the country's trade partners, including the US, the European Union (EU) and Canada.

Mexico's new labeling reform - known as NOM-051 - will require the use of front-of-package (FOP) stop-sign warning labels on foods that are high in calories, sugar, salt and saturated fat, and will prohibit the use of characters, celebrities and toys in the marketing of foods that exceed certain thresholds of nutrients of concern.

The comprehensive labeling reform has been under development since last year in response to Mexico's high rates of obesity and diabetes - a longtime concern for the country where nearly a third of adults are obese, a rate exceeded only by the United States among 36 developed nations that participate in the Organization for Economic Cooperation and Development (OECD).

Mexico is also a world leader in childhood obesity with 34% of children 5 to 11 years old qualifying as obese and 35% of teenagers (12 to 19) being overweight or obese. This, along with growing evidence that being overweight increases the risk associated with coronavirus infections, appears to be the driving force behind Mexico's new state bans of soda and junk food.

Oaxaca, Tabasco ban sales of junk food to minors

The Oaxaca ban, which was adopted Aug. 5 on a 31-1 vote, was the first of the new so-called "ley antichatarra," or anti-junk food state laws. The ban in Oaxaca - Mexico's state with the highest rate of childhood obesity - prohibits the sales to minors under 18 of unhealthy products such as chips, candy, soda and other products that have high-calorie content.

Officials in Tabasco followed suit and on Monday (Aug. 17) adopted a similar restriction, which effectively puts junk food and soda in the same sales category as cigarettes and alcohol.

The two measures have similar features, Reyes said, and include language that would prohibit the sale of high-calorie drinks and snacks at schools and prohibit the operation of vending machines on school grounds. Both measures also include an exception, which allows the purchase of such foods or drinks when a child is accompanied by a parent.

Mexican states contemplate criminal penalties for breaking junk food bans

However, there are some differences, as the Tabasco ban is more tailored to address packaged junk foods and drinks - a move that could exclude some traditional Mexican drinks and snacks that are still high in sugar and carbohydrates.

For instance, the Tabasco regulation targets pre-packaged sugary beverages and when finalized may exclude some traditional Mexican soft drinks that are sold by the glass, Reyes noted. The Tabasco regulation also prohibits the sale to children of carbonated sugar beverages, as well as the sale or distribution to minors of packaged foods with refined carbohydrates and saturated fat.

"It is much more detailed than … the regulations in Oaxaca," Reyes said. "Perhaps is more tailored in trying to protect the food products that are traditional for Mexico."

Both bans also include penalties for businesses caught breaking the laws, and in Oaxaca regulators even contemplated felony charges before deciding against the idea, Reyes said.

In the case of Tabasco, regulators still have to decide on penalties and those will likely come in the form of administrative penalties or sanctions, "but I don't know exactly at this time whether these would involve felony charges," he said.

The bans have not yet gone into effect, but according to Reyes, that is likely to happen very soon.

"They will come into force only after the bills are published in the official gazettes local," he said. "That still has not occurred but it could be due at any time."

Both local and international companies, as well as trade groups, are likely to challenge the bans, Reyes predicted, noting that food and beverage companies - both around the world and in Mexico - are closely following the reforms.

With respect to legal challenges, small stores may have the strongest ammunition to battle the bans, as they would be most affected by them, Reyes said.

State bans spell huge losses for small stores in Mexico

Mexico's National Association of Small Merchants (Anpec) has already reacted strongly against the measure in Oaxaca. The trade group said that "prohibiting the sale of these products is a measure that will close many of the small businesses in Oaxaca, causing job losses, more business closings and despair in the families that make a living from their sale," according to Mexico News Daily, an English language online publication.

"With this initiative, in Oaxaca, a 17-year-old will be able to work, drive a vehicle or complete military service but not buy chocolate, a pastry or a soft drink at their neighborhood store," the group said.

The group's president, Cuauhtémoc Rivera, also observed that in Oaxaca, a state where 66% of the population lives in poverty, "you are asking them to have a California diet," according to the online publication.

Rivera also raised concerns the measure would have a huge impact on Oaxaca's 58,000 corner stores, which could face losing at least 50% of sales because of the ban, Mexico News Daily reported. On average, packaged foods and drinks represent 70% of inventory in corner stores in Mexico.

Beverage industry says state bans will do more harm than good

The International Council of Beverages Associations (ICBA) - which represents the interests of the worldwide non-alcoholic beverage industry - also opposes the bans and argue they represent an ineffective solution to a complex problem that cannot be attributed to a certain food or beverage.

"The global beverage industry has a strong track record of supporting sensible, science-based regulations around the globe, and taking action to address key challenges like obesity," said Santiago Lopez Jaramillo, the executive director of the ICBA's Latin America Group.

"Over the past six years, our industry in Mexico has reduced calories in beverages by 11 percent per 100 milliliters. In addition, we have pledged to further reduce our calories by an additional 20 percent by 2024."

During the COVID-19 pandemic, the beverage industry has also stepped up to address the needs of families and communities affected by the health crisis, Jaramillo said, adding that "restrictive" bans, taxes and "overly burdensome" regulations have never been shown to improve public health.

"Such actions only serve to make daily life harder for working families during an already difficult time and threaten the livelihood of small business owners across the country," he said. "We understand the health challenges facing the people of Mexico and want to work closely with the Government to collaborate on real and innovative solutions to this complex problem."

While agreeing that nutritional education will have to play a key role in helping Mexico lower obesity rates, the group said the new regulations being imposed on the food and beverage industry "help neither the public health nor the economy and are based on misplaced speculation rather than science."

"These measures are especially unfortunate during this time of a global crisis when reliance on sound science and common sense is more important than ever," Jaramillo said.

"We are committed to doing even more help reduce obesity, and we are making a difference with our voluntary actions to reduce sugar consumption from beverages, through our efforts to innovate, reformulate and offer smaller portions," he added. "Our commitment to serving our communities is unwavering and more critical than ever."

Advocates, however, have hailed Mexico's new state bans, and organizations such as the United Nations Children's Fund, the World Health Organization (WHO), UNICEF and the Food and Agriculture Organization (FAO) of the United Nations have issued statements praising the measures.

Mexico new measures 'will save lives,' says CSPI

Advocates in the US have also been watching the reforms in Mexico with heightened interest, but they believe they are unlikely to trickle into the US.

"I don't think it's likely that a sugary drink and junk food ban to minors would happen here anytime soon," said Nancy Fink, sugary drinks campaign manager at the Center for Science in the Public Interest (CSPI).

Mexico, she said, has now established itself as a world leader in terms of measures targeting obesity, as it already levies a nationwide tax on sugary drinks and is looking to adopt FOP nutrition labeling reforms, Fink said on Thursday.

"It's not surprising that several Mexican states, faced with the deadly impact of the pandemic, are taking things one step further after making the connection between poor diet, diet-related diseases like type 2 diabetes and cardiovascular disease, and a higher risk of death from COVID-19," she said. "Mexico is leading once again, and no doubt this new policy will save lives."

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.